“Commerce is good” is the motto of a free market economy, and it's true that without commerce businesses would grind to a halt and the wealth of nations would stagnate or even collapse. But what is regulation in an economic system? What are the limitations of government intervention to protect citizens' rights? The true answers may surprise you.
The concept of “commerce” is an extremely vague term, one that is often used interchangeably with “commerce.” However, there are three distinct types of commerce: international, state-regulated, and self-regulated. International trade is governed by the body of laws known as the customary law system. This body of law is primarily set down in civil law and is not recognized by any other law system. Economic activity is only authorized when it is conducted through agreements reached by the government in accordance with its own powers.
Many observers of business regulation would argue that regulation is necessary because the marketplace cannot function without regulations. It must be noted however that most consumers and businesses do not understand the distinction between customary law and regulation. Most of the time they think regulation is something imposed by a municipality, and they therefore accept whatever the municipality demands. In the end, consumers suffer as businesses struggle to compete for market space against large corporations with deep pockets.
Small businesses have a much smaller impact on the economy, and regulations are not as detrimental to them. Because of this, many cities and states to favor small business over large businesses in their effort to encourage economic development. Some cities have been successful at this, but overall the rule of thumb is that if a regulation affects your liberty or property, then it is a bad regulation. Regulations should not restrict freedom and commerce.
Regulation is necessary to protect the rights of citizens and facilitate free market competition. Without government intervention, entrepreneurs would not be free to pursue innovative ideas or invest in new products and technologies. Without competition there is no incentive for a product to be developed. Without consumers having access to affordable products there will be no incentive to purchase a product. Without government regulation no one would be able to afford the goods or services that they require from the marketplace.
Without government intervention and regulation the economy would not only suffer from the lack of goods and services, but it would also suffer from increased prices. The best way to prevent this from occurring is to regulate the economy. The government can do this by increasing taxes, implementing tariffs, or licensing businesses. All of these measures are aimed at ensuring the protection of the market and the protection of the rights of consumers. Without the presence of government intervention the market would not be regulated and the result would be the absence of a regulated market and the subsequent failure of business and economy.
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