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== The "Free Market" ==

== The "Free Market" ==

The interaction of supply and demand is what we call the "market".  The "free market" is the interaction of supply and demand without any interference or control by government.  This term originated in 1907 - note how recent that is compared to other terms in the dictionary!

The interaction of supply and demand is what we call the "market".  The "free market" is the interaction of supply and demand without any interference or control by government.  The dictionary definition states that the "free market" is "an economic market operating by free competition."<ref>Merriam-Webster Collegiate Tenth Edition (1994).</ref>

The Merriam-Webster dictionary's definition is not as good as ours.  The dictionary says that the "free market" is "an economic market operating by free competition."  Can you see flaws in that definition?  "Competition" is part of a "free market," but the essence of a free market is the interaction or interplay between supply and demand.  A "free market" can exist with only one supplier, without any competition.  Or there can be competition, such as between the Post Office and Federal Express, without it being a "free market" (because the government interferes by funding the Post Office and imposing limitations on Federal Express).

The free market drives down prices, which helps the poor enormously.  It is the free market that makes the Bible and food and communications inexpensive for the poor, and which helps bring Christian missionaries to serve the poor in faraway places.  The following example illustrates how the free market has made air travel available to the poor, and available to others in order to help the poor.

 

Can you improve on our definition of the "free market"?  The homework assignment gives you an opportunity to do so.  For example, the concept of the "free market" could be defined in terms of opportunity:  "the free market is one that provides full opportunity for the poor, so that they can buy and sell goods and services, and pursue careers, on the same terms as the rich."  Indeed, the poor in society may be the biggest beneficiary of the free market.  It is the free market that makes the Bible and food and communications inexpensive for the poor, and which helps bring Christian missionaries to serve the poor in faraway places.  The following example illustrates how the free market has made air travel available to the poor, and available to others in order to help the poor.

In the 1960s and 1970s, government set the prices for airline tickets, and only the wealthy could afford to travel by plane.  Then, in 1978, Congress "deregulated" the airplane industry, which allowed the free market to set the prices based on supply and demand.  The benefits were tremendous in enabling far more Americans to be able to afford air travel:<ref>http://www.econlib.org/library/Enc/AirlineDeregulation.html (emphasis added, citation omitted).</ref>

In the 1960s and 1970s, government set the prices for airline tickets, and only the wealthy could afford to travel by plane.  Then, in 1978, Congress "deregulated" the airplane industry, which allowed the free market to set the prices based on supply and demand.  The benefits were tremendous in enabling far more Americans to be able to afford air travel:<ref>http://www.econlib.org/library/Enc/AirlineDeregulation.html (emphasis added, citation omitted).</ref>