Free Market Economics
Long before Karl Marx the American Pilgrims experimented with socialistic practices in the hopes of creating a fair just society. The pilgrim settlers had contracted with their merchant-sponsors in London for their passage and supplies to the new world. The pilgrim’s had established the socialistic program that was initially followed only to be replaced by a free market economics system after the first year.
Experiment with Socialism
The contract they obligated themselves to in London required products of their labors to be shared equally among everyone in the community. Their first year in the New World was difficult nearly half of the pilgrims died of sickness, exposure to the elements or starvation.
The following spring the native Indians taught the pilgrims how to farm, fish and hunt. With this newfound knowledge the lives of the pilgrims improved however they were still unable to prosper at their new venture of life in America.
The pilgrim’s contract with their merchant sponsor called for everything to be held by the entire community. The community proceeds were to be distributed equally among the community members. No one in the community owned anything. The initial pilgrim settlement was established as a commune.
The pilgrims understanding their survival needs for the second winter in this new wilderness devoted only the labors that were required of them. Their newly acquired knowledge and skills helped them to survive but not prosper. The community members were not willing to labor for another man’s benefit.
The pilgrims led by William Bradford decided to scrap the social experiment established in their original contract with a system that rewarded individual industriousness and creativity. The surviving pilgrims were allowed to own property along with enjoying the benefits of their labors. The pilgrim colony then began to flourish. The community was able to repay their sponsors in London. The pilgrims had discovered that free market economics which rewards personal efforts works benefiting everyone in the community.
Free Market Economics Results in Wealth for the Poor Upward Mobility
For free market economics to function property ownership must be recognized. Allowing people to benefit from their own labor creates incentives producing overall economic development. Over the last 100 years free market economics has been instrumental in reducing poverty along with increasing life expectancy than man had experienced in the previous 5,000 years. Though these benefits have been real we have not had a totally free market economics system to fully function as government has been allowed to encroach on man’s unalienable rights and freedom.
The United States Constitution was established to protect the rights and freedom of its citizens. Protection of the unalienable rights and freedom has allowed the free market economics system to not only benefit the citizens of the United States but the population of the entire world. It was the guarantee of freedom provided by the Founding Fathers Constitution that has unleashed this creativity and development world-wide. Men will put forth labor when they know that labor expended will go for their benefit.
Under a centralized economic system such as socialism there is a person or committee that must decide the number of items that are produced for the societies benefit. How is that decision made? From where is the data procured that goes into making the decision as to the number of units that is necessary to fulfill the requirements of the overall group?
There is no source where this information can be found as society is in a continual change. Therefore the decisions made at the central planning level are always incorrect. There are either too many products produced or there are too few.
If you were a government employee with the job of deciding how many products were to be produced which option would you choose; producing too many or too few. Under socialism or a centralized planning model there are always too few products produced for the masses as it is safer to have a demand for more than to have produced too much.
Allowing People to Decide or Decentralized Planning
Under free market economics system the people are free to make the decision as to the numbers of a product that are necessary from one day to the next. If the supply of a product is insufficient the price of that product increases. An increase in price invites more people to produce.
When the supply of a product is greater than the demand for that product the price of the product decreases. The consuming public makes the decision on a day to day basis as to the number of units that are necessary to fulfill the demands.
The price system under free market economics determines the overall numbers of products that are available for the consumer. The people decide what products will or will not be produced and in what quantities the products will be produced.
Free market economics is the door to creating wealth for the poor. The price system of a free market allows consumers to determine the use of resources. The “price system” determines what people can afford, what sells, what gets manufactured.
Our Founding Fathers Constitution
In 1789 a constitution was enacted that guaranteed the rights and freedom of the people would be protected from government tyranny. This act along with the freedoms to try, to fail, to succeed, including the freedom to possess the benefits of one’s own labor opened up the flood gates for development in the United States and the world. The enactment of the U. S. Constitution was the first time in the history of man that all the principles of freedom were made available at one time.