Voluntary exchange is the act of

buyer Procurement is the process of locating and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. The term may also refer to a contractual o ...

s and sellers freely and willingly engaging in market transactions. Voluntary exchange is a fundamental assumption in

classical economics Classical economics, also known as the classical school of economics, or classical political economy, is a school of thought in political economy that flourished, primarily in Britain, in the late 18th and early-to-mid 19th century. It includ ...

and

neoclassical economics Neoclassical economics is an approach to economics in which the production, consumption, and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a go ...

which forms the basis of contemporary

mainstream economics Mainstream economics is the body of knowledge, theories, and models of economics, as taught by universities worldwide, that are generally accepted by economists as a basis for discussion. Also known as orthodox economics, it can be contrasted to ...

. That is, when neoclassical economists theorize about the world, they assume voluntary exchange is taking place. Building on this assumption, neoclassical economics goes on to conclude a variety of important results such as that market activity is efficient, that free trade has net positive effects and that markets in which economic agents participate voluntarily make them better off. Notably, neoclassical economists—based on the assumption of voluntary exchange—deny the

Marxist Marxism is a political philosophy and method of socioeconomic analysis. It uses a dialectical and materialist interpretation of historical development, better known as historical materialism, to analyse class relations, social conflic ...

definition of the

exploitation of labour Exploitation is a concept defined as, in its broadest sense, one agent taking unfair advantage of another agent. When applying this to labour (or labor), it denotes an unjust social relationship based on an asymmetry of power or unequal exchange ...

as a possibility within neoclassically defined

capitalism Capitalism is an economic system based on the private ownership of the means of production and their use for the purpose of obtaining profit. This socioeconomic system has developed historically through several stages and is defined by ...

. Marxian economics, one of the major alternatives to neoclassical economics, contends that the exploitation of labor is both possible with voluntary exchange and a definitional condition of the capitalist mode of production, among other modes of production. Voluntary exchange is sometimes at the root of arguments about the morality of markets. Market proponents often invoke what they believe is the morality as well as the purported efficiency of voluntary exchange to argue against government mandates, including many forms of taxation. The morality of markets, even those adhering to true voluntary exchange, are nonetheless in dispute. According to Dr Marianne Johnson, there is no theoretical basis for arguing that partially or completely voluntary exchange is preferable to other arrangements such as government mandates.

References

Free market {{economy-stub