Threats Posed by Laissez-Faire Capitalism
Laissez-fair capitalism is a socio-economic concept involving the free practices of private parties in business transactions where they transact business free of government restrictions, tariffs and subsidies with minimum regulations to protect property rights. This form of conducting business was admitted because of the free market that came with it as a package. However, there are threats associated with laissez-fare capitalism on “the good life” caused by commodity fetishism and pecuniary emulation and the threat to political institution.
Karl Marx argued that laissez-faire capitalism imposes threat to “the good life” got from satisfaction derived from consumption of goods and services from the free market through the effect of commodity fetishism. Marx was trying to obtain an economic interpretation of the relationship that existed between commodities and the value set on the commodities. Every commodity in the market has a value, an exchange value that gave the worth of a commodity. The issue of concern with Marx was the manner at which persons in the society were possessed with the possession of commodities. As a capitalism effect, every person desires to poses a commodity more at this moment of laissez-fare capitalism where the cost of owing commodities is reduced due to reduction of government restrictions. Having restrictions such as; tariffs would immense acquisition of wealth since such restrictions increases on the cost of acquiring wealth. Therefore, laissez-faire capitalism is a threat to good life from commodity fetishism since people will be possessed to acquire more commodities more so at low exchange values.
Thorsten Veblen argues the threat to good life from the point of pecuniary emulation. Veblen believes certain members of the society have the desire to acquire wealth for self-esteem and pride. When people are driven by pecuniary emulation, as a motive to acquire wealth in unrestricted market, their attempt to acquire more wealth will be unlimited. This situation would pose threat to good life due to unequal distribution of wealth since the rich will acquire more than the poor.
Robert B. Reich and Robert Kuttner on the other side argue that laissez-faire capitalism imposes threat to democratic political institutions in a society. Reich argues that large companies have an increasing voice in the democracy. This would not give a genuine reform required since power is associated to wealth acquired. Instead of people speaking on their own, corporations speak on behalf of people. Laissez-faire capitalism takes away individual powers to corporations and large companies with more wealth. Robert Kuttner argues that unequal distribution of wealth caused by free market poses challenge to democratic political system since power is associated with money. Kuttner believes the only way we can create free citizens is by eliminating free market caused by laissez-fare capitalism. Kuttner argues further that a society can be democratic in its political system by doing something on its laissez-faire economics and education, but more preferably doing away with the existing free market.
The threats on good life are directly linked to laissez-faire capitalism. Absence of restrictions in the market will mean only the persons considered senior in the market will enjoy its tenure. Market seniority will include both the financial ability and other factors such as insider trading. Therefore, these would give conducive grounds for the free market tampering with intended good life of persons.
Francis Fukuyama’s argument that history has effectively come to an end because free market and free society are the natural goal of humankind, do not stand to any provable ground. Francis Fukuyama antagonistically based his argument on social ground differing himself from Karl Max’s argument of capitalism. Francis was literally comparing capitalism to his proposed communism where Francis believed that the moment at which communism will replace capitalism would mark the end of the history. A point of importance from his argument is that communism can replace capitalism but cannot make the end of history since communism itself has challenges.
According to Francis Fukuyama, French democracy after the revolution proved to be best political, social and economic system than any other. One point that has been confessed to be challenging in Fukuyama’ theory is the term history. On clarification, history can never stop and above all the theory referred to more prevalent events occurring in future and in the long run.
This assumption that Western society is the ideal economic and political form does not hold to any reasonable ground. The argument is based on misinterpretation of Fukuyama’s reference to America’s democracy as the correct political and economic system. Fukuyama’s point of argument was that in future there would be more governments using the parliamentary or representative democracy that exercises democratic markets to that style of America. This therefore, refutes the claim that western society discovered ideal economic and political form but rather used as a point of reference.
Free society does not depend on free markets as argued. This is since development of a society is social issue as opposed to free market that is a function of economic development of a country. Societies can be free without necessarily depending on free markets depending on the existing social and political factors outlining that particular society. Similarly, capitalism would be the best form that free markets can take. Setting a market free from restrictions and government involvement would create the most conducive environment for participants in the market to drive their own self-interest. This is because there is no limit and therefore, creating ways for unfair market practices. Rich merchants will hence maximize on their acquisition of wealth being the largest shareholders in the market.
Michael Sandel believed a market is a place of its own uniqueness. Sandel argues that the most visible change that has been experienced in social and economic situation is the development of the market. Initially people got goods and services by queuing based on first come first serve. This system of first come come first serve has developed to buying market where people get whatever they want as long as they can pay for it. However, according to Sandel, this nature of the market where to obtain whatever you want as long as you can pay for it has emerged with numerous challenges. The major issue identified by Sandel is the valuation of even social issues that should not be priced. This resulted to Sandel’s proposal of inclusion of incentives to improve public life since everything in life is viewed economically.
Sandel’s market objections of fairness and corruption apply to this situation of indifference market ambitions to rectify the market to normalcy. Sandel tries to give a rather social way of solving the problem of the market without including much economic concepts, which have failed to rectify the situation. The objection of fairness will ensure every member of the society get his or her deserved share of the market properties while corruption objection will appeal to the moral importance in the market. Therefore, Sandel’s response would give the best solution to the market situation since as far as it considers economic equity, it also advocates for sanity in the market by pushing for inclusion of good moral behavior through his corruption objective.