Capitalism and Socialism: Technology Science and Society - Term Paper Example

 Technology Science and Society The American society is a phenomenon of capitalism and socialism ideas in its political and economic sphere. The economy is based on the free market where goods are produced, sold in the market without the ‘invisible hand’ referred to by Adam Smith. Milton and Friedman discussed extensively on the America economy in their book Free to Choose. Milton and Friedman argues that capitalism is characterised by the ‘the power of the market’ (Friedman and Milton, 1990, 9). To Milton the production of goods and services is not as a result of the application of the command like in the military structure, but as a free will to satisfy the needs of the people. The producers are guided by the desire and the needs of the American people to consume various goods and services. Moreover, the government does intervene to address the negative effect of production processes. Though the market ensures that goods are equitably distributed, the market has negative externalities and this where the government intervenes. The Medicaid is one example of a social programme by the government. It offers to cover the health of the poor citizens, and it is not driven by demand and supply, but by a chain of command. Therefore, socialism as well capitalism has a role in the American society. The American society was established after a very long confrontation between the colonies and their masters. The American Revolution brought a new dawn in the world and people from other part of the world free from tyranny to the land of affluence and freedom (Friedman, 1990). Hard work enables people realized their dreams and talents. The growth of the country is a story of the economic phenomenon. Adam Smith outlines in The Wealth of Nations ideas that helped people to exchange goods and services as he coined that ‘so long as cooperation is strictly voluntary’ both parties are bound to benefit (Friedman, 1990). Friedman says that though Adam argued on voluntary exchanges of goods it is the role of price that acts between the parties without direction from the government or capital owners. The prices are the drivers of the capitalist economy. Prices coordinate the millions of activities and unsure that everyone interest is served and leaves all parties better off (Friedman, 1990). The price system has three major functions. It conveys information, provide incentive to the production process and help utilize of available resources to the maximum. A free market is one of the benefits of capitalism. It is through the market that resources are equitably distributed to various sectors of the economy. The market forces of supply and demand enables people get the best products in the market and at the appropriate price that relate to her or his disposable income. Capitalism has grown from the exchanges of goods in ancient time to the gold and silver and to the money economy. The money economy has enabled people from distance shore to trade and thus international trade had dominated the world since its inception in the 15th century. However, international trade has benefited some countries over others and has led to the establishment of tariff to control exploitations and protect infant industries. The American industries have a competitive advantage over countries in the Latin America, Europe, Africa and Asia. The big company takes advantage of huge financial base to edge out small businesses (Friedman, 1990). Capitalism helps in shaping a political freedom in society. The American society is known to have a vibrant political system in the world; this is because the country enjoys the highest level of economic freedom. The ownership of enterprises by private businessmen enables the government to avoid large bureaucracies that would hinder the dispensation of services to the people. Moreover, if the government was involved in economic operations, it world extended to control people life on what and when to consume (Friedman, 1990). Capitalism has been the engine of industrialization and promotes economic growth of America’s economy. The free market economy offers the best incentive for firms and individuals to innovate. This premise has resulted to the establishment of big companies such as Apple, Facebook and the Ford companies of the past decades. The benefit that these companies get out of trade help in improving the country’s GDP and thus leads to improve the living standard of the people. The clearest example of the benefit of capitalism is the economic situation of the West and East Germany. During the Second World War, Germany splits into two regions divided over ideological differences between capitalism and communism. The West development as a result of trading with other nations of the world while the East remained intact after the war was over. West Germany became the largest economy in Europe within a few years (Friedman, 1990). Nevertheless, capitalism has it detriment. The private businesses ownership has enabled to the establishment of monopoly in labour and product market. The exploitation by private monopoly businesses had left people worse off compared to when resources are equitably distributed (Friedman, 1990). The energy sector is the mostly affected by the power f monopoly. In a free market economy, the inequality is always an issue because firms would be willing to pay small wages to maximise the return on investment. Capitalist societies have the largest inequality gap due to monopsony power of firms. Freidman and Milton argue that a centrally controlled economy or socialism has been shown to help the ordinary citizens who have no power over their destiny. Developing countries has demonstrated that capitalism cannot address the entire problem in the society. They have undertaken what would be regarded as non-economics in the developed world. The 1929 depression brought unprecedented loss to the United States. The income of the country fell by more than half and unemployment rose to 25%. The crisis led to the rise of Adolf Hitler, strengthened Japan and the establishment of communism in China. People distrusted capitalist system for it flows and was seen as vulnerable to the economic crisis. However, the crisis helped innovation of government interference in the economic set up. Keynes argued that government intervention can provide a prescription to control the negativity of capitalism (Friedman, 1990). The Federal Reserve was created to oversee the monetary and unemployment problems. Therefore, Federal Reserve is one of the socialism institutions in the American economy and has worked very well in bringing the country out of the 1930, 19970s and 2007-8 financial crises. Otto Von Bismarck was the first leader to introduce welfare state in large scale. He introduced social security measures for unemployed, the sick and to the old people. These measures are linked to socialism and America would later embrace the idea in the 1960s. Friedman argues that though several countries have suffered implementing social security, they have served to caution for the externalities of capitalism (1990). Britain and Sweden has resulted to increase taxes to enable meet the demand for high government spending. In Britain, the government has suffered high inflation and increasing unemployment rate. Therefore, social security has affected the functioning of the economy to full employment. In New York, the federal state rolled out one of the biggest social program in the country. However, over two decade the state government has suffered from financial problem one after another. The State was rescued from bankruptcy by the federal government and also failed to meet the needs of its people. Socialist ideas have been implemented in America and other capitalist society, but have never full functioned like the capitalist ideals. However, capitalism has outgrown its founding father ideas and has created a ‘global village’ where people interact and do business while on different parts of the world. Reference Friedman, Milton, and Rose D. Friedman. (1990). Free to Choose: A Personal Statement. San Diego: Harcourt Brace Jovanovich. Print. Read More