The Failure of Capitalism of the Twentieth Century - Essay Example

The United States plunged into an economic crisis in 2008 and 2009. This situation escalated, and it became an irresistible opportunity for the United States to pronounce the failure of the type of capitalism that had emerged towards the end of the twentieth century. The French President, Nicolas Sarkozy once said, “One had expected competition and abundance for everyone, but instead one got scarcity, the triumph of profit-oriented thinking, speculation, and dumping." According to Sarkozy, the then economic crisis had signaled the return of the state and brought an end to public impotence illusions. Notably, economists regard the state of capitalism as one in which the governments are limited in controlling markets and posing property rights. The majority of political economists usually make a strong emphasis on private property, wage labor, power relation, class, and the uniqueness of the historical formation of capitalism. Generally, capitalism encourages economic growth, and the failure of our economy in 2008 should not be laid at Capitalism’s door.
For one year that is between June 30, 2009, and July 1, 2008, the United States’ total economic output experienced escalating inflation that led to a drop in the economy at an annual rate of 3.8 percent. Historically, this was the worst twelve months of economic decline that the United States had experienced since the year 1946 (Ingham 57). The rate of unemployment that had started declining in the year 2008 at the rate of five percent per annum doubled in the fall of the year 2010. This led to a fall in the number of jobs, a situation that lasted for about twenty-one consecutive months. Towards the end, of May 2010, the median workers were relieved of their duties for a period of twenty-three weeks this is compared to ten weeks when the United States had experienced depths of recessions; that is, between 1973 and 1975. All these economic hard times should not be pegged on capitalism but on poor governance and a poor approach to resolving economic problems (Ingham 89).
Shortly after the election of Ronald Reagan in the United States, a norm of a quarter century become operational, and this is the time or period when the free market approach to economics proved to be superior to economies of state directions (Ingham 43). During this period, America’s income tax rate was halved; thus, reducing burdens from regulation. Notably, during the same period, the United States experienced a tremendous spread and growth of the free market economy. This encouraged free trade, which produced remarkable stability and significant prosperity. Between the period 1983 and 2008, the gross domestic product experienced growth of an average of 3.2 percent per year. It is only once within this period that the output of the United States fell in a calendar year; this only resulted when the percentage was adjusted to two-tenths point (Ingham 104).
Unfortunately, the assets of the real estate exploded resulting in varnishing of growth and stability. This drove the United States into a worse economic crisis. As President Sarkozy said, many would see this recession as an economic setback that could be as well regarded as a death blow (Ingham 119). The policies of a conservative economy aimed at reducing the government's power and liberating the private sector. Therefore, the introduction of the free market could have been regarded as a way of managing a state economy, but it was extremely brief. The surprising reversal of the economic downfall of the United States reached a point of no return in the year 2010. All these cannot or could not be blamed on capitalism, but on Americans who were only “profit-oriented.” American is now convinced that the government has failed to solve the economic crisis; in fact, it has worsened the situation. It is liberal economic policies, not conservativeness that are in quick jeopardy (Ingham 342).
Most Americans had lost faith in the federal government, and the majority believed that the government’s economic policies could only help or be advantageous to middle-class citizens. For instance, most of them believed that the economic policies that had been advocated by President Obama to help avert America’s worse economic situations further fueled the situation. The only way the economic crisis could be solved is through adopting proved means of liquidation. Finally, poor government interventions such as adopting and implementing short-term effects stimulus and only seeking the advice of a few have led to the escalation of the crisis (Ingham 217).
In conclusion, things have indeed changed, and conservatives may as well face challenges regarding the tax cut since increased debts may worsen the situation. Additionally, considering the repudiation of free market capitalism and the return of the state, the problem may only worsen. The reduction in the GDP arose in 1991. Read More