What is a market economy?

A market economy is one in which the government has little to no influence over the direction. This means that the government cannot, or will not, tell businesses which direction to take, and businesses have lower taxes and fewer regulations than they might have in a mixed or planned economy. In general, political conservatives often argue for a market economy, or relaxing government policies on the economy, believing that the government is by definition wasteful while businesses by definition cannot afford waste. By contrast, political liberals often argue for higher taxes and more regulation rather than a market economy so that citizens will have protection and government services.