A free market, as defined by Ayn Rand, is a voluntary system in which prices are allowed to vary without interference from any external source. This means that competition among businesses is allowed and voluntary prices can be set by the consumers and businesses themselves, as long as they realize the potential threat of disreputable business practices. The free market, as envisioned by Ayn Rand, is one in which entrepreneurs and small businesses are able to enter into mutually profitable transactions with other businesses while avoiding the intervention of a monopolistic or state-run authority. In her novel “Atlas Shrugged” John Galt, an American industrialist, complains that the government has grown too big and control the free market by driving up the cost of goods and forcing companies to build too much wealth and sell too little to get the market share they need.
This is how capitalism operates in Ayn Rand's novel “Atlas Shrugged.” The novel is marketed as a call for protection against the evil collectivists who are conspiring to control the free market through monopoly, collusion, and crony capitalism. Of course, in reality, the free market is just a system where businesses compete and try to provide the best products at the lowest possible prices. It is not controlled by anyone except for the businesses themselves. Thus, businesses need not fear competitors or the whims of some overarching government bureaucracy.
Yet, in the hands of someone who loathes the free market, such protection can be used to unfairly benefit one type of business over another. Monopoly is such a problem. For instance, in this type of business a monopolist sets the price that every business has to pay in order to gain a foothold in the marketplace. If a business fails to keep up with this monopoly price, it is illegal to sell its products in the market unless it re-defers from this price and allows other businesses to sell its products.
Capitalism like system works much differently. Here, the government plays an active role in fixing market conditions by changing the laws to create a competitive environment. In the case of business competition, this might involve the re-distribution of wealth so that those at the top of the ladder have more money than everyone else. In this way, the rich get richer while everyone else has access to affordable services. And this is why most people prefer to work in a free market since it is more likely to lead to fairer outcomes.
So why do people hate capitalism? One answer could be that it is too complicated for the lay-person to understand. Another is that it is run by crony capitalists who benefit from the cost of providing the public with the goods and services. Another reason is that it is unenlightened about the true nature of the free market system. It tends to romanticize and idealize the free market system as if it were a magic elixir that produces wealth without effort. This is wrong and misleading, as the free market is anything but a fairy-tale paradise.
However, the flaws of capitalism do not apply to other systems as well. For instance, in a centrally planned system there would be no room for entrepreneurial activity because the state would control the distribution of resources and act as the regulator of prices. And as mentioned earlier, some kind of rent extraction would be necessary in order to ensure that people are sufficiently motivated to work. And so, while we shouldn't deny the fundamental goodness of free markets, we must also admit that a free market is the optimal solution for ensuring social stability and economic freedom.
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