Should People Take Advantage of Market Forces?

Whether people should take advantage of market forces

In modern society, the forces of the market become more and more important, because most of the world economy is market economy. Harberger (2002) argues that people should harness these forces of market so as to benefit the society. However, not all the forces of market are benefit to people, they are divided into the powerful forces, such as the market with the correct information on time, and the adverse forces, such as the market with the imperfect information. Therefore, the main thing is that people how to distinguish and how to make use of the forces of market. This essay will argue that people should make different decisions to face the various of conditions for economy, the best way for the development of economy is combing the market forces with the government intervention.

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To begin with, we should know the definition about the forces of market. According to Stewart (2007), which goods and services provided by a market , the forces of demand and supply standing for the aggregate influence of self-interested consumersandproducerson price and quantity . And excess demand leads to prices and quantity of supply to increase, and excess supply causes them to fall in principle. Thus, the forces of market mean that the market guiding caused by change between the quantity of supply and demand, which give governments or producers a signal that how much to provide or produce. For example,…. Therefore, the forces of market are very vital for the development of economy.

On the one hand, the forces of market would benefit the development of society if people can differentiate between good and bad market fores and people also can conform to rules of the right market forces ( Goldstein 2013). Firstly, for example, Yan (2013) argues that it has been rightfor China onthepathof socialismwithChinese characteristics or market socialism started by thethe reform and opening-up policy since 1978, which adapted to the forces of market. Theeconomicreform has led to the remarkable achievements on China, because, today’s China,thesocialist marketeconomicsystem isgrowing, the aggregatenationalpower is enhancing,and the level of people’s living improved significantly.For instance, according to Waldron (2007), owning to the economicreform, in China, there are few direct supervisions to the trade of sheep and sheep meat in markets, so these merchandises are relatively open and free, which leads to an positive effect on these households and even can have an influence at an industry-wide level. So the basis for comprehending progress in the industry and the effects on its participators is the market driver which is value-added. Therefore, the mostoutcomesin China’seconomy are determined by the marketforces,in other words, in order to help people outof poverty, thebusinessmarketisthe strongest force foreconomicgrowth, which is afactthathelpsexplain a plenty of Chinesesuccessincreatingwealth.

Secondly, despite the multifaceted pressures smithing industry progress, market drivers arguably offer the most powerful adaptions of where the industry might be moving in the longer term. That is, systems, policies and industry structures will change as the industry moves beyond its current, early stage of development. With the industry matures, the market forces will lead to the industry rely on a more basal set of drivers primarily. These market drivers are discussed below according to consumer trends, prices and returns to producers (Waldron, 2007).

In addition, Ollman (1999) argues that there are some main positive effects on the market economy caused by the market force, no matter whether the society is advanced or not. For instance, firstly, for firms, it is necessary for firms to have competitions with other different firms, because it not only can lead firms to decrease the cost of product, increase efficiency, but also can motivate them to has the unique selling points. Therefore, firms should make use of the forces of market so as to attract more consumers and get more profits, which would benefit both producers and consumers. Secondly, for people who are in work and especially have the performance tasks, in order to get more earnings and avoid losing their jobs, the workers will learn the new knowledge and skills acquired by their work activity. Thus, the forces of market would encourage the employees to work more hard, which is a good thing them and companies. Thirdly, for consumers, the forces of market can promote the people to select and buy the products which they like, which can give the producer a feedback that which products are most popular with consumers. Fourthly, for investors, the forces of market can lead the investors to invest the products which has the marketability. Moreover, the forces of market are also very important for students. Coxe (2002）discusses that why students should keep their eyes open for the behavior of the stock market. The answers for it are that the broad bear market has the significant effects on students and the awareness of investment is very important. And he suggests that the students need to be trained the capacity of market forecasts job by the university. Therefore, the fores of market have many benefits for society and different people, which rather than the government would promote the development of economy.

Because it’s different this time when many university students could not have cared less about a bear market. Pulled by the spectacular crash of technology and the stocks of telecom , global equities into their second-worst bear market since the Great Collapse of 1929 is an event students have a hard time ignoring. From the discussions with kids at campuses in Canada and the U.S., he has gleaned reasons why they think this bear market has meaning for them. Firstly, it’s because so many of them bought into the idea that the new technology was the revolution that would change everything. It would provide them with their pick of cool jobs with flex hours, and a great chance to make a lot of money while still young, without having to wait for those baby boomers to retire. That money could come in pay, and it could come in stock options.

