There is such a thing in the market economy as price liberalization. This phrase means that the state sets prices free from restrictions on the market, thereby encouraging the activities of entrepreneurs. The process of such pricing gives flexibility to the entire system of the economy as a whole and leads to an increase in production. As a result, competition in the market increases, manufacturers are forced to come up with new interesting ideas and improve the quality of goods. In other words, price liberalization leads to the emergence of a free pricing system in the state. This is due to the fact that the government in this case can partially or completely withdraw its functions of direct price regulation.
Here's what, for example, price liberalization in the USA looks like. In this country, prices for dairy products are regulated by Congress, which sets only the optimal price border. If the prices of dairy products fall below it, then the state buys all these goods in order to send them for export or charity.
In the regime of a planned economy, which is characterized by tight control over all values (they are set above), price liberalization is simply necessary. It is it that allows capital in the economy to move freely, and the market for goods and services to become more mobile. In addition, properly implemented price liberalization allows reducing the level of bureaucracy in the field of economy and expanding the possibilities of investment inflows and access to the international market.
Price liberalization is currently known in two ways. The first option, inherent in the countries of Eastern Europe and Russia, is the method of "shock therapy." She is known to many who survived the unrest of 1992.
The second option, the milder one, is called “gradual liberalization”. This is the system of transition to free pricing that most developed European countries adhere to. By the way, this is exactly how Vietnam and China developed in their time, in 1973 - 1986 - France, and after the Second World War, the countries of Western Europe.
As for our country, price liberalization in Russia took place in the very first month of 1992. It was then that the state freed from its regulation the price of all products except milk, bread and tickets for travel by public transport. A decree on free trade was issued. Each citizen could convert their money into currency. In addition, the share of imports of goods produced in Russia increased. I must say that price liberalization in Russia was thoughtlessly and swiftly. So, by March 1992, politicians and the population had fully experienced the method of “shock therapy” - hyperinflation occurred by 2600%. All this led to the depreciation of money, including the money that many Russian citizens had in their bank accounts.
The authorities had to introduce coupons for many goods and issue them to Russians, and enterprises - to issue loans. Since working capital was now in short supply in factories and plants, wage delays began to occur . By the way, salaries also depreciated. But unemployment increased, the difference between the rich and the poor was sharply marked. Undoubtedly, the “Gaidar” reforms have borne fruit.
Now there was no shortage of goods in the country , but their prices increased 30 times, but the income of the population over the year decreased by almost 50%. The reform especially hit retirees and public sector employees. Now many analysts say that the mistake of the monetary reform of that time lies in the fact that politicians thoughtlessly implemented the theoretical recommendations of the monetarists, without taking into account the specifics of the Russian economy.