Md. Joynal Abdin
The Daily Star, July 24, 2008
A free market economy ensures a competitive market where the rights of buyers as well as sellers are protected. What is free market? A market will be treated as free market when it fulfills the following conditions — price of the product will be fixed through bargaining, there will no action taken by anybody to control demand and supply, there will no action taken by government to fix prices, etc.
But, what goes by the name of free market economy in Bangladeshi market? Is it a free market? Here sellers are not going to compromise with the buyers. The sellers fix the prices, leaving the buyers without any options. The first condition of free market economy is, thus, missing .
What are the reasons for this? The main reason is that the sellers are united, and they have several committees and cooperatives or syndicates. Instead of price fixing through buyer/ seller bargaining, syndicate leaders fix prices to maximise their profit. On the other hand, buyers are scattered. They do not have any platform to counter the syndicates or sellers’ forums. The government also does not try to counter this syndication, and, unfortunately, does not recognise the existence of such syndicates.
Bangladesh is a so-called democratic country. During the election, held every five years, political parties take commissions from these business communities to meet the election expenditure of the party. As a result, after winning the election, they never try to stop such syndication of the sellers. Not only this, a good numbers of business leaders are also engaged in politics. They buy nominations from different parties to maintain a favourable business environment for themselves.
The second most important condition of free market economy is that no group will interfere in controlling demand and supply. But we see that business syndicates control the supply and create an artificial crisis in the market to increase prices of the commodities. As a result, inflation takes place, which makes people’s lives difficult. The government never tries to balance the supply of goods in the market through its own departments, like TCB and others.
The third condition of free market economy is that the government never interferes in price fixation. Our past governments had efficiently played this role.
After considering all of the above factors, it is quite clear that we are not enjoying the facilities of free market economy. We are being exploited in the name of free market. Absolute monopoly may be better than this environment, because one group controls a sector in the monopoly market. After making their targeted profit they may reduce market price of that particular product.
If we think about Microsoft Corporation, they make profit in the software market almost like a monopoly (thought they did not get full monopoly because of the intervention of the US government).
There is no difference between a decision taken by one person, or one by a group of sellers. In Bangladesh, the market structure looks like a free market, but is monopolistic in nature through syndication.
Why is fertilizer not available in the open market at government fixed price? How is it available at a higher price? It is because the sellers are united, and promised that there would be no fertiliser available in the open market except at the price fix it. In this situation government is not taking any actions to regulate prices, or making it available in the open market through TCB or other government agencies.
Ultimately, who is being affected? Farmers and general consumers are being exploited. If farmer do not get fertiliser in the open market then production will be hampered. There will be a crisis in the market, which will facilitate further increase of price of essentials.