<P> Capitalism has been dominant in the Western world since the end of feudalism, but most feel that the term "mixed economies" more precisely describes most contemporary economies, due to their containing both private - owned and state - owned enterprises . In capitalism, prices determine the demand - supply scale . For example, higher demand for certain goods and services lead to higher prices and lower demand for certain goods lead to lower prices . </P> <P> Laissez - faire is synonymous with what was referred to as strict capitalist free market economy during the early and mid-19th century as a classical liberal (right - libertarian) ideal to achieve . It is generally understood that the necessary components for the functioning of an idealized free market include the complete absence of government regulation, subsidies, artificial price pressures, and government - granted monopolies (usually classified as coercive monopoly by free market advocates) and no taxes or tariffs other than what is necessary for the government to provide protection from coercion and theft, maintaining peace and property rights, and providing for basic public goods . Right - libertarian advocates of anarcho - capitalism see the state as morally illegitimate and economically unnecessary and destructive . </P> <P> Free - market economy refers to an economic system where prices for goods and services are set freely by the forces of supply and demand and are allowed to reach their point of equilibrium without intervention by government policy . It typically entails support for highly competitive markets, private ownership of productive enterprises . Laissez - faire is a more extensive form of free - market economy where the role of the state is limited to protecting property rights . </P> <P> Welfare capitalism refers to a capitalist economy that includes public policies favoring extensive provisions for social welfare services . The economic mechanism involves a free market and the predominance of privately owned enterprises in the economy, but public provision of universal welfare services aimed at enhancing individual autonomy and maximizing equality . Examples of contemporary welfare capitalism include the Nordic model of capitalism predominant in Northern Europe . </P>

Who makes the important economic decisions in a free market economy