Myths About Free Markets Debunked!

Posted by: on Feb 6, 2012 | 4 Comments

The AT&T deregulation in the 1980s offered competitive phone rates to the market. The US airlines deregulation in 1979 facilitated lower airfares and more choices to consumers. Despite these historic successes of a free market system, those against the concept often term supporters as anarchists. Naysayers claim that a free market economy leads to overproduction and promotes greed. Here are some myths and misconceptions about a free market economy:


Myth 1: There are no regulations in a free market


One of the meanings of ‘free’ might be ‘unregulated’, but a free market is in no way related to it. According to economists, self-set standards and consumers are the two forces that regulate free markets. These are also forces that can replace governmental regulations and save the taxpayer’s money. Let’s take an example of vehicle manufacturers. Manufactures of automobiles analyze market reviews of the products and eliminate features in the upcoming models which irked consumers previously. This is a perfect example of how a so-called ‘unregulated’ market would operate.


Myth 2: Inflation in bound to happen


Did you think that it is natural for prices to rise as the years go by? No. Inflation is an unnatural phenomenon that acts likes an extra tax on earnings. Inflation helps some groups for a short time. For instance, farmers may sell their products at higher prices, till the time the prices of their inputs surge. In the long term, inflation is beneficial only to the government, as it offers more funds while reducing the real debt value.


Inflation is not caused by greedy businessmen – all businessmen are after all greedy. The cause of inflation is only one: the government increasing the money supply to fund its already limitless expenses.


Myth 3: Government can offer the best solution to problems


One of the political creations of the 1930s New Deal reforms is Social Security, which has only served to increase the burden of taxes since the last eight decades. Most often than not, solutions posed by the government to end economic troubles impinge heavily on the taxpayers. This is because most of the ‘solutions’ are schemes for redistributing tax in areas that buy political support.


Free market supporters believe that the true motivation behind any political decision is to help the decisions makers keep their seats. This reality is often ignored by the people who continue to believe that the government will come to their aid. On the contrary, in a free market, the consumer’s voice will determine the quality of products or services and contribute to political, civil and economic freedom.



  1. sam
    February 7, 2012

    Really a myth buster article…..keep up the good work!

  2. renne
    February 9, 2012

    Free market creates opportunities and make each participant responsible towards others………..good article!

  3. aakash
    March 1, 2012

    an interesting read…….keep up the good work…thanks for posting

  4. Stuart
    January 27, 2014

    Hmm, I might need dumbed down version of this? heh


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