Unit 2.12: The market’s inability to achieve equity (HL only)
IntroductionThis is the last of the Market Failure units and considers the strengths and weaknesses of both market based and interventionist approaches to development / economic growth. The page considers whether or not a market based economic system is moral but also whether it is capable of provide equity to all of its members.
Is the market able to achieve equity?
Is capitalism moral?
Lesson time: 70 minutes
Understand whether a free market economy may result in an unequal distribution of income, wealth and opportunity.
Recognise that high rates of economic growth does not always bring benefits to a nation.
Activity 1: The free market
The following two videos paint a very different picture of free market capitalism. Watch both and then discuss which of the two arguments you find most convincing.
Activity 2: The importance of strong institutions to help regulate free market excess
The following video highlights the importance of strong institutions in regulating the excesses of the free market and promoting development. After watching the video highlight the institutions required to help a nation develop.
Activity 3: Theory of knowledge: Is capitalism moral
Watch the following videos and then decide:
Activity 4: Negative externalities of unrestrained economic growth - a focus on China
The following video focuses on some of the negative externalities of unrestrained economic growth in China. After the following video answer the questions that follow:
(a) Explain why the high rates of air and water pollution in many Chinese cities represent a negative externality to unregulated free market growth.
(b) Illustrate the negative externality on a suitable diagram, showing the size of the welfare loss.(c) How does the video highlight the merits of the argument that the most effective method of improving living standards in an economy is through a mixture of free market and government interventionist methods.