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>
Mercea, you wrote:
> Another big difference is that 'capitalism' describes an economy
> sufficiently far away from its 'saturation level' of production. That is,
> it has too little capital given the current technological level.
> A 'marketing economy' is closer to the saturation level, and advances
> are possible mainly through technological progress and social change which
> makes this technology adopted. Marketing is a commercial means to push these
> social changes.
>
And Daniel Bromley wrote:
"I will let the certified historians address the first two of Mircea Pauca's
questions and will confine my observations to the idea of "markets" with
and without the tendentious adjective "free." The origins of this
adjective seem less important than the hopeful normative message its use
seems to inspire in particular circles."
First, Mercea, I hope that you realize that the term "market economy" has nothing to do
with "marketing," as this term is commonly understood in business administration. It is a
synonym for exchange economy. The word "economy" initially referred to an individual's
management of household affairs. It did not refer to "exchange." So adding the term
"exchange" or "market" was a means of changing the meaning of the term.
But, as I recall reading somewhere, this was not the first change in the meaning. The
first change, was to use the term "economy" to refer to the King's management of "his
household." Thus, the first change would have applied to a totally planned system of
managing the nation by a king.
Considered in this context, the modifiers "exchange" and "market" would more accurately
connote the idea of Adam Smith's "system of natural liberty," which I believe remains, in
a general sense, the prototype for an image, or model, of the King's household in which
goods are produced and consumed without the King's planning, managing, or restriction in
any way.
Second, Daniel, I would like to discuss the use of the term "free" to modify "market
economy." One justification, based on a desire for clarity, for this term is that it
distinguishes between a market economy in which entry into employment, business, the ranks
of consumers, banking, etc. is not restricted by law. Economists use the term "free
banking," for example to refer to a system in which anyone is free to start a business as
a bank. Similarly, we can use the term "free market economy" to refer to a market economy
in which everyone is free (i.e., not restricted by law) to engage in consumption, resource
supply, production, and exchange.
>From this point of view, the term "free" is not at all tendentious or normative. It
describes an image that the economist typically begins with in an effort to evaluate the
effects of some policy that restricts otherwise free exchange.
Of course, I am writing here about economic theory, or the ideas of economics conceived as
a body of knowledge. Because the words of economics are also used in everyday speech, they
can refer to entirely different things by people who have different motivations.
Libertarians, for example, may use the term "free market economy" in a much different
sense than economic theorists.
Pat Gunning
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