Studies
Joshua Epstein and Robert Axtell have attempted to predict the properties of free markets empirically in the agent-based computer simulation "Sugarscape". They came to the conclusion that, under idealized conditions, free markets lead to a Pareto distribution of wealth.
The Heritage Foundation, a conservative think tank, tried to identify the key factors necessary to measure the degree of freedom of economy of a particular country. In 1986 they introduced the Index of Economic Freedom, which is based on some fifty variables. This and other similar indices do not define a free market, but measure the degree to which a modern economy is free, meaning in most cases free of state intervention. The variables are divided into the following major groups:
- Trade policy,
- Fiscal burden of government,
- Government intervention in the economy,
- Monetary policy,
- Capital flows and foreign investment,
- Banking and finance,
- Wages and prices,
- Property rights,
- Regulation, and
- Informal market activity.
Each group is assigned a numerical value between 1 and 5; IEF is the arithmetical mean of the values, rounded to the hundredth. Initially, countries which were traditionally considered capitalistic received high ratings, but the method improved over time. Some economists, like Milton Friedman and other Laissez-faire economists have argued that there is a direct relationship between economic growth and economic freedom, and studies suggest this is true. Continuous debates among scholars on methodological issues in empirical studies of the connection between economic freedom and economic growth still try to find out what is the relationship, if any.
Read more about this topic: Free Market
Famous quotes containing the word studies:
“What an admirable training is science for the more active warfare of life! Indeed, the unchallenged bravery which these studies imply, is far more impressive than the trumpeted valor of the warrior.”
—Henry David Thoreau (1817–1862)
“Possibly the Creator did not make the world chiefly for the purpose of providing studies for gifted novelists; but if he had done so, we can scarcely imagine that He could have offered anything much better in the way of material ...”
—Elizabeth Stuart Phelps (1844–1911)
“You must train the children to their studies in a playful manner, and without any air of constraint, with the further object of discerning more readily the natural bent of their respective characters.”
—Plato (c. 427–347 B.C.)