Sample Essay: Neoclassical View Of A Free Market System

One of the easiest ways to learn to write a definition essay is to find several good samples, study them and try to follow their structure. If you do everything right you won’t need any essay help. So here’s one of the definition essay samples.

a book with sample essays According to the Economics Encyclopedia, neoclassical view of a free market system is a collection of assumptions customarily made by mainstream economists starting in the late 19th century, including profit maximization by firms, utility maximizaiton by consumers, and market equilibrium, with corresponding implications` for determination of factor prices and the distribution of income. Contrasts with classical, Keynesian, and Marxist. [1]

Neo classical theory holds that economic growth is caused by [1]:

  • increase in labour quantity (population growth)
  • better labour quality through training and education
  • increase in capital (through higher savings and investment)
  • improved technology

Underdevelopment is seen as the result of inefficient government planning of resource allocation and state interference in markets through price regulation. State intervention inhibits growth because it encourages corruption, inefficiency and offers no profit motive for risk taking. In this model under development is internally induced. [1]

The ‘solution‘ lies in the introduction of a free market economy. Economic growth only comes about if the government encourages [1]:

  • Competitive free markets
  • Privatisation of state owned industries

A move from closed (no trade) to open (trading) economies. Opening up the domestic economy through free. This introduces the funds for investment, hence capital accumulation, higher output and income and hence higher savings ie Harrod-Domar growth. This model assumes third world markets are both developed and efficient any market failures (say in co-ordinating investment, non-availability of information, or environmental damage from output) to be of little consequence. Equity criteria (ie income distribution issues) are also ignored. [1]


1. Economics. Retrieved at:

Need more tips on high-quality essay writing? Browse our blog – we have plenty of information on academic paper writing.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>