The market economy means an economy that is organized labor. This means that the tasks are in the economic and social order held by different agencies. The market economy works through the integration of supply and demand. The offer, which offer the producer to the consumer is determined by his request or demand. These two elements go hand in hand a functioning market economy. Basic conditions for the market economy are property rights (that is, private production and accumulation of capital are permitted), freedom of contract and a competitive system to be provided by the state legal rules that do not work, however, to regulate. The market economy is clearly separated from the subsistence economy, which provides that market participants to produce only for themselves or for barter goods for goods. In the market economy, every agent is planning for himself what the command economy is not the case.

History of the Market Economy

As a crucial prerequisite for a market economy is the introduction of money. Before Greece, the coin was put into use, there was there before 400 BC, nor the subsistence economy. Action was still trade for goods produced or things like food or clothing for themselves as far as possible also in the entire Roman Empire was living as a facilitating agent for driving commerce and industry. In the Middle Ages, so in the period 500-1500 AD, there was next to the natural economy, but based on just the squares back to exchange, also quite a market economy. The craftsmen were organized in guilds, associations or councils, which govern trade through personal relationships and agreements in the cities of the middle ages. The guild presented a sufficient income to the individual craftsmen's associations, certainly limited by the number of approved production sites. The balance between production and consumption was then transferred to this markteingreifende measure into balance. These regulatory measures being considered for use by the dictates of the production methods, the insertion of tools or technical innovations.

The market economy in the absolutism

Today's capitalist market economy goes back to the days of absolutism. Between 16 and 18 Century, early modern states were formed out that assumed a more central force in the form of monarchy, which took more influence on the economic situation. With the establishment of bureaucratic institutions and their maintenance have been increased resources needed money. The creation and maintenance of military units, which was the first time ever from paying standing armies, was the drive for more money for the King or government bigger. This would achieve the desired amounts of money individual states by an expansionary monetary policy. We therefore tried in foreign trade to come to money, what the dealers in Europe but was always valid, but was operated only now increasingly rigorous. This time economy, and that of mercantilism afraid, is not afraid to break the local markets and to force up to the task. For profit sacrificed to the regional and local small farmers and artisans in favor of cheaper products from the anonymous and global market.

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