Globalization: Good or bad?Vivian Choy, Economic ExpertArticle:
http://www.globalissues.org/TradeRelated/FreeTrade/Criticisms.aspA closed market system, also known as command or planned economy, is a government-controlled economy. The government decides the prices and allocates the resources, and this is done all in the name of social and economic equality in society and is based on the belief of creating an equal and just society. As I have mentioned in my previous post -
Neo-liberalism rejects any concept of social responsibility and any restraint on the global forces is regarded as a restriction of human rights, and this means that there is free movement of finance and capital - thus a free market system is employed in globalization. With the transition from closed market systems to free market systems, the costs of goods are raised and this is where people who simply cannot afford them fall behind and get left behind. A free market system may result in an unequal distribution of wealth, and it would mean that the economy would be dominated by large films that drive the smaller ones out, leading to an increase in the unemployment rate.
On the other hand, because there is no government involvement or state control on taxes, subsidies and regulations, and the prices depend solely on the demand and supply of the goods, a free market system can be beneficial as well. In a free-market system, businesses are privately owned and there is little or no government interference on supply and demand, and all economic decisions are made by individuals. Demand and supply determines the prices of goods. People are given the freedom of choice and they are given the chance to pursue their own dreams and interests, and in the process improve society. Free market systems have been successfully implemented in countries like Singapore and Hong Kong, which are among the countries with the highest per capita gross domestic products. The success of the free market system in Singapore can be seen through the 7.7% economic growth for 2006.
From this, we can conclude that while there is a downside to the free market system, the pros outweigh the cons of it. While some people refuse to admit that globalization has played a major role in the world’s progress and are against it, truth is that globalization definitely has improved the world’s economy, and it is globalization that has made it so competitive.
