Advantages Of Competitive Private Business Economy Essay

1181 Words Sep 21st, 2015 5 Pages
Assignment 2

competitive private enterprise economy tends to have higher efficiency

Fallacies exist in our daily life, and economics seems suffered from this kind of problems the most compared with other subjects like physics, mathematics or medicine. According to Henry Hazlitt (1979), this is because of self-interest of groups and the persistent tendency of people. For the first one, in oder to pursue certain economic self-interests, some relevant groups would preach some policies which benefit themselves but are based on the expense of other groups. The persistent of men is that people are tend to focus on the immediate effects than in the long run or only consider the benefits of certain groups instead of the all. In his article, he reveals the truth of some representative economic fallacies by analysing these two reasons. In this assignment, Henry’s experience will be used to help analysis the question: is it true that competitive private ownership economy tends to generate higher efficiency?

To discuss this problem, the economic liberalism which was raised by Adam Smith should be first mentioned. In ‘wealth of nations’, Adam Smith (2007) pointed out that, in a market-oriented economy, everyone makes the choice to pursue their own interests so that the social resources can be allocated on the best level under the instruction of ‘an invisible hand’. The late Nobel laureate, Milton Friedman (2007) , even insists that a liberal economy needs to eliminate the…

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