ABSTRACT
The free market economy asserts that the prices determined by the free will of the participants in the markets guides the economy in the interests of all individuals in society. Starting with the Industrial Revolution, it was witnessed that the conditions in the labor market were far from producing results that would meet the expectations and the aspirations of the people: labor was exploited and worked for a subsistence level of income under very inhumane working conditions. These conditions were clear indications that the free market economy was not able to function in the labor market. Therefore, a different system, the collective bargaining system, was developed to determine the wages that would be considered to be fair wages by society. The lack of balance of power in the labor markets between the buyers and sellers was the main cause of setting aside labor markets and formulating a different model to determine wages.
