Abstract:

Free market system in the Liberal Economic paradigm means that when each individual acts in his or her self-interest, the welfare of society is automatically assured. This is so called "invisible hand" of Adam Smith which insures the social welfare, even though individuals seek their own interests. In order to have such a system, one has to assume: 1- large number of firms which produce homegenous products, 2- free entry and exit in the markets. Yet, these assumptions also mean that there would be no "economic power" of any individual actors. The reason is obvious: the first assumption implies that no firm has any power to influence the market conditions in which it operates, the second, if any one of them got such power, it can not carry out too long because of competition which comes from new firms entering freely into the market. Therefore, in order to teorize an "ideal" economic system, the Liberal paradigm tries to exclude the "economic power" from the economic analyses and many unsettled discussions in today's economic issues are in someway related to this effort. 

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