Editing Market economy (section)

== Capitalism ==
{{main|Capitalism}}
{{Capitalism sidebar}}
Capitalism is an economic system where the [[means of production]] are largely or entirely [[privately owned]] and [[operated for a profit]], structured on the process of [[capital accumulation]]. In general, in capitalist systems investment, distribution, income and prices are determined by markets, whether regulated or unregulated.

There are different variations of capitalism with different relationships to markets. In ''[[laissez-faire]]'' and [[free-market]] variations of capitalism, markets are utilized most extensively with minimal or no state intervention and minimal or no regulation over prices and the supply of goods and services. In [[Economic interventionism|interventionist]], [[welfare capitalism]] and [[mixed economies]], markets continue to play a dominant role, but they are regulated to some extent by the government in order to correct [[market failure]]s or to promote social welfare. In [[state capitalist]] systems, markets are relied upon the least, with the state relying heavily on either [[indicative planning]] and/or [[state-owned enterprises]] to accumulate capital.

Capitalism has been dominant in the Western world since the end of [[mercantilism]]. However, it is argued that the term ''mixed economies'' more precisely describes most contemporary economies due to their containing both private-owned and state-owned enterprises. In capitalism, prices determine the demand-supply scale. Higher demand for certain goods and services leads to higher prices and lower demand for certain goods lead to lower prices, in relation to supply.

=== Free-market capitalism ===
{{see also|Free market}}
A capitalist free-market economy is an economic system where prices for goods and services are set freely by the forces of supply and demand and are expected by its supporters to reach their point of equilibrium without intervention by government policy. It typically entails support for highly competitive markets, private ownership of productive enterprises. ''Laissez-faire'' is a more extensive form of free-market economy where the role of the state is limited to protecting [[Property rights (economics)|property rights]] and enforcing [[Pacta sunt servanda|contracts]].

=== ''Laissez-faire'' ===
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{{see also|Economic liberalism}}
''Laissez-faire'' is synonymous with what was referred to as strict [[free-market]] economy during the early and mid-19th century{{Citation needed|date=December 2014}} as a [[classical liberal]] ideal to achieve. It is generally understood that the necessary components for the functioning of an idealized free market include the complete absence of government regulation, subsidies, artificial price pressures and government-granted monopolies (usually classified as [[coercive monopoly]] by free market advocates) and no taxes or tariffs other than what is necessary for the government to provide protection from coercion and theft, maintaining peace and property rights and providing for basic public goods. [[Right-libertarian]] advocates of [[anarcho-capitalism]] see the state as morally [[illegitimate]] and economically unnecessary and destructive. Although ''laissez-faire'' has been commonly associated with capitalism, there is a similar [[left-wing]] ''laissez-faire'' system called [[free-market anarchism]], also known as [[Left-wing market anarchism|free-market anti-capitalism]] and [[free-market socialism]] to distinguish it from ''laissez-faire'' capitalism.<ref>Chartier, Gary; Johnson, Charles W. (2011). ''Markets Not Capitalism: Individualist Anarchism Against Bosses, Inequality, Corporate Power, and Structural Poverty''. Brooklyn, NY: Minor Compositions/Autonomedia{{page needed|date=March 2022}}</ref><ref>"It introduces an eye-opening approach to radical social thought, rooted equally in libertarian socialism and market anarchism." Chartier, Gary; Johnson, Charles W. (2011). ''Markets Not Capitalism: Individualist Anarchism Against Bosses, Inequality, Corporate Power, and Structural Poverty''. Brooklyn, NY: Minor Compositions/Autonomedia. p. back cover.</ref><ref>"But there has always been a market-oriented strand of libertarian socialism that emphasizes voluntary cooperation between producers. And markets, properly understood, have always been about cooperation. As a commenter at Reason magazine's Hit&Run blog, remarking on [[Jesse Walker]]'s link to the Kelly article, put it: "every trade is a cooperative act." In fact, it's a fairly common observation among market anarchists that genuinely free markets have the most legitimate claim to the label "socialism." [http://c4ss.org/content/670 "Socialism: A Perfectly Good Word Rehabilitated"] {{Webarchive|url=https://web.archive.org/web/20160310111716/https://c4ss.org/content/670 |date=2016-03-10 }} by [[Kevin Carson]] at website of Center for a Stateless Society.</ref> Thus, critics of ''laissez-faire'' as commonly understood argues that a truly ''laissez-faire'' system would be [[anti-capitalist]] and [[Libertarian socialism|socialist]].<ref>Nick Manley, [http://c4ss.org/content/27009 "Brief Introduction To Left-Wing Laissez Faire Economic Theory: Part One"] {{Webarchive|url=https://web.archive.org/web/20210818131348/http://c4ss.org/content/27009 |date=2021-08-18 }}.</ref><ref>Nick Manley, [https://c4ss.org/content/27062 "Brief Introduction To Left-Wing Laissez Faire Economic Theory: Part Two"] {{Webarchive|url=https://web.archive.org/web/20210516192528/https://c4ss.org/content/27062 |date=2021-05-16 }}.</ref>

