One of the most important features of a free market system is that it separates the economy and the state, and the fact that its core principles are based on individual rights which indicate that each person has a right to his own being and has the right to use his resources in the manner that pleases him, as far as he doesn’t violate the privileges and freedom of others.
It has been evidently proven in many nations that when individuals are allowed to freely act, unimpeded by aggressive and unstable policies and regulations, wealth is created. This in turn, positively affects the standard of living. Another beauty of the market system is that as each individual creates wealth for himself, in the process, he creates opportunities for wealth for others through employment and some other chains of profitable business activities that would emanate from his own enterprise. It can be well interpreted as a case whereby the rich get richer and the poor gets richer. Everyone gets richer, even the non-capitalist!
There has always been a debate as regards the involvement of government in a free market environment. I like the way Abraham Lincoln simplified it when he said “do for people only what they can’t do for themselves.” It is important to note that there are a few commodities that only government can properly cater for. Basic examples of such things include good roads with quality bridges and network, law enforcement, and then the military, which has to do with the protection of the citizens. Since free market is built around individual right; safe guarding those rights are peculiar to the wholesomeness of the market. Without the assurance of security, market activities can’t thrive. And this is evident in some parts of Northern Nigeria where the Boko Haram insurgency has crippled economic activities.
Indeed, government’s involvement should be about creating a structure that aids the healthy practice of free markets and also ensuring penalties for those who choose not to play accordingly. The role of government majorly shouldn’t exceed that. Basically because excessive interference by the government coupled with preferential treatment which is the basis for cronyism corrupts the beauty of the market. Just like the practical case of General Electric, Chrysler and a couple of other companies in the United State, it is clear that government sometimes become too political to create a level playing ground for all competitors. Moreover, like some economic intellectuals have argued and asked that on what basis do we advocate for accountability by bailing failing institutions. But more importantly, it is now obvious to all that such actions support the foundation for cronyism, abuse of tax payers’ money, and also misappropriation of a nation’s resources for selfish political benefits.
Capitalist are practically so liable to cross the line which exist between right and wrong by compromising standards, most especially in their quest to minimize cost and maximize profit. In fact, an average individual at the slightest chance would exploit any system. Therefore, it is the sole duty of the government in such a case to draw the boundaries, map out structures that would checkmate excesses ensuring that market men and women are liable for their actions and inactions. "Government is about setting the rules and boundaries but also reminding us about the nobleness of the game” says Jacoline Loewen an expert in private equity and competitive strategy.
In a healthy society, government should be concerned about increasing competition, in such a way that condemns monopoly. Because come to think of it, no competitor competes to get rid of competition, and of what essence is a free market without competition? In this regard, government needs to stand in for the collective will of the people. Or just like Ronald Reagan put it “…protect the people from each other.”
Thomas Friedman, New York Times columnist, is of the opinion that government's role is not to intervene but to create the rules of the game that enable markets to be free. When anti-capitalist tend to claim thatin a free market economy, companies tend towards monopoly, I don’t get too economical with time to quickly say to them that government also tends toward absolute control through some useless and aggressive policies and regulations.
‘Lanre Olagunju is a regular contributor to the Voice of Liberty Africa Project and also a prize winner with African Liberty.
