DiscussEconomics

Q. Pure Capitalism Out with Free Market?

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**This questions was posed in our forum originally**

Wonder if you can help with this please. I am currently thinking that pure capitalism is where production is owned by private companies that are free from government intervention in regards to investment, pricing, product and growth etc. (i.e. function in a free market).

If this is the case then technically there are few if any real capitalist countries as by and large all involve government intervention for consumer protection and economic stability (thus a free market system).

Is this being overly pedantic, can one really refer to an economic system in which governments intervene as capitalism and if not what is the best name to describe what most developed western countries have, just a mixed market system?

Thanks in advance for any help on this. -Taijitu

5 responses to “Q. Pure Capitalism Out with Free Market?”

  1. barry econ Avatar
    barry econ

    Pure capitalism does not exist, it is a theory. All developed economies have a certain level of government expenditure and have a central bank to deal with foreign investments and domestic economic issues.

    Reply
  2. Taijitu Avatar
    Taijitu

    Thanks. This is how I was thinking I guess people just use the term very generally when they talk about Capitalist countries in todays world.

    Reply
  3. Jonathan Avatar
    Jonathan

    Indeed, a government must intervene in markets for them to function at all–even Adam Smith agreed with this point.

    There is, however, a spectrum. In politics, when we refer to someone as a liberal or a conservative, we don’t mean a pure liberal or a pure conservative. There’s a spectrum, and it’s at least partially subjective.

    The United States is fairly capitalist, probably the most capitalist developed country. Most European countries, on the other hand, tend to be much more mixed. These terms are all relative, however. England might be considered mixed now, but in the 1600s they were very capitalist (perhaps too much so, more than the United States). European cities didn’t even have police forces until the 1800s, as that was handled by private entities (though inadequately by today’s standards).

    Reply
  4. Grant Avatar
    Grant

    What caused the shift in England’s economy, in the 1600s, away from such a capitalistic state?

    Reply
  5. Jonathan Avatar
    Jonathan

    Political forces, essentially.

    The people demanded more government intervention, they demanded help.

    At the time, crime wasn’t the only issue going on, of course. There was mass urbanization and ‘modernization’ of business practices. Guilds were losing power, and were asking governments for help. Unemployment became a problem as companies’ factories were making business more efficient (unemployment is always lagging), and killing the then-present way of life. People didn’t want to be subject to such wild swings in the economy, and asked government for help.

    This wasn’t just contained to England, of course, this was going on throughout Europe. England may have been the most extreme example, though.

    Reply

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