Liberal market economy - Essay Example

According to Maurice Mullard, there is a linkage between the commitment to liberal democracy and the concept of market liberal economies. The democracy and market economy are linked with each other. In a democratic country, the policy guarantees the people to choose the government. Similarly, the liberal market economy provides choices in employment, consumer products, education facility and provisions of health. The democracy cannot survive without any commitment towards a market economy and the market economy cannot survive outside the political democracy (Mullard, 2004).

The liberal market economy has the potential to outperform the capital economy. The social environmental factors of a liberal market economy are highly influenced through the nature of autonomous work of the economy itself (Pagano & World Institute for Development Economics Research, 1996). The US and the UK economies are strongly anti-trust regulations that forbid the firm’s entrance to financial credit and capital markets that are driven by profitability and expectations of the market. The liberal market economy strongly follows the philosophy of neo-classical economics in which the firms function in a ‘perfectly competitive’ market and are determined by the short term profits (Deller, 2005).

The economist Bennet Harrison and David Gordon viewed that the firms in the US and the UK in the liberal market economy reduces the costs to increase the profit margin in the short run. In a coordinated market economy, firms increase the profit margin through the enhanced productivity, technical advancements and labour training methods. The liberal market economy in view to the bankruptcy as a legitimate business strategy differentiates from coordinated market economies. In the US market, firms use the bankruptcy business strategy as an option to negotiate the labours’ and the suppliers’ contract.

The best example was the United Airlines that used this strategy and restructured itself in reducing the costs (Deller, 2005). This kind of strategy has become well known for the motive of short run profitability that has increased the gap between the primary and secondary labour market conditions. A study conducted by Dirk Akkermansa, Carolina Castaldi and Bart Losc found out that liberal market economy and coordinated market economy comprise diversity economies that illustrate varied patterns of specialisation and in comparison, they are quite heterogeneous across the industries.

The scholars have concluded that the liberal market economy approximately specialises in essential innovations in industries that are related to electronics and chemicals while the coordinated market economies concentrate on transport equipment industry and machinery industry (Akkermansa & Et. Al., 2008). According to Marijana Milic, the liberal market economy follows the philosophy that assists in promoting laissez-faire capitalism, maximum of free trade and competition. The liberal market economy provides rights and freedom to every country in order to enhance the development of the economy according to the supply and demand forces of that country (Milic, 2010).

The liberal market economy has a representative relationship with the states and offers special treatment to the big corporations in concentration of economic power. This influences the people in general due to the