ABSTRACT
The wonderful, automatic mechanism of market forces has a powerful hold over the mindset of most economists. Unrestricted competition between buyers and sellers leads to the evolution of a market price that equates scarce supplies to effective demand. Market equilibrium results with costs close to revenues, normal profits rewarding enterprise and prices signalling what, how and for whom goods should be produced. The role of government in such an ideal world is to establish market institutions and enforce the rules of trade – especially outlawing monopolistic practices that threatened the public interest.
