A Note on Misconceptions about Market and Non‐market Economies

The traditional analysis of the Soviet‐type economies denies the existence of markets to these economies. The usual argument is that these economies lack freedom and are characterized by the absence of private property. Additionally, the conventional analysis implies that theory of markets is a theory of free markets, one characterized by free economic interaction among economic units (individuals or businesses)regardless of the degree of market perfection. Argues that the conventional economic analysis is wrong in denying the existence of markets and capitalism to certain modern societies (e.g. the former Soviet bloc countries). The central thesis is that the environment in which buyers and sellers interact does not have to be free in the Western sense to be considered as a market. Points out that the economic systems of the former Soviet Union, China, Cuba and others may be characterized as totalitarian state capitalism.