Government Intervention in Free Market

Topics: Free market, Capitalism, Market economy Pages: 1 (297 words) Published: April 1, 2011
Do you think the Government should intervene in the labour market in a free market economy? Explain why or why not.

A. Yes, there should be government intervention in a free market economy to some extent. Markets cannot exist without a government to protect property rights, enforce contracts and settle disputes all of which is intervention. This would benefit the economy in variety of ways. Firstly, government regulations allow businesses to remain in the private hands while removing some of the worst abuses of pure capitalism. Extremely wealthy people or companies have the ability to control large sections of the economy because of shrewd business dealings. Only Government involvement can fix that. When a producer has a monopoly, the consumer is no longer sovereign, prices are not set by supply and demand, and therefore the system cannot function effectively. As a mixed economy there is competition between companies but we need government regulation to ensure that these types of monopolies do not exist. A safe amount of government intervention would result in higher incomes, production and employment, which would then lead to expansion. Limited government involvement prevents crises such as inflation, unemployment and depression. Without government the strong will take what they want from the weak and there will be no reason to voluntarily exchange good and services which is the sole purpose of buying and selling.

In Canada there is some government involvement in the economy, but people have the freedom and individualism to do as they wish like in Capitalism. Government regulation and/or intervention does not stop a competition from occurring. In conclusion, I believe that Government should intervene in the labour market in a free market to some extent in order to accomplish certain economic goals as well as freedom and individualism.
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