Economic Style of the United States

Freedom is what allows citizens of the United States to pursue the “American Dream”- the dream in which each individual has the ability to pursue their own goals, passions, and ambitions to the greatest extent that they choose. Obviously, there are outside forces in a person’s life that might derail or distract them from this dream, and it might not be easy to be successful, but at least everyone has the opportunity to do what they want, or at least try. Due to the possibility of pursuing the “American Dream”, Americans live in the best country on earth. One might ask how so, and the answer to that comes in the form of how the United States’ economy functions. If one were to visit China or Cuba, for example, they would be limited by governmental control over the economy (which will be discussed in depth later) making it extremely hard for someone to follow their passions. It is no surprise that no one ever talks about pursuing the “Chinese Dream” or being overly excited to travel to Cuba (if you can get in) in hopes of finding success with the “Cuban Dream”. People’s “dreams” in these nations are non-existent, and they want to seek refuge from their economy in a place like America where they have the chance to do what they want, or at least something better than where they come from. The United States’ economic style affords Americans the blessing of abundant opportunities, albeit some more than others, to propel themselves in life and enjoy the freedom that America was founded on. Yes, it is controlled freedom, but that is why it works so well. The blend of economic freedom combined with economic control is why America’s economic style functions smoothly on a normal basis. In the United States, its mixed economy is a perfect economic style which allows for the blend of capitalism and socialism so that Americans can pursue the “American Dream” and create their own wealth through any productive means while still having protection and support from the government.

Capitalism is reasonable, but its loose freedom creates problems for its citizens. So, what exactly is capitalism? It is considered a free-market economic style in which Sarhan Jahat from the International Monetary Fund describes it as, “Capitalism is often thought of as an economic system in which private actors own and control property in accord with their interests, and demand and supply freely set prices in markets in a way that can serve the best interests of society” (International Monetary Fund). It sounds like capitalism would be successful and benefit everybody equally, but this is not the case. Yes, like in America, capitalism’s free-market style allows individuals to pursue their own interests and passions, but there is no protection from the government. It promotes freedom by allowing everybody to find their own business and have ownership over their own things. It also encourages cooperation and competition because everybody works with each other for their needs. If a person needs a haircut, they would find someone who performs these duties and negotiate a fair price that they can agree on, or else a new hairdresser would be contacted. Also, capitalism is for the people and portrays a more optimistic outlook on society. Because of its free-market style where everybody can pursue their dream, it successfully encourages society to be more self-driven because, “Capitalists live in a world of opportunity. They constantly survey the landscape looking for possibilities to gain, to build, to expand, to create” (Contracting Business). Every individual wants to elevate themselves. Whether it comes financially or socially, all have a need for success, and it is an innate human feeling to be envious when one is more successful or doing better. Jealousy is a good thing when it is used as an intrinsic motivation tool for an individual to propel themselves. If someone is motivated to do better, than capitalist ideas should be beneficial because, “Most people are pleased when they are able to live better than they, or their families, have lived in the past. And they are pleased when they are able to live better than their friends, neighbors, coworkers, and others with whom they compare themselves” (Benjamin M. Friedman). Capitalism is good for this because it allows society to see where their peers are and strive to go above and beyond. So, capitalism does have a lot of good qualities that the United States believes in and integrates in its mixed economic style, but the free market has downsides too.

The drawbacks of capitalism arise in the lack of protection that it gives (or doesn’t give). Prices rely solely on supply and demand, minimum wages may not exist, and monopolies have an increased chance of arising. If society stops buying a good or service, its price will drop. Conversely, if a product is in high demand, its price will rise. In capitalism, these drops and rises have no boundary. The businesses can make their prices whatever they want, whereas in a more controlled economy, the government can step in and put a price floor (the lowest amount at which a product can be sold) or establish a price ceiling (the highest amount at which a product can be sold). Although prices still rise and drop in the United States, this price protection from the government creates more fair prices for both buyers and sellers. Next, a free market loses the establishment of minimum wage. A company can choose to pay their workers any wage because the government is not there to protect workers with a specific wage. This affects low-skilled workers the most because they could be forced to work long hours with very low pay. The last con of capitalism is that enables the rise of private monopolies. Companies are able to grow as big as they want with no governmental power slowing them down. This becomes dangerous for society because once a company becomes too controlling and faces little to no competition, they can charge any price they want for products.

Although capitalism has both benefits as well as negative effects on society, it has been used throughout time as the economic style in different places. Capitalism and the idea of a free market began in Europe around the 16th and 17th centuries. This economic form proved to be successful where it was established. Today, most Western countries follow capitalist economic views, or some sort of free-market style paired with control or regulations. In contrast, there are only five countries that follow a socialist economic style.

