Capitalism Development in the USA - Coursework Example

Capitalism in the United States

The world comprises of various systems that have been put in place to control how various world affairs are conducted. All these systems are based on some ideals that help them accomplish their goals. It is good to note that there can be more than one system controlling a particular aspect of the world that is, the economic aspect of the world. Capitalism and communism try to control social and economic aspects. This paper discusses capitalism in the US economy, its influence, and makes a comparison between the US and other capitalist nations.

Capitalism: Concept, Meaning, Ideals, and History

This system is mainly based on private ownership. The system is open to new ideas and leaves room for the establishment of news firms and the emergence of new owners. Under this system, the means of production and distribution (land, technology, factories, the transport system and so on) are owned by the capitalist class (Marx & Engels, 2009). The capitalist class makes up a small portion of the population in the society. The other members of the society have to offer labor to the capitalist class in exchange for a wage/salary.

The working class receives a salary/wage from the capitalist class for their labor input in the production of goods and services. The capitalist class then sells the produced goods and services at a profit (Marx & Engels, 2009). The working class is the largest consumer of these goods and services. The capitalist class then re-invests part of the profit realized to ensure further accumulation of wealth. Selling goods and services produced by the working class at a higher price than what cost them in getting the labor ensures that they continue exploiting the working class (Marx et al., 2009). This notion suggests that there are two classes in the society; the capitalist and the working class. This is a vital feature of capitalism.

Another essential feature of capitalism is the profit motive. The main motive behind the production of goods and services is to get profit. It is not to satisfy human wants. Of course, the goods and services produced lead to the satisfaction of human wants of their consumers. This should not be confused as the motive behind their production and delivery. This is because if one is in need of the goods or the services but lacks money, he cannot get them. His wants will not be met (Marx & Engels, 2009). He must part with what the capitalist class wants in exchange for the goods and services. Whatever he has to part with will ensure the capitalist gets profit once he passes its ownership to the class. Part of this money is re-invested to ensure the capitalist class accumulates more wealth. Thus, the main theme of capitalism is to use wealth to accumulate more wealth (Marx & Engels, 2009).

Weber tries to explain how capitalism came about in his works. Max had an academic background in sociology. He came up with the Protestant Ethic Theory that tried to explain what capitalism is all about. In his works, Weber argues that capitalism began in Western Europe. His mother was a Calvinist while his father was a liberal businessperson. In his work, he argued that the Protestant religion provided a fertile ground for the growth a spread of capitalistic ideals (Weber, 2002). He suggested that the growth and development of capitalism started in Western Europe. Individualism forms the basis of capitalism. This stems from the European Enlightenment period of the 18th century that emphasized various humanistic ideals. These ideals suggested that every individual is unique and valuable. Also, they suggested that every person has a unique role to play in the society. When individuals play their special roles, the entire society stands to benefit. Before this period, governments did not recognize human rights. It is this social consciousness that led to the establishment of capitalism where individuals could pursue their goals without interruption by the government. This is to say that real capitalism is embedded in the need to have minimum government interruption in the enterprise. Some countries like the US and Britain had real capitalist economies until the industrial revolution happened in the 1800s. Countries that claim to be capitalist economies currently are in fact mixed economies. They do not fully conform to the ideals of capitalism. Real capitalism is characterized by lack of laws to regulate wages, lack of child labor laws, lack of laws touching on anti-discriminatory practices, and laws on social security. The list is extensive. The current world economies all have these laws, therefore, cannot claim to have a real capitalist economy.

The system of capitalism is based on individualism. This refers to the need to let individuals pursue their interests. Arguably, it emphasizes on the need to allow privatization of wealth in the society. When individuals reach their goals, the overall society stands to benefit. This is the reasoning behind this concept of individualization. Individualization increases the competition in the society for the scarce resources. This leads to maximum utilization of the available resources. The entire society stands to benefits when the available resources are put into maximum use. Critics, however, have argued that individualization leads to exploitation and exclusion of some members of the society from gaining the benefits of the available resources (Marx & Engels, 2009). Smith, however, has countered this criticism by arguing that an invisible hand guides enterprise in the society. In this, he claims that pursuing individual interests, private ownership and competition lead to accumulation of social wealth. Accumulation of social wealth means everybody in the society stands to benefit (Wagner-Ksukamoto, 2013).