Secondly, most of them knew young people who had those cool jobs who have recently been fired. Thirdly, many followed the stock market, particularly the high-flying tech stocks. Finally, there was growing fear that this bear market was so severe that it meant a long-term recession. What job opportunities of any kind would graduates have if the economy did an imitation of Japan?

On the other hand, the forces of market are not always benefit the society, they are also have the disadvantages . The first reason for this is that according to Griffiths and Wall (2011), market failureis a condition that the distribution of goods and services in a free market is notbusinesslike, which includes the imperfect information as so on. And the imperfect information means that where sellers always have more information than buyers, which is often called ‘information asymmetry’, for example, the seller has information not available to the consumer of a used car about its quality . So, the market failure would lead to the moral hazard, limit the role of market, and make the market mechanism out of order . Thus, the realmarket in fact isonewithmarket failure, it means that in order to avoid someunnecessarylosses, people should recognize the different market information rather than always rely on the forces of market when the market with wrong information.

The second reason for the forces of market has some adverse effects is that because firstly, for workers, in a market economy, in order to decrease the product cost and get more profits, most firms adopt the solution including wage cutsand layoffs, which is not only unfavorable for the employees but also harmful to the social stability (Ollman, 1999). Secondly, for farmers, Foxglove (2010) indicates that although the forces of market are very important for farmers because the market information can tell them which agricultural products are much demanded by people, it also would result in the excess supply, which can lead to a new economic issue for producers. Thirdly，for society, the economic society would be more unbalanced caused by the market forces, for example, the rich are getting richer, the poor are getting poorer (Ollman, 1999). Lastly but importantly, for environment, in order to pursue more economic interests, some of the people pollute and damage the ecological environment, which caused by the promotion of the forces of market, such as the increase of demand of some materials (Stavins, 1996). For example, in order to meet the needs of commercial purposes, Japan always catches and kills a plenty of whales with the disguise of scientific research (Moore, 2014), and some countries reject the emission reduction, such as American (Wilcox, 2001).

Thus, the development of the economy needs the government intervention not only depends on the forces of market because the market has the failures.

Government intervention in the market economy

1. Tax
2. Spending

Even if government intervention is designed to be market conforming, markets are often poorly understood, misinterpreted and there are inevitably response lags, while market based objectives are sometimes traded off against other social and strategic objectives.

Technological changes can alter the relative profitability or access to production, processing and distribution activities. Thus market drivers discussed in this chapter must be seen in context with other drivers and factors discussed elsewhere in the book.

References:

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Harberger, A., (2002). ‘Interviewed on Commanding Heights’, PBS, Episode One, chapter 11. Available from: http://www.pbs.org/wgbh/commandingheights/ . Last accessed on 29 October, 2014.

Stewart, I., (2007). ‘ MARKETFORCES ’, Nature, March, Vol. 507, Issue 7492

Yan, Y. X., (2013) . ‘Themainachievementsofthereformandopeningupthree

decades’, The Australian Journal of Chinese Affairs, pp. 1-23

Waldron, S. A., (2007). ‘China’s Livestock Revolution : Agribusiness and Policy Developments in the Sheep Meat Sector’, CABI, April

Coxe, D ., (2002). ‘Why students can’t ignore the market’, EBSCO, Vol. 115, Issue 46, p81. 2p.

Ollman, B., (l999). ‘Market Economy: Advantages and Disadvantages’, Dialectical Marxism

Griffiths, A. and Wall, S., (2011). ‘ Economicsforbusinessandmanagement ’, Financial Times Prentice Hall, 3rd ed, chapter 8

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Wilcox, J. , (2001). ‘Putting a value on the environment’, Modern Power Systems, April, Vol. 21, Issue 4, pp. 17

Foxglove, S., (2010) ‘ MARKETFORCES ’, The Conference Board Review, October

Moore, M. J., (2014). ‘ How we allkillwhales ’, Journal of Marine Science, Vol. 71, Issue 4