Free Economy

What is free economy and how is it working?

Once Murray Rothbard, an American economist, a philosopher and a political theorist once said "It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”

http://thefreeeconomy.com/

The concept of Free Economy is one of the latest trends which captivated the market and the marketers. The sheer influence of free economy day to day life cannot be ignored. So, what is this free economy? According to Wikipedia definition it is an economy based on supply and demand where attributes of economy like investment, production, and distribution are interrelated among each other on the basis of free price system. What it means, the price of the goods and services are free.

http://en.wikipedia.org/wiki/Market_economy

The first experiment of free economy goes back to history when King Gillette, the founder of Gillette razor and shaving cream gifted freebies like Wrigley's gum to packets of coffee, tea, spices and marshmallows. From the below mentioned link we can get to know more about it which I'm going to explain in the later stage of this post.

http://www.wired.com/techbiz/it/magazine/16-03/ff_free?currentPage=all

He was in his late middle ages and still he was an unsuccessful salesman of cork lined bottle caps. He belonged from a rich family and inherited most of their wealth which brought him hardly any chance to work. His philosophy on market was that there should be a single corporation owned by the public. The idea of free items struck in one of the days when he was shaving with one of the straight razors. These straight razors could not be sharpened and after multiple usages these were useless. So, the idea came from this thought when thought of making something which men can discard after use rather than spend their valuable time and energy on maintaining the blades. It was very difficult for him to do it as his idea was a noble one and was out of the box. During the war period he started to sell of the razors to Army at a great discount. He often used to give freebies like Wrigley's gum to packets of coffee, tea, spices and marshmallows which were bundled with the razors. The freebies boosted up the sales and helped him to make a mark of his products in the market.

In the age of free economy we're indebted to this man who showed us the way that even one can make money by giving something away without charging a single cent for it. Later the idea of cross-subsidy came from this ideology where one can get a free thing if he/she buys another item. Another example in the recent ages is the installation of Cafe Coffee Day (CCD) vending machines being installed in the organizations absolutely free. This helps them to sell their coffee sachets, beans at a fixed and steady rate. This concept of selling is much dynamic compared to selling their products in the market.

Even since the advent of Facebook, it has been free and it will always be. Google as a free search engine earns it revenues from the Adwords which they create. Last year, Google earned around $42 billion only from Adwords. Even, when we access YouTube videos, we get to see them free. So, we can see the influence and ideology getting things free is immense and the penetration level is to the core where every user gets the benefit out of it. Every industry which has become digital has become free.