Market Vs Non-Market Economies

Economics, in reality is the study of how a whole society uses scarce resources that have alternative uses. Economics is about how a society economizes and how individuals share, without even being aware of sharing. There are many other possible ways of allocating resources, and many of these alternatives are particularly attractive to those with political power. However, none of these alternative ways of organizing an economy has matched the track record of economies where prices direct what resources go where and in what quantities. Thus, when a hurricane, flood or other natural disaster strikes an area, emergency aid usually becomes both from FEMA and from private insurance companies whose customers’ homes and property have been damaged. Allstate cannot afford to be slower in getting money into the hands of its policy-holders than State Farm is in getting money into the hands of its policy holders. A government agency, however, faces no such pressure. There is no government rival agency that these people can turn to for the same service. Henry Ford continued producing the same standard model car year after year, all painted black. GM began changing body styles and painting them different colors. Ford began losing customers. GM soon replaced Ford as the number one automaker. While some businesses can and do cut corners on quality in a free-market, they do so at the risk of their own survival. The great financial success stories in American industry have often involved companies almost fanatical about maintaining the reputation of their products, even when these products have been quite inexpensive. A business is NOT just selling a physical product, but also the reputation which surrounds that product.