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  • Writer's pictureSam Wilks

The advantages of a free market system over a planned economy



From the author.




The opinions and statements are those of Sam Wilks and do not necessarily represent whom Sam Consults or contracts to. Sam Wilks is a skilled and experienced Security Consultant with almost 3 decades of expertise in the fields of Real estate, Security, and the hospitality/gaming industry. His knowledge and practical experience have made him a valuable asset to many organizations looking to enhance their security measures and provide a safe and secure environment for their clients and staff.

The free market, often championed as the engine of economic prosperity, stands in contrast to the planned economy, where government intervention and centralised decision-making are predominant. At its core, a free market is characterised by voluntary exchanges between individuals and businesses. Government regulations do not determine the prices of goods and services, supply and demand do.

This system, by default, promotes efficiency and innovation. In a free market, businesses are driven to innovate to stay competitive, a phenomenon vividly observed in Australia's technology sector.

Consider the case of Australia's telecommunications industry. The liberalisation and deregulation of this sector have led to increased competition among service providers. This competition has spurred advancements in technology and service delivery, culminating in better services at lower prices for consumers. Despite Optus recent hic-up in service upgrades and the effect it had on those that rely on their service infrastructure, compared to many of our larger, more populated neighbours, our services are much more reliable. In contrast, in a planned economy, where competition is stifled, such advancements are slower or non-existent.

Free markets are also characterised by their adaptability. In Australia, the rapid response of businesses to the global financial crisis of 2008 is a testament to this. Unlike a planned economy where responses are typically slow due to bureaucratic processes, the Australian market quickly adjusted, with businesses restructuring and innovating to meet new economic realities. Often, a $43 billion injection into the market by the government is cited; however, this only increased debt and increased inflationary pressures, harming the most vulnerable, the poorest.

The variety and quality of products and services in a free market are typically higher than in a planned economy. Australian consumers enjoy a wide range of choices in everything from food products to automobiles. This variety is a direct result of competition, driving businesses to cater to diverse consumer needs and preferences.

A significant advantage of the free market is its capacity for wealth creation. Australia's economic growth, particularly in the past few decades, can be greatly attributed to its embrace of free market principles. Economic liberalisation, including reductions in tariffs and the privatisation of several state-owned enterprises and liabilities, has contributed to this growth.

Despite these advantages, free markets are not without their challenges. Issues such as income inequality and market failures are often cited as drawbacks. A range of services the government has decided should be available are not feasible for the market, so rather than not providing them, the government uses taxpayer dollars to keep them going, regardless of their failures or the harm done, like welfare dependency or loss of autonomy. It's crucial to understand that these issues are not inherent to the free market system itself but are often the result of other factors, including government policies.

The government and taxpayer-funded bureaucrats often perceive the market as a threat due to its inherent accountability measures. This perception stems from several fundamental aspects of how market systems operate and the contrasting nature of government bureaucracy. Market economies have a focus on efficiency and performance measurement, while bureaucracies lack direct feedback mechanisms, leading to a lack of efficiency and accountability. Innovation and adaptability are key advantages in a market economy, while bureaucracies are rigid due to limited competition.

Customer choice and responsiveness are also crucial in a free market, while bureaucratic settings reduce this. Resource allocation is more efficient in market economies, while bureaucracies rely on political considerations or established procedures. Accountability and transparency are more diffuse in government bureaucracies, and market efficiency poses a threat to power and control.

A planned economy has significant disadvantages compared to the free market system, which the Australian experience serves as an example of. These include fostering innovation and efficiency, offering a wide array of choices to consumers, and facilitating economic growth and wealth creation. While challenges exist, they are not insurmountable and do not detract from the overall benefits of the system. The free market, with its inherent dynamism and capacity for self-correction, remains a powerful mechanism for economic prosperity. From the author.


The opinions and statements are those of Sam Wilks and do not necessarily represent whom Sam Consults or contracts to. Sam Wilks is a skilled and experienced Security Consultant with almost 3 decades of expertise in the fields of Real estate, Security, and the hospitality/gaming industry. His knowledge and practical experience have made him a valuable asset to many organizations looking to enhance their security measures and provide a safe and secure environment for their clients and staff.

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