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Free Market Economy: Same Concept, Different Meaning

Entrepreneurs and politicians have diverse views on how a free-market economy should operate. In economics, a free market is when a business...

Entrepreneurs and politicians have diverse views on how a free-market economy should operate.

In economics, a free market is when a business is determined by market forces rather than the government controlling it.

By @Comic24Derick

In this scenario, consumers determine what is produced, with production lines determined by producers. Consumer purchase power has a say on who receives the goods and services.

From Africa, America, Asia to Europe, observers have shared interesting perceptions on how a free market should look like.

However, for some countries, it is only on paper. But those that practice it has seen the benefits to their respective economic environments.

Same concept, different meaning

Hailing from Gabon, in Africa, Omar Bongo ruled the equatorial nation for an uninterrupted 42 years, until his demise in 2009. Upon his death, his son replaced him. Bongo, a contentious ruler, had, however, thought-provoking analysis of the free market.

“The free-market economy is supposed to be the only path leading to the happiness of humanity by promoting wealth and prosperity, power and influence of nations,” claimed one of the longest-serving non-royal rulers since 1900.
“There’s not a single country that actually approaches economics in a pure, free market, capitalist way.” (Image: 
Contrary to Bongo’s assertions, at the time of his death, Gabon ranked highest on infant mortality rates in the world. Also, development was nonexistent, despite substantial oil reserves in the country.

Instead of benefiting his people, the oil created a few presidential elites. A free market was a utopia, instead, it gave him unlimited power and influence to run the country like a dynasty, ruining its future.

Myths versus facts

“Basically, the myth is that America has been founded on the free market; the government has done very little; it has thrived under free trade,” proposed Ha-Joon Chang. “But actually, if you look at the history, this is actually the country that has succeeded most with protectionist policies.”

The south Korean economics academic scrutinized America’s policies, a country that many look to as a yardstick of the free market.

Chang claims the nation has acted unfairly, creating policies that protected its economy at the expense of other players. In 2017, more than 10 South Korean-based companies were listed as part of the Fortune Global 500.

Politics and the economy are parallel institutions

For seventy years, Malaysian statesman, Mahathir Mohamad has been a central figure in the nation's politics. During his political era, he postulated some interesting economic theories.

“It is not true at all that a free market will ensure democracy. It doesn’t,” the two-time Malaysian Prime Minister insisted. “There must be a balance between a free market and some regulations which are essential to safeguard the interest of consumers and people in general.”

Mohamed believed the economy and politics were different arms, that could not influence each other. A free market, some may argue enhances the full participation of citizens, because they are empowered. 

However, he thought otherwise. Interestingly, upon his retirement, he became the harshest critic of his hand-picked successor.

The gun overrides the people’s will

Nigeria Africa’s most populous country requires a little introduction because of its documented corruption and military coups. One of the instigators of a military takeover, Ibrahim Babangida offered a fascinating insight into a free market.

“The challenge as we saw in the Nigerian project was to restructure the economy decisively in the direction of a modern free market as an appropriate environment for the cultivation of freedom and democracy and the natural emergence of a new social order.” – Ibrahim Babangida.

If the statement had not originated from the man dubbed as the “The Evil Genius”, chiefly for orchestrating a 1983 coup, it could have made economic sense. 

But his autocratic move to claim power meant his ideals of a “modern free market” were meaningless. 
Babangida further sought to instill “freedom and democracy” which was a pipedream. 

To date, the Nigerian economy is still described as a “middle-income, mixed economy and emerging market,” though it has an estimated 35 billion barrels of oil and 100 trillion cubic feet of natural gas.

Keep dreaming, a free market is a fantasy

“There’s not a single country that actually approaches economics in a pure, free market, capitalist way,” Dambisa Moyo, a Zambian-born global economist detailed. 

“I like the free market – but it very much exists only in textbooks. If I had a choice, and we could live in a very pure world, I would be a supporter of the free markets.”

Celebrated for her astute analysis of macroeconomics and global affairs, Mayo’s input is valued. After stints at the World Bank, board member of Chevron Corporation, including eight years at Goldman Sachs, she understands the topic well.

The Southern African nation of Zambia rose after a bitter war against British colonial rule. More than half of the 17 million citizens live below the recognized national poverty line. The rates are much high in rural areas.

The Indian market version

The author of The God of Small Things, which won the 1997 Man Booker Prize for Fiction is pessimistic about the prospects offered by champions of a free market.

“Democracy no longer means what it was meant to,” opposed the political activist. “It has been taken back into the workshop. Each of its institutions has been hollowed out, and it has been returned to us as a vehicle for the free market, of the corporations. For the corporations, by the corporations.”

Barack Obama’s contradictions

“I am a strong believer in the free market. I am a strong believer in capitalism,” Barack Obama said. “But, I am also a strong believer that there are certain common goods – our air, our water, making sure that people are safe – that require to have some regulation.”

From the above account, it seemed Obama didn’t know the definition of a free market. Or he chose to confuse his listeners. Probably, he sought to appease his critics.

When a regulates prices, there is no longer a free market. The laws of demand and supply also apply to air and water, contrary to United States 44th president’s wishes.

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