Why Is a Free Market Economy Better Than a Socialist Economy?

            The liberty principle for this Freedom Friday is the simple fact that a free market economy is better than a socialist economy. We have been living under conditions much like socialism would provide for about a month. Americans are not used to going to grocery stores and finding empty shelves. This may have been one reason why Bernie Sanders ended his quest to become the Democrat presidential candidate. Getting a bitter taste of socialism likely changed a lot of ideas about it.


            The Heritage Foundation has been publishing an annual Index of Economic Freedom since 1995. The annual report puts the nations of the world in a list depending on their governmental policies that develop economic freedom and promote greater prosperity. Heritage Foundation President Kay C. James recently emphasized the difference between free markets and socialism.

The debate in the United States over whether to move away from free markets and toward socialism may change dramatically as the latest coronavirus spreads throughout the world. That’s because in the fight against the global pandemic, we’ll likely witness one of the most compelling arguments in our lifetimes emerge in favor of free market systems – lives will be saved in the process.

The pandemic will demonstrate that nations with the freest markets and freest people tend to have the health care systems with the greatest capacity to handle such a crisis. Free-market incentives have produced health care systems that have better capacities in terms of beds, equipment and medical personnel to handle increased caseloads. Those incentives have also spurred innovations that have led to some of the greatest medical advances in history.

Moreover, nations with both private-sector companies that are financially incentivized to work quickly for a cure, and governments willing to remove regulatory obstacles to innovation are more likely to develop the treatments to abate the disease or possibly even find a cure.

            The best way for the United States or any nation to emerge from the catastrophic economic damage from fighting the corona virus will be to let the free market lose to do what it does best. This is one reason why President Donald Trump is so anxious to open the country once again. The free market system known as capitalism has proven that it has policies that work time after time.


            Anthony B. Kim of The Heritage Foundation followed up on the article by James and wrote an article with charts showing the “critical importance of preserving and advancing economic freedom. The charts illustrate the truthfulness of the following statements by Kim.

1. Economic freedom creates wealth. Countries with higher levels of economic freedom have much higher per capita incomes than others.

2. Economic freedom promotes innovation. The positive link between economic freedom and higher levels of innovation ensures greater capacity to cope with various challenges, ensuring a virtuous cycle of creativity and vibrant economic growth.

3. Economic freedom promotes health security capacities. The link between economic freedom and overall human well-being is undeniable. People in economically free societies live longer, have better health, and take better care of the environment.

More critically, they also tend to have greater capability to counter infectious diseases that know no borders, such as the current coronavirus pandemic. Indeed, as The Heritage Foundation’s National Coronavirus Recovery Commission points out, “Good public health policy is good economic policy.”

            Kim concludes his article with this statement, “An economically free and dynamic American society can provide the strong response we need now in resurrecting our livelihoods.”


            The truth is that American capitalism must be set free as soon as possible to work its magic to get the United States open for business once again. We must have a strong America because there are many other nations in the world that will not be able to regain their economic strength without our help. If the United States is too weak from fighting the coronavirus to take care of its own citizens, the nations in Africa will be in even weaker condition. The free market system is the only system that can rebuild wealth quick enough to save the world from the ravages of the coronavirus.