Economics Essay Final Draft

Jordan Ross

Economics in a Changing World

Mr. Bloom

12/1/11

Is a Free Market Economy Greedy?

            Mahatma Gandhi once said, “Earth provides enough to satisfy every man's need, but not every man's greed.” In this statement, Gandhi acknowledges the tension between satisfaction and greed. Gandhi essentially separates what people need, from what people want: the need being what is sufficient, and the want being what is selfish. Greed often emerges in relation to the economy. Greed is personified in a free market economy.

            Before understanding a free market economy, one must first define greed. Greed is defined as “An excessive desire to acquire or possess more than what one needs or deserves,” or the wish to gain more than necessary.

            Some economists like to justify a free market economy by using the term, “self-interest.” It is simply a kind twist to the phrase, interested in oneself, or greedy. However, self-interest is a selfishness that transpires to both ends of the free market economy.

            On one end lies the firm, or the buyer. A firm’s greed begins in the production of its service or good. In order to produce a good, a cost of production is charged to the producer. The product is then sold at a price for revenue. The revenue gained, minus the cost of production, creates the profit. In a free market economy, a successful firm is a business with a maximum profit, through low cost of production, and large revenue. But, to achieve a large profit, the firm must rely on greed and selfishness. One can lower the cost of production by cheaper materials, non-educated labor, or outsourced labor, all of which increase the amount of profit, and greed. Firms also falsely advertise goods at higher prices to gain larger revenue, resulting in a larger profit. The attempt alone to increase profit is an act of greed.

            Yet, maximizing profit is not the only selfish tactic used in a free market economy. Competition is another staple of the free market economy that promotes greed. Competition occurs when two or more firms produce the same product. In order to attract the most consumers, the firms will continuously lower prices of their goods and services to make a quick buck of the consumer, while eliminating the competition that cannot keep up. Competition is a bloody and greedy concept that is not only used, but is also promoted in a free market economy.

            Greed is also prevalent on the consumer’s side of an economic transaction. A consumer, or buyer, will always try to maximize their utilities. Maximizing one’s utilities is accomplished through using the least, to attain the most. The greedy consumer’s will buy from the firms with the lowest cost. This not only lowers the profit of the firm they purchased from, but it also negatively impacts the firms they did not decide to buy from by not adding to their revenue. This greedy cycle occurs because a free market economy promotes it.

            Some call the free market economy a necessary evil. This is due to the vast success the free market economy has had on a global scale. While successful however, it is one of the most greedy standards in the modern economy. The greed infested within both the consumers and the sellers tend to balance each other out. The greed of both parties seems to ironically keep them united and honest. The necessary evil of a free market economy will never achieve peace, but then again, not everyone wants it to.