Becoming Rich in a Free Market Economy
From a macroeconomic perspective, Ricardo’s comparative advantage theory sought to morally justify colonialism. This theory basically serves to give economic reasons as to why some countries are extremely wealthy while other have a majority of citizens languishing in abject poverty. Ricardo proposes that those countries which enjoy a healthy financial status do so as a result in specializing in innovation and value addition. Poor countries on the other hand tend to specialize in ensuring that manufacturing countries have a constant flow of raw materials. The rich countries thus take advantage of the poor countries in a relationship which is heavily skewed in the favor of industrialized economies. This paper seeks to discuss how individuals become rich in a free economy.
In a free market economy, the government has no authority to regulate or state economic intervention strategies. In free market economies, governments only play the direct role of ensuring private contracts are enforced in accordance with law as well as overseeing property ownership. This implies that all means of production in free market are in the hands of private entities as opposed to the government.
The fact that the free market is in the hands of private entities and that the demand supply mechanisms control pricing means that the market is heavily dependent on mutual consent. To become rich in a free market economy is therefore rather easy in the contemporary world economy. This statement is however subjective as it common to find that the moral and ethical considerations towards getting rich are not adhered too.
For instance, a free market economy is driven by the profit factor which essentially tends to ignore the need. Profit oriented market economies are motivated by the need to accumulate more capital. People therefore have the freedom to invest in any free market enterprise that attracts the highest possible profits so as to accumulate more capital which is then reinvested into other profitable enterprises. As this form of capital accumulation ignores the need factor, investors tend to ensure costs are kept at a minimum at the expense of workers, the environment is characterized with poor income distribution channels. This leads to income inequalities which further lead to socia