Adam Smith Capitalism Analysis

analytical Essay
1931 words
1931 words

To many commentator and many politicians, Capitalism is the only moral social system because it is the only system that respects the freedom of the producers to think and the right of the individuals to set their own goals and pursue their own happiness. In contrast, there is the ideal that capitalism is something greedy and immoral. Fifty years ago, the term “the morality of capitalism”, it was not simply considered by many economist and politicians, and without any correspondent in the real economic life. In addition, in the Bill Clinton’s word, the free market the best system for producing wealth and promoting prosperity; the private economy, and the primary engine of growth. Capitalism is presenting that it is an economic success and the …show more content…

In this essay, the author

  • Argues that capitalism is the only moral social system that respects the freedom of the producers to think and the right of individuals to set their own goals and pursue their happiness.
  • Explains that the morality of capitalism is a guide to behavior that is put forward by society, by group, or by person. the normative sense refers to code of conduct that applies to all who can understand it.
  • Argues that capitalism's history is marked by the industrial revolution, which created population effects in productivity increases, health improvement, and rising of organized labor.
  • Argues that adam smith's book, wealth of nation, was an effort to explain why the system of natural liberty would produce both prosperity and inequality.
  • Analyzes how adam smith's book explains that capitalism is insufficiently moral. he admits that individual selfishness is not the only basis for ethical decision.
  • Analyzes how john kenneth galbraith agrees with adam smith on the role of government in the economy.
  • Argues that galbraith's theory of consumer demand shows that there will be an under allocation of resources to public goods.
  • Opines that government must control the planning sector of the economy from members who intend to influence and control it, ensuring that it serves the public purpose.

According to Adam Smith, it was useless to expect the individual’s goodwill and help because, for moral and humanity reasons, they will be never received, only if the action will meet their personal interest and gain they will offer the collaboration. He also held that individuals acting in their own self-interest would naturally seek out economic activities that provided the greatest financial rewards. Smith was convinced that this self-interest would in turn maximize the economic well-being of society as a whole. Moreover, Smith also argued that capital for the production and distribution of wealth could work most effectively in the absence of government interference. Such a laissez-faire, in his opinion, encourage the most efficient operation of private and commercial enterprises. He was not against government involvement in public projects too large for private investment, but rather objected to its meddling in the market mechanism. Furthermore, in the Wealth of Nation, he sets forth a puzzle that he hoped to solve, “the savage nations of hunters and fishers, everyone works and almost everyone acquires the essentials of human sustenance, but they tend to be poor that they are reduced, on occasion, to killing babies and abandoning the elderly and the infirm. Among prosperous nation, by contrast, many people do not work at all and many more live lives of great rich. His book was an effort …show more content…

Although, he disagrees with Smith in this point but he agrees with Smith when he emphasizes the role of government in the economy. He has argued that positive government can be successful in its essential duties. These duties, first, protecting people against all form of interfering power, curbing corporate power, and protecting and providing the conditions for a good or decent society. Second, government can play an essential, facilitating role in economic, social, and culture relation, and in the expanding freedom. We need effective government and an effective market. He insists that economics is inseparable from the political social environment. The argument that a market economy is separate from the state is sterile and an example of what he refers as not quite an innocent fraud. The modern capitalism is created and defined by organization, power and government support. More importantly, he indicated that the corporation have taken over the private industry of public decision-making and government spending, have acquired power over in and over the community. He acknowledges that economics and economic power have profound social and political impact, that the polity and economy are closely related, and the distinction government changes as the economy changes, and an appropriate government role

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