The State Hampering Of A Capitalist Economy Essay

The state hampering with a capitalist economy can have positive and negative to society. Theorist such as Hayek was against state intervention and believed in the neoliberalist movement, which meant that firms would are able to privatize their businesses and still trade in free markets. Hayek identifies that capital theory â€Å"was an area where he found that the coordinating processes of the market were underappreciated† and that the â€Å"evolved institutions and market competition as irreplaceable means for social coordination† (White, 1999, pg. 753-4). Despite Hayek’s claims of state intervention, it has been proved that the state hampering in a capitalist economy has brought positive effects. For example, mixed markets such as Sweden have 52% government spending shares, and 48% privatized firms in the market. Conversely, without the state intervening in the market, this could also lead to negative effects in the economy by monopolies being created by privat ized firms, which leads to market inequality, diminish the marginal utility of wealth and social benefits will be ignored. The government only intervenes in areas such as regulation and spending money on public services and amenities; which is why some economies have been able to strive and grow. Government intervention could be viewed as an essential element to regulate the economy, but over the past decades, we have seen that it is not the case. Adam Smith a classical liberal proposed the idea of Laissez Faire, whichShow MoreRelatedThe Father Of Modern Economics1675 Words   |  7 PagesAdam Smith (1723-1790), christened the ‘father of modern economics’ made several important discoveries in the field of political economy. 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