Understanding Capitalism And The Need For Government Intervention

2114 Words9 Pages
Wendy Diep
International Political Economy
Essay #1
October 20, 2014

Understanding Capitalism and the Need for Government Intervention In today’s capitalistic society, “liberal” and “conservative” are common terms we use to classify a political party, candidate, or even ourselves. But what does this mean? Choosing to identify as a liberal or conservative has a lot to do with what one believes is the appropriate level of government intervention in terms of the economy. Liberals believe it is the duty of the government to act to ensure economic equality and to guarantee that all are provided for. A liberal economy is one in which the market system functions best with government regulation, and the government must protect the economy from monopolies and the greed of big corporations. On the other hand, in terms of economics, conservatives believe in individual responsibility, limited government intervention, personal liberty, and free markets. The free market system breeds competitive capitalism and private enterprise, believing it provides the opportunity for the highest standards of living for all. A central question within regards to international political economy today focuses on the role of government in economic activity – to what extent should government play a role in economic activity? Adam Smith and John Maynard Keynes are economists in history whose theories are central to the understanding of how the economy works, and how government works within a
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