Capitalism in the US

The US economy is the poster-child of capitalism since it conforms to all the capitalist ideals. These include allowing individuals to pursue self-interests, allowing private ownership of property, and creating room for competition in the economy. Real capitalist ideals require governments to interfere with businesses minimally. The governments are to play the regulatory roles only in the market leaving the forces of supply and demand to control market prices. In the wake of the threats that such an economy poses to the society governments have increased their presence in the market. This means that they partially subscribe to these ideals. This is the state of the economy in the US. The governments allow individuals in the US to pursue their own goals in the enterprise, own property privately and compete with each other in the market. These enterprising individuals are, however, required to abide by the set rules and regulations in trying to reach their goals. These set rules and regulations are meant to protect the citizens of the US from exploitation, and exclusion from getting the full benefits of the available resources. They are also meant to protect the business community. Being a capitalistic nation, the US allows various ideals of capitalism to be applied in its economy. The ideals that control capitalism are; allowing private ownership of property, leaving room for individuals to pursue self-interests, allowing competition and minimal government intervention.

Competition is one of the ideals under which capitalism is founded. The aspect of allowing a free market economy plays a significant role in this ideal. The United States subscribes to this ideal. In their quest, to accumulate wealth, private business owners try to outsmart each other to attract more customers to buy their goods and services. This has led to heightened business competition in the United States boosting the economy in the process.

Both federal and state governments have tried hard to create a favorable environment that will make businesses to thrive. Although the governments in the US allow private owners to fully take charge of their businesses, they have enacted laws to regulate how businesses are conducted. These laws do not seek to infringe on the rights of businesses owner but just serve regulatory roles.

The regulatory laws in the US have some capitalist connotations in them. A capitalist economy is characterized by class-division, stiff competition, and a profit motive behind the establishment of the businesses. If left unchecked, capitalism can have dire consequences in the society. To avoid this, the US Congress and the state governments have enacted laws to check these aspects of capitalism.

The capitalist ideals that the US economy practices have numerous effects on the economy. Allowing individuals to pursue their interests has boosted the US economy. This has made individuals work extra hard to attain their full potential. This has ensured that resources in the US are put into maximum use which has impacted on the economy positively. Allowing individual ownership of the property has created a sense of security to the capitalist class. This has attracted both local and international investors who have boosted the US economy. Competition in the business sector has boosted the economy too. This has led to an innovative capitalist class. This has resulted to the establishment of new techniques to approach the US market and creation of new products. All these make the US society stand to benefit.

As pointed out previously, the wake of industrial revolution saw capitalist countries adopt a hybrid kind of economy. This means that though the economies retained some vital aspects of capitalism, they were a bit adulterated by ideals of other economic systems. They became mixed economies. One of these tenets that made these economies be viewed as mixed economies is the increased government presence in the enterprise. Previously, the capitalist class had the monopoly of the whole business sector and decided what would happen and how things were to be done. That changed in the wake of the industrial revolution. The government increased its presence in the vital areas of the enterprise. It started regulating prices set by the capitalist class, established labor laws that the capitalist class had to abide by when hiring workers and so on (Marx & Engels, 2009). This is the case in the modern US economy. Both the federal and the state governments have set up laws that have capitalist connotations to regulate the economy. This is done to protect the rights of every US citizen. Previously, capitalist economies were characterized by the violations of human rights. In fact, human rights were not considered to exist during the real capitalism age in those economies.

The Dodd-Frank Act

This is a statute that was passed by the Obama administration. This law affects financial institutions directly. It was meant to regulate oversight and supervision of these institutions among other things. It introduced stricter capital requirements. It established a new agency to control adherent of the consumer laws. To this end, capitalist connotations are evident in this law. The mention of capital takes one to the private ownership of property championed by capitalism. Stricter rules are put in place to control how individuals interested in investing inject their capital into the economy. This is meant to protect the interests of the existing businesses. In other words, this law recognizes the presence of competition in the economy and the need to regulate it. Real capitalism requires that businesses are left to compete in the economy without interruption. This poses a threat to the economy since it can lead to monopolies. Often, formation of monopolies leads to the violation of consumer rights. This law seeks to protect the consumer from the vested interests of the capitalist class among other things. The existence of capital is an idea of capitalism. The Trump administration has attempted to repeal this law. The new law is yet to take charge. The provisions of this statute are still effective.