=== Welfare capitalism ===
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Welfare capitalism is a capitalist economy that includes public policies favoring extensive provisions for social welfare services. The economic mechanism involves a free market and the predominance of privately owned enterprises in the economy, but public provision of universal welfare services aimed at enhancing individual autonomy and maximizing equality. Examples of contemporary welfare capitalism include the [[Nordic model]] of capitalism predominant in Northern Europe.<ref>{{cite web |url=http://www.iea.org.uk/sites/default/files/publications/files/Sweden%20Paper.pdf |archive-url=https://web.archive.org/web/20121022170900/http://www.iea.org.uk/sites/default/files/publications/files/Sweden%20Paper.pdf |archive-date=2012-10-22 |url-status=live |title=The surprising ingredients of Swedish success – free markets and social cohesion |date=June 25, 2013 |publisher=[[Institute of Economic Affairs]] |access-date=January 15, 2014}}</ref>

=== Regional models ===
==== Anglo-Saxon model ====
{{main|Anglo-Saxon model}}
Anglo-Saxon capitalism is the form of capitalism predominant in Anglophone countries and typified by the [[economy of the United States]]. It is contrasted with European models of capitalism such as the continental [[Social market economy|social market]] model and the [[Nordic model]]. Anglo-Saxon capitalism refers to a macroeconomic policy regime and capital market structure common to the Anglophone economies. Among these characteristics are low rates of taxation, more open international markets, lower labor market protections and a less generous [[welfare state]] eschewing [[collective bargaining]] schemes found in the continental and northern European models of capitalism.<ref>''Anglo-Saxon capitalism'', Business Dictionary on BusinessDictionary.com: http://www.businessdictionary.com/definition/Anglo-Saxon-capitalism.html {{Webarchive|url=https://web.archive.org/web/20200927202903/http://www.businessdictionary.com/definition/Anglo-Saxon-capitalism.html |date=2020-09-27 }}</ref>

==== East Asian model ====
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The East Asian model of capitalism involves a strong role for state investment and in some instances involves state-owned enterprises. The state takes an active role in promoting economic development through subsidies, the facilitation of "national champions" and an export-based model of growth. The actual practice of this model varies by country. This designation has been applied to the economies of [[China]], [[Japan]], [[Singapore]], [[South Korea]], [[Vietnam]], and sometimes to those of [[Hong Kong]] and [[Taiwan]].<ref name="An East Asian Model of Economic Development: Japan, Taiwan and South Korea, 1988">{{cite journal |last1=Kuznets |first1=Paul W. |title=An East Asian Model of Economic Development: Japan, Taiwan, and South Korea |journal=Economic Development and Cultural Change |date=April 1988 |volume=36 |issue=S3 |pages=S11–S43 |doi=10.1086/edcc.36.s3.1566537 |s2cid=153899556}}</ref>

A related concept in political science is the [[developmental state]].

==== Social market economy ====
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The social market economy was implemented by [[Alfred Müller-Armack]] and [[Ludwig Erhard]] after [[World War II]] in [[West Germany]]. The social market economic model, sometimes called [[Rhine capitalism]], is based upon the idea of realizing the benefits of a free-market economy, especially economic performance and high supply of goods while avoiding disadvantages such as [[market failure]], destructive competition, concentration of [[economic power]] and the socially harmful effects of market processes. The aim of the social market economy is to realize greatest prosperity combined with best possible social security. One difference from the free market economy is that the state is not passive, but instead takes active [[Regulation|regulatory]] measures.<ref>[http://www.bpb.de/popup/popup_lemmata.html?guid=Y0VZ7J keyword "social market economy" = “Soziale Marktwirtschaft”] {{Webarchive|url=https://web.archive.org/web/20111212140139/http://www.bpb.de/popup/popup_lemmata.html?guid=Y0VZ7J |date=2011-12-12 }} Duden Wirtschaft von A bis Z. Grundlagenwissen für Schule und Studium, Beruf und Alltag. 2. Aufl. Mannheim: Bibliographisches Institut & F.A. Brockhaus 2004. Lizenzausgabe Bonn: Bundeszentrale für politische Bildung 2004.</ref> The social policy objectives include employment, housing and education policies, as well as a socio-politically motivated balancing of the distribution of income growth. Characteristics of social market economies are a strong [[competition policy]] and a [[contractionary monetary policy]]. The philosophical background is [[neoliberalism]] or [[ordoliberalism]].<ref>[[Duden]] Wirtschaft von A bis Z. [http://www.bpb.de/nachschlagen/lexika/lexikon-der-wirtschaft/20642/soziale-marktwirtschaft "Eintrag: keyword "social market economy" = Soziale Marktwirtschaft"] {{Webarchive|url=https://web.archive.org/web/20120829015237/http://www.bpb.de/nachschlagen/lexika/lexikon-der-wirtschaft/20642/soziale-marktwirtschaft |date=2012-08-29 }}.</ref>