Socialism is quite the opposite from capitalism, and if one were to choose which economic style is closer to what the United States uses, it would most definitely be capitalism. There are, however, some qualities from socialism that are implemented into the Untied States’ mixed economy. The idea of socialism is centuries old, and in the ideology of Karl Marx, “it is this excess of value produced over value received which he calls ‘surplus value’. According to him, ‘unpaid wages’ constitute the source of all rent, interest and profit- in fact of all surplus. This is the cardinal point of the whole doctrine of socialism. If this proposition can be scientifically established, the theory of socialism cannot be successfully disputed” (George Gunton). It is used because of its major themes in which are thought of to be benefits, but the United States sees them as downsides. For example, a socialist economic style believes in public industry, redistribution of wealth through taxes, and social security system. America employs these concepts to a minor extent. There are tax brackets for different levels of wealth and a social security system that benefits each individual in society. So, there are positive aspects of socialism that can be implemented in mixed economies, but they are definitely not beneficial when standing alone in a socialist society.

Socialism in its purest form is not used in many places. China and Cuba are two popular countries for using this communist type of regime. These countries are infamous for having notoriously horrible leaders of their socialist parties. In these places, society struggles, and people are trapped, often seeking refuge in the United States. Why come all the way here, though, when there are other countries much closer? People come to America because they want to chase the “American Dream, and the way the United States’ economy is set up, they can do that.

The United States of America enables people to use their afforded freedom to follow their passions. The greatest country on earth is a question with many different answers, but the greatest economy on earth can be answered with one country- the United States. According to Investopedia, in 2021 the U.S. was the leading economy in the world with a nominal GDP of $20.89 trillion, leading the next best economy by about $6 trillion. America is leading this statistic because its mixed economy uses a blend of ideas from capitalism and socialism to create a high-functioning economy that people strive to succeed in, or at least be a part of in one way or another. Americans are fortunate because, “Although it is true that a market economy exists in all democratic countries, it is also true that what exists in every democratic country is a market economy modified by government intervention” (Robert A. Dahl). America’s economic style allows its inhabitants the freedom to do what they want. Citizens can make their own money through their own means, and society functions well with this theory. The mixed economy is characterized by a mechanism in which:

“is provided by government expenditures which counteract the movement from prosperity to depression. The economic role of government seems to divide the whole of the mixed economy into a ‘public sector’ and a ‘private sector’. Actually, of course, it is just one economy in which government intervenes, for it is not government control which characterizes the mixed economy. There is, of course, in addition, a great and growing amount of direct ownership in the mixed economy…” (Paul Mattick).

There is intervention from the government, but it is limited. The government does not control businesses or households, it only provides the policies that need to be followed. It is beneficial for American society to have governmental regulation because it keeps society away from true capitalism where everything is governed by the citizens. If America had an economic style consisting of only capitalist ideology, society would face the consequences of unprotected prices, monopolies, and no minimum wage for low-skilled workers.

With a mixed economy being so successful, it is important to analyze why it works and what allows it to work effectively in the United States. The government is there to help in periods of economic expansion and depression. Society benefits from policies set by the government that are put in place for each of these economic situations. This economic system functions efficiently in the United States because,

“The spread of capitalism in the eighteenth and nineteenth centuries triggered innovation, growth, and economic progress, but so long as markets were relatively unconstrained, the scale and benefits of that economic dynamism were often limited, inconsistently delivered, unequally distributed, and too frequently unfairly captured by powerful private actors. It was the emergence in the first half of the twentieth century of a robust U.S. government willing and able to act boldly on behalf of the country as a whole that led to spectacular advances in national well-being…” (Jacob S. Hacker and Paul Pierson).

America’s system works. The combination of freedom and government intervention is the perfect blend to encourage Americans that wherever their passion takes them, they will have a chance to succeed. Government policies are meant to help households and businesses, so if society can understand that, then everyone will be equally motivated (on a surface level). Society becomes successful in a mixed economy because everyone’s best interest is at the forefront of the style. People who enjoy freedom receive their freedom, and people who prefer government interference receive that assistance. In either case, “a government capable of rising above narrow private interests and supporting broader public concerns is part of the solution, not the problem” (Hacker and Pierson). The government is there to help, and whether people like it or not, it is not going to leave anytime soon. However, as long as the government stays neutral and does their job to effectively intervene in a mixed economy, it will benefit the greater good of society.

Too many taxes take away hard earned money, too much freedom and one becomes too powerful. So how are these problems combatted? They are fixed through a mixed economy. The United States is a perfect example of blending capitalism and socialism to create an economic style that appeases both sides and also works effectively in practice. People have the freedom to follow their passions and can be comfortable in knowing that the government is intervening when necessary to create a fair economic society. Each extreme of true capitalism or true socialism is not going to work. they create problems that cannot make all parties happy. The socialist regime in China and Cuba is unrealistic to satisfy the citizens, and it takes away all freedom. The opportunity to pursue dreams, or the “American Dream” is afforded in mixed economies, and the United States has effectively proven this to be true.