Basic principles of a market economy The market economy is based on a number of basic principles that fully reveal its essence: 1. The principle of economic freedom.It assumes that every economic entity has the right to exercise a free choice of activities, areas of expenditure and consumption. For producers, economic freedom means the ability to start activities in any field and achieve the goal of maximizing their own income (profit) by all legal means. For the consumer, economic freedom implies a wide choice of goods and services and the best use of their own income.
One of the prerequisites for the implementation of this principle is private ownership of the means of production, property and income. Economic freedom cannot be absolute and has nothing to do with capital whatsapp mobile number list to permissiveness. It is associated with the observance of rights and freedoms, respect for the interests of others, responsibility for one's actions and their results. 2. The principle of competition. Competition in the economic sphere is a competition for the completeness of the realization of one's own economic interests. Competition is impossible without economic freedom.
The power of competition directs the motive of personal gain in such a way that it promotes the best interests of society. However, competition does not limit its role to responding to the needs of society. It is competition that stimulates and forces enterprises to switch to more efficient production technologies. In a competitive market, the inability of some firms to use the most economical production technology ultimately means they will be forced out by other competitors using more efficient production methods.