Free Markets

A free market is an economic system where goods and services are produced and exchanged based on voluntary choices rather than government control.¹ It operates through the interaction of supply and demand, with individuals freely deciding what to buy, sell, and produce. Grudem describes it as “a wonderful, God-given process in human societies through which the goods and services that are produced by the society (supply) continually adjust to exactly match the goods and services that are wanted by the society (demand) … entirely through the free choices of every individual person in the society rather than through government control.”² This structure relies on honesty, private ownership, and personal responsibility.

Why Is Limited Regulation Still Needed?

Even the freest markets require some government oversight. Grudem explains that laws must prevent fraud, enforce contracts, and protect public health and safety.³ For example, weights and measures need to be accurate so consumers are not cheated, food and medicine must meet health standards, and restaurants must operate safely. He connects this limited oversight to the biblical duty of government “to punish evil and to praise those who do good” (Romans 13:4). Regulation at this level supports justice without controlling the economy.

What Moral Principles Support Free Markets?

Grudem teaches that certain moral truths in Scripture uphold economic freedom. The Bible affirms private property, as seen when it prohibits theft (Exodus 20:15) and warns against rulers who “take” from the people (1 Samuel 8:10–18). It also values human liberty, allowing individuals to work, trade, and steward their resources as they choose. These principles, he argues, oppose systems such as socialism or communism, where government ownership dominates. In his view, “nothing in the Bible’s teachings on the role of government would give the government warrant to take over ownership or control of private businesses.”⁴ Free markets, then, fit the biblical pattern of justice and personal stewardship.

What History Shows About Free Markets and Control

History, Grudem notes, displays the stark contrast between freedom and control.⁵ During the Cold War, he observed that West Berlin, under free enterprise, was bright and prosperous, while East Berlin, under communist control, was impoverished and dreary. Similarly, he compared markets full of food and goods in Helsinki with the empty shelves and low-quality products in Leningrad. The difference did not come from geography or culture but from the type of economic system in place. Free markets produced variety, value, and growth; government control led to scarcity and loss of hope.

How Does a Free Market Encourage Productivity?

Freedom connects effort to reward. In a free market, workers can pursue jobs suited to their talents, and employers can hire and reward based on performance.⁶ This connection motivates better training, diligence, and quality work. The same process gives consumers satisfaction because businesses must compete to serve real needs. Prices naturally adjust to coordinate countless local decisions—what to produce, how much to make, and at what cost—without central planning. Grudem calls this coordination “almost miraculous,” since “no person or government agency or planning board directs all this activity, yet it all gets done.”⁷ Even simple items, such as pencils, involve thousands of independent decisions aligning through voluntary exchange.

What Happens When Governments Control Markets?

Heavy government intervention, Grudem warns, distorts natural price signals and reduces efficiency.⁸ When prices no longer reflect reality, some goods are overproduced while others become scarce. This mismanagement wastes resources, raises taxes, and diminishes personal freedom. People end up waiting for rationed goods instead of freely purchasing what they need. In his view, such control burdens both the economy and the individual, replacing opportunity with dependence.

References

1. Wayne A. Grudem, Politics - According to the Bible: A Comprehensive Resource for Understanding Modern Political Issues in Light of Scripture (Grand Rapids: Zondervan, 2010), 274–278.

2. Ibid., 274–275.

3. Ibid., 276.

4. Ibid., 277.

5. Ibid., 278.