Show Para
PASSAGE - IV Globalisation, liberalisation and free market are some of the most significant modern trends in economy. Most economists in our country seem captivated by the spell of the free market. Consequently, nothing seems good or normal that does not accord with the requirements of the free market. A price that is determined by the seller or, for that matter, established by anyone other than the aggregate of consumers seems pernicious.Accordingly, it requires a major act of will to think of price-fixing as both normal and having a valuable economic function. In fact, price-fixing is normal in the industrialised societies because the industrial system itself provides, an effortless consequence of its own development, the price-fixing that it requires. Modern industrial planning requires and rewards great size
Hence, a comparatively small number of large firms will be competing for the same group of consumers. That each large firm will act with consideration of its own needs and thus avoid selling its products for more than what its competitors charges is commonly recognised by advocates of free-market economic theories. But each large firm will also act with full consideration of the needs that it has in common with the other large firms competing for the same customers. Each large firm will thus avoid significant price-cutting, because price-cutting will be prejudicial to the common interest in a stable demand for products. Most economists do not see price-fixing when it occurs because they expect it to be brought about by a number of explicit agreements among large firms; it is not
Moreover, some economists argue that allowing the free-market to operate without interference is the most efficient method of establishing prices in all cases, except for the economics of non-socialist countries. Most of these economics employ international price-fixing, usually in an overt fashion. Formal price-fixing by cartels and informal price-fixing by agreements covering the members of an industry are common. Were there something peculiarly efficient about the free market and inefficient about price-fixing, the countries that have avoided the first and used the second would have suffered drastically in their economic development. There is no indication that they have.
Socialist industry also works within a framework of controlled prices. In the early 1970s, the Soviet Union began to give firms and industries some flexibility in adjusting prices that a more informal evolution has accorded the capitalist system. Economists in the USA have hailed the change as a return to the free market. But the Soviet firms were not in favour of the prices established by a free market, over which they exercised little influence. Rather, Soviet firms acquired some power to fix prices.Socialist industry also works within a framework of controlled prices. In the early 1970s, the Soviet Union began to give firms and industries some flexibility in adjusting prices that a more informal evolution has accorded the capitalist system. Economists in the USA have hailed the change as a return to the free market. But the Soviet firms were not in favour of the prices established by a free market, over which they exercised little influence. Rather, Soviet firms acquired some power to fix prices.
Hence, a comparatively small number of large firms will be competing for the same group of consumers. That each large firm will act with consideration of its own needs and thus avoid selling its products for more than what its competitors charges is commonly recognised by advocates of free-market economic theories. But each large firm will also act with full consideration of the needs that it has in common with the other large firms competing for the same customers. Each large firm will thus avoid significant price-cutting, because price-cutting will be prejudicial to the common interest in a stable demand for products. Most economists do not see price-fixing when it occurs because they expect it to be brought about by a number of explicit agreements among large firms; it is not
Moreover, some economists argue that allowing the free-market to operate without interference is the most efficient method of establishing prices in all cases, except for the economics of non-socialist countries. Most of these economics employ international price-fixing, usually in an overt fashion. Formal price-fixing by cartels and informal price-fixing by agreements covering the members of an industry are common. Were there something peculiarly efficient about the free market and inefficient about price-fixing, the countries that have avoided the first and used the second would have suffered drastically in their economic development. There is no indication that they have.
Socialist industry also works within a framework of controlled prices. In the early 1970s, the Soviet Union began to give firms and industries some flexibility in adjusting prices that a more informal evolution has accorded the capitalist system. Economists in the USA have hailed the change as a return to the free market. But the Soviet firms were not in favour of the prices established by a free market, over which they exercised little influence. Rather, Soviet firms acquired some power to fix prices.Socialist industry also works within a framework of controlled prices. In the early 1970s, the Soviet Union began to give firms and industries some flexibility in adjusting prices that a more informal evolution has accorded the capitalist system. Economists in the USA have hailed the change as a return to the free market. But the Soviet firms were not in favour of the prices established by a free market, over which they exercised little influence. Rather, Soviet firms acquired some power to fix prices.
© examsnet.com
Question : 107
Total: 150
Go to Question: