Free market economy refers to an economy where markets within it are regulated by the forces of the markets only (Friedman, 1962). It is contrary to the controlled market economy where the state regulates the movement of goods, services and labor and their prices. In free market economies, means of production are not in the hand of states but rather in the hand of private sectors. Individual liberty has more to do with freedom accorded to individual within a society; Freedom to enjoy various political, economical and social rights. Free economy system is more compatible with individual liberty.
There are various ways in which the principles of free market economy advance the concept of individual freedom. First of all free market economies advocates for limited control of the state over the forces of production and consumption (West, 2010). This is in line with the principles of individual freedom which advocate for less involvement and control of the state over people’s lives. The principles of free market economies guarantee the protection of sanctity of private property.
In free market economies the government has limited powers to tamper with individual private properties. This is also in line with the concept of individual freedom which requires that all individuals be accorded the right to own and protect property. Under free market economies individuals are free to deal with their property the way they deem fit without coercion from the state. Free market economies also give people the freedom to acquire posses and use property.
Free market economies respect the freedom of individual to buy and sell anything from/ to someone at any price (West, 2010). This means that monopolies are restricted within these free markets and therefore there is existence of a healthy competition within the market. Competition presents various individual freedoms to members of the society. These include freedom to access quality goods and services, freedom to get goods and services at reasonable prices and freedom to have variety from which to choose from.
Free markets are an extension of individual freedom because they are based on cooperation and mutual benefit (Friedman, 1962). Individuals buying and selling do so at their own will and because they look forward to deriving some benefits from the transactions. No one is forced to sell his own property and no one is also forced to buy property. This is contrary to controlled markets where sellers can be compelled to sell goods and at prices set by other parties therefore denying the sellers their individual freedom.
Similarly, by predetermining the prices the freedom of buyers to negotiate their own prices is limited.Free markets also encourage equality and liberty for all individuals (Friedman, 1962). Individual liberty grants people freedom to enjoy economic, political and social rights without discrimination. In free markets there is little room for discrimination since it is the forces of demand and supply that are in control. An organization cannot afford to sell at different prices to different groups of people since it will become less competitive.
Whether individuals are part of the majority of the minority the market forces will apply similarly to all thereby avoiding discrimination.In summary, the principles of free markets and the principles of individual liberty are intertwined in such a way that one advances the other. Individual liberty involves allowing individual space to determine the direction of their lives. Limiting what an individual can or cannot own, or by dictating the prices at which the individual can buy and sell property surely violets this liberty.
Friedman M (1962). Excerpts from Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962), Chapter 1, "The Relation Between Economic Freedom and Political Freedom," pp. 7-17. Retrieved on March 16, 2011, from http://www.mtholyoke.edu/acad/intrel/ipe/friedman.htm
West T. (2010). The Economic Principles of America’s Founders: Property Rights, Free Markets and Sound Money. Retrieved on March 16, 2011, from http://www.heritage.org/research/reports/2010/08/the-economic-principles-of-america-s-founders-property-rights-free-markets-and-sound-money