Guardian implies that there really is an invisible hand

Question

Evaluate and explain the statements: “Market is its own guardian implies that there really is an invisible hand or taskmaster that watches over the decision makers in the marketplace”

Answer 1

The statement that the market is its own guardian implies that there really is an invisible hand or taskmaster that watches over the decision makers in the marketplace.  In a pure capitalist system where free markets exist, freedom of enterprise and freedom of choice exist.  However, if one chooses to produce that which the consumer does not want, or at least doesn’t want enough to cover the cost of the scarce resources employed, the producer-entrepreneur will find this freedom of enterprise limited by the decisions of consumers in the marketplace.  On the demand side, consumer choice is limited by the prices of commodities which consumer wants and the consumer’s income i.e. limited by value that the consumer’s own resources can earn in resource markets.