One thing that seems to fuel the division within existing political parties and the emergence of new parties is the question of whether we need more or less government intervention in our day to day lives. There are those that argue in favor of a small government, capitalist approach, while others maintain that Americans have been babied with so much government intervention that they are unable to get out there and pull themselves up by their own bootstraps. Then you have those on complete opposite ends of the spectrum that feel that the people should govern themselves and that government intervention is unnecessary. Polarized by those who feel that the government should run the show. So who decides the what, how and for whom, of our lives?
According to the father of economics, Adam Smith the market should decide. The Laissez-faire or leave it alone doctrine approach is a conservative view, arguing that limited government intervention in the economy is best (McGraw-Hill, 2016). Adam Smith’s wrote The Wealth of Nations in which is stated that the invisible hand would allow the strong to survive and the weak to fall by the wayside with demand equal to the supply producing perfect competition.
On the other end of the spectrum you have Karl Marx’s a proponent of communist economics who felt the government should decide. In the Central Planning doctrine the government owns all resources and allocates them according to their output goals (McGraw-Hill, 2016). This view is synonymous with socialism as well as advocates who call for more government intervention in the economy (McGraw-Hill, 2016). Not as popular an idea as many of these thoughts were part of Marx and fellow German thinker Friedrich Engels “The Communi...
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...(Ajefu & Barde, 2015)n. When the circumstances required for this are not satisfied, a justification for government intervention in the market is provided (Ajefu & Barde, 2015). For these reasons there is no guarantee the free market may perform well if left alone, but what happens when there is government failure occurs when government intervention fails to improve economic outcomes (McGraw-Hill, 2016). Government will not necessarily offer better answers than the market mechanism (McGraw-Hill, 2016). Government intervention may lean heavily on politics rather than sound economic principles to “solve” the problem (McGraw-Hill, 2016). There is no guarantee that the visible hand of government will be any cleaner than the invisible hand of the marketplace (McGraw-Hill, 2016). All policy decisions are ultimately a mix of politics and economic theory (McGraw-Hill, 2016).
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