What were some of the disadvantages of a free market system without government regulation that appeared during the Industrial Revolution?
The Industrial Revolution showed how many problems can arise if the government does not regulate an industrial economy at all. Here are some of the most important problems that arose during this time that are connected to free market economies.
- Pollution. In a free market economy, there is usually no incentive to avoid polluting. It is cheaper for industries to pour smoke into the air and chemicals and other wastes into the water than it is for them to avoid doing so.
- Poor working conditions. Companies in a free market want to outcompete one another. One way to do this is to spend as little as possible on production of goods. This means that you do not provide safety equipment or anything to make your workers comfortable. It means that you do not pay them much. These things make life miserable for workers.
- Monopolies. Companies want to destroy their competition so that they will have the market all to themselves. During the Gilded Age in the United States, companies gained monopoly powers, leading them to abuse customers and others because they had the power to do so.
- Production of dangerous and/or substandard products. In the late 1800s and early 1900s, big companies were willing to produce and sell shoddy products. They did not have to worry about whether they hurt their customers or gave them things that were unusable.
These are some of the important problems that can arise in a purely free market economy and which did arise in the Industrial Revolution in the United States.