by Zheng Yang
Each economic system requires a particular political environment to function effectively. The political environment is a foundation on which the economy can grow. If that foundation is inadequate, the system will never reach full potential and may in fact collapse. In order to maximize efficacy, the right combination of government strength and economic freedom must prevail.
Let us examine the relationship between the government and the economy under different economic systems. First, we consider Communism. Communism ideally guarantees economic equality within society. Thus, Communism requires almost a pure democracy so that the people may allocate and distribute equally the fruits of society. The purer the democracy, the fairer the society. When the citizens vote for the laws that govern them and the necessities given to them, then a perfect commune can be achieved. However, if politics and economics do not cooperate, they will collide. As seen in history from Stalin’s Russia to Mao’s China, when an authoritarian regime takes control under the premise of communism, the system fails to achieve the equality necessary and corruption takes hold, ultimately oppressing the people the theory aims to support. Inevitably, the people will attempt to rise up and regain the proper balance between government power and economic freedom, but almost always the reaction does not correct the imbalance.
In Capitalism, each man is entitled to what he produces. Under Capitalism, fairness requires society to provide equal opportunity to achieve success. Capitalism is comparable to a race in which every participant begins at the same point and the sole determinant of his results is his merit. However, without basic levels of education and standards of living, the race is no longer based on merit—the starting points differ. Intrinsic strength, intelligence and dedication should decide the ultimate outcomes in this model, not extrinsic preconditions such as luck or wealth. Therefore, for Capitalism to fully function as the theory dictates, a government is required to act as a referee. As a referee, the government ensures no one cheats the system and government implements fair regulations on the market so that no one entity dominates the entire system. With these government actions, each individual has what he needs to run a fair race.
Capitalism’s ultimate goal, however, is to maximize profit. From the point of view of business, elimination of competition is one of the easiest ways to maximize profit. Thus, if left to develop by itself without governmental control, Capitalism will ultimately generate an all-powerful super entity that dominates the economy and society. The system will consume itself since the super monopoly will have the power to crush all fair competition, thus demolishing any benefits gained by individual merit. If the government does not have enough strength to control this system, the monopoly will necessarily take control over society through both corruption and sheer size. At this point, because the government and market did not perfectly coordinate, the economy will naturally move government to the benefit of powerful economic interests.
To examine the effects of this scenario, we can look to the Gilded Age of America. During this time, as the market grew and the government did not adjust to this growth, economic super entities emerged. Trusts from Rockefeller’s oil to Vanderbilt’s rail dominated society, and the U.S. government was submerged within corruption. Political bosses the votes necessary to perpetuate their influence in government. Society failed to gain from the market, and instead the market exploited society to maximize gain. The average man wishing for the American Dream was crushed under the weight of million-dollar businesses, and the U.S. government legislated not for the common people but to keep the rich and powerful in their place. Social mobility almost entirely crumbled in the presence of a failing education system and a declining standard of living. This system was ultimately fixed with an active attempt by society to rein in uncontrolled industries. People eventually took it upon themselves to make the changes necessary and correct the system from its natural course, and government attempted to control the process by instituting regulations and providing some basic standards of human life and education. Over the next few presidencies, the U.S. government slowly adopted the ideas of progressive politics and busted the trusts that spiraled out of the Gilded Age.
This detrimental growth also appears in today’s world. As economies grow and governments do not create boundaries to protect fair competition, similar societal deteriorations will occur. Corporations will again gain the ability to control the workings of politics as the captains of finance replace those of industry. The point of Capitalism will entirely be eliminated, for we will no longer enjoy the benefits of competition and individual merit as societal mobility is crushed under a mountain of gold. If we do not provide fair opportunities to every individual within our borders, many who have the potential to succeed will never be able to achieve that potential. If we do not regulate what needs to be regulated, unchecked capitalism will become a cancer sapping the life from society. In order to fully achieve Capitalism’s maximum benefit, we need a strong government, not for the purpose of wealth redistribution but rather for the purpose of ensuring an equal starting point for each member of society. It matters little for society how far a single man runs. Our focus should be preventing runners from breaking the legs of every other competitor on the field.