Question

Explain why no modern nations have a purely free-market economy?

Answer 1

The reason why there are no nation states with pure free market economies (capitalist economies) is because this would most likely cause corruption in the upper 10% and damage the other 90%. All land owners, business owners, etc. can charge as much as they want for their products, pay their employees as little (or as much) as they want, and get to decide how much and of what is made. This is because in a free market economy, there is very little to no government intervention, meaning little to no regulations on the economy, meaning the rich and wealthy can control how the economy is run.

Answer 2

Pure market economies do not exist because when markets are allowed to freely function, and economic decisions are reached by the interaction of individuals, firms and goverment in the markets, these lead to sharply unequal outcomes and social welfare is threatened.

In turn, mixed market economies are established, where economic authorities implement income redistribution systems that reduce income inequalities and generate fairer outcomes for all the individuals that conform a society.