Understanding the Constitutional Concepts of Free Private Initiative and Social Market Economy

Abstract

The present paper seeks to explain, in a simple and general way, the adequate application of the concepts of free private initiative and social market economy, collected from the general principles of the economic system of the 1993 Political Constitution of Peru. The effects of a free market complemented with the model of social justice and the scope of the intervention (or lack of intervention) of the State are explained to achieve a better price and quality of the products in favor of the consumers or users of the goods and services. Thus, it is possible to ensure their interests and balance the asymmetry of information between supply and demand. In addition, this analysis is complemented with an explanation of the principles of free enterprise and freedom to work, economic pluralism, principle of subsidiarity, free competition, consumer protection, freedom of contract and free possession of currency (foreign exchange holdings).