States Intervention in Market Economy

States Intervention in Market Economy

Recently, there has been development concerning free market trends adjustment in Africa and the world. But despite that, generally free market has remained a subordinate instrument of the national political system and their policies. The popularity and free trade policies being enjoyed by the market at the present moment wouldn’t be possible without government intervention in business affairs; concerning State involvement it is necessary to point out that, the primary objective of the state is to facilitate market competition and assist markets to achieve their national policy objectives.

Notably, the role of State policies intervention should be more than just addressing more than the purpose of rationalizing trade, but rather address the factor that effects the market trends. These rationalized objectives often result to do marketing practices to conform mechanically to the modern model. Market interventions should take into consideration of marketing network proven capability. Main reason for developing policies is to make the market work within the existing system, but not to replace it. Some States get more involved in the market to change free market systems, raising the costs of marketing, hurting consumers, distorting resources allocations, as well as damaging the economy.

Policy makers or free market conservatives should view trading as a necessary and socially desirable activity carried out under favorable regulations and friendly environment. General advice regarding their intervention is that they should play a facilitation role rather than a direct role in the market. There should be limited regulatory responses. Developed countries have a long involvement in nature, and they have three aims: to improve market infrastructure, to improve information flow, and to improve institutional infrastructure.

The concept of free market is created, maintained, and curated by the government. Conservatives of free market behave as if free market has the same idea as the state of nature in which tyrannical government arrives after the fact and wrecks the policies when, in fact, it is the opposite. The difference is that in State of nature, you have permanent war, while, traders and entrepreneurs in a free market can only exist if there are monsters to enforce things such as private property, contracts, and money, of which the State creates all of it.  The States sets free market rules and policies, and without their intervention, there would be no free market.

For instance, France has an average retail price of 20% higher than that in Germany, despite the fact that Germany has a higher VAT than France. Evidently, this is because retail market in France is cartel based; in this case, the biggest retailers hold local monopolies. Hence, there is no competition (Gobry, N.p). However, State involvement is based on the strength of the government, and free markets require a vigorous and active government. For instance, United States is more open market than Europe considering the power of their government, but they have been outshined because Europe has a government that is less concerned about maintaining a free market(Gobry, N.p).

In conclusion, involvement of State in every market economy is based on their strength on market policy. Regulations play a role of zoning laws which then prevent the opening of situations such as dumping, reduced price regulations, and squeezing of suppliers. Some States have more involvement because their big companies have created comfortable alliances that suppress other firms from merging. Lastly, it is recommended that government intervention creates a free market, nonetheless, there can be harmful interventions, such as France’ scrapping wrongheaded regulations, but primarily positive interventions have been witnessed with government involvement with the market economy.