One of the elements of capitalism is that businesses that cannot compete in the current environment should be allowed to fail. That is part of the free market philosophy. However, that would also assume they were not burdened by regulations such as a minimum wage. In truth, though, the minimum wage is meant to make correct for an inefficiency in the market. We assume the free market works because of the assumptions of rationality and accurate information about prices. Can anyone think of how these assumptions don’t work in the labor market, and how a minimum wage may correct these issues?