The capitalist ideals in this law are straightforward. It recognizes the existence of private employers. This is an ideal of capitalism touching on the need to allow private ownership of property. Previously, the employer-employee relationships were not checked in the real capitalist economies. The industrial revolution led to changing of this aspect as government presence increased in the enterprise.

The US capitalist economy subscribes to various economic principles. For instance, to attract customers in order to stay ahead of the competition in the market the capitalist class subscribes to the economic principle that argues that people respond to incentives offered to them in a business. The capitalist class, therefore, make offers in their businesses to lure customers to purchase the goods and services they are offering. Also, the economic principle that argues that markets are usually ideal ways to eject order in economic activities apply to the US capitalist economy. The US adopts both liberal market or free market economy and controlled market economies in its system. These eject good order in the way economic activities are conducted in the US.

Comparison of US Capitalism With the Rest of the World

The form of capitalism in the US is comparable with that of other capitalist countries. Capitalism is the single system that has dominated the world’s social and economic aspects extensively (Robinson, 2007). Many leading economies in the world subscribe to the ideals of capitalism in the modern world. As observed previously, real capitalism ended with the dawning of the Industrial Revolution. No single economy subscribes completely to the ideals real of capitalism. In fact, what exist today are mixed economies. The capitalist ideals that these economies have adopted vary from one country to another. Sometimes they conform to the same ideals.

Latin America

Robinson (2007) suggests that Latin America has adapted to the global capitalism well. It should be noted that the freedom that the Latin America currently has is relatively new in comparison to that of the US. This affects how things are done in the two regions. While Latin America could have made significant strides towards establishing functional capitalist economies, those economies cannot match what the US has achieved in many years it has been a free country.

Both Latin America and the US have mixed economies. The two regions subscribe to the following capitalistic ideals; they allow individuals to pursue their interests, allow private ownership of Property, and encourage competition in their economy. The level of government involvement in these systems is what could give the difference between how these two regions subscribe to these ideals. Most of the countries in Latin American gained freedom relatively recently. They are, therefore, more cautious when implementing various systems in comparison to the US which has gained experience over the years on experimentation. The US has implemented more property right laws in comparison to the nations in Latin America. These are implemented to protect private ownership of property.

Europe

Arguably, Europe has experimented more with capitalism than the US. Max Weber claims that capitalism originated from Western Europe. Before the dawning of the Industrial Revolution in the 1800s, both the US and Europe subscribed to the ideals of real capitalism fully (Weber, 2002). These ideals were characterized with minimal government presence in the enterprise. The capitalist class called the shots on what would happen in the economy. There was no recognition of human rights. This led to overexploitation of the working class by the capitalist class. This led to the industrial revolution. The government involvement in the economy has since risen significantly in both regions. The two regions have a mixed economy. They have both liberal market economies and controlled market economies. Governments in Europe allow private ownership of property, allow individuals to pursue their self-interests and allow business competition, which is still the case in the US.

Asia

The type of capitalism practiced in the Asian region differs a bit different to what is practiced in the US. This is chiefly due to the communism influence in the region. The Asian region is relatively new to the system of capitalism and is still in the experimental stage. Some nations in the region still have communist deeply entrenched in their systems like the Communist State of China (Hundt et al., 2017). The region has adopted some form of capitalism that relates to those adopted in the US, in some areas, like the free market economy and the controlled market economy. These forms of capitalism have maintained their differences there like in the US economy. The region is more cautious in adopting the system and the close proximity of communist states has slowed down this process.

Conclusion

Capitalism controls the US economy significantly. It has helped boost the US economy. In addition, capitalism has made significant strides and controls on the world’s economy. Although capitalism has achieved this feat, real capitalism is no longer in practice. What exists is an adulterated form of capitalism characterized by extensive government involvement in controlling the economy. That said, the system of capitalism controls the largest portion of the world economy.