History and Trends of Free Market Capitalism
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Free Market Capitalism
History of Capitalism
Free Market Capitalism emerged in the mid to late 1700s and grew in popularity and strength as individuals realized the benefits specialization and trade and antiquated infrastructures began to grow increasingly more capable and efficient. Improvements in travel and transportation, the monetization of individuals and the softening of attitudes towards the promise of a market based system were important obstacles that needed to be overcome before a region could progress under a free market system. Therefore, regions developed at a very uneven pace over the past several hundred years.
The road to free market capitalism has not always been a smooth one. A system where every man is primarily responsible for their own success or failures, yet are completely dependent on each other for survival has some inherent problems such as a propensity for greed and the exploitation of the weak. Market inefficiencies were often great due to lack of rapid communication, regulations, and government interference. Individuals in the past had to rely on their own common sense and had little means for comparison. As competition grew and the flow of information increased, markets became increasingly more efficient.
The birth of the industrial revolution catapulted capitalism to the forefront of economic thought. The mechanical advances, mass production and profits it generated were tremendous and intoxicating. Industrialized nations began on a whirlwind of growth and prosperity. This mass production fostered the creation of societies made up of many interdependent channels that rely on each other for survival. This interdependence was a large shift from the days of self sufficient farmers that provided nearly all of the food and goods the family needed and had little use for markets.
The era of the great depression was a catastrophic setback for free market capitalism as growth and investment came to a halt. Many lessons were learned from these events by governments, individuals and companies alike. The system proceeded but more slowly and with a great deal more caution. Many initiatives and laws were put in place to help prevent a future occurrence.
Today Free Market Capitalism is in full swing. Our entire economy is dependent on it in some way and the idea of a self sufficient individual is nearly extinct. Markets are heavily regulated and analyzed by millions of groups for many different reasons. A system of checks and balances governs the actions of the market system ensuring for the fair and equitable trade of goods and services. In addition, we are in the midst of a technological revolution. The entire way in which business is transacted is evolving thanks to a massive global, technological infrastructure and the internet.
Trends
Globalization and the emergence of an international capitalism structure:
As Capitalism expands and commerce goes global, it is undergoing a huge transformation and encountering a new host of opportunities, benefits, obstacles and shortcomings. The worlds doors are opening up like never before and the task of navigating the differences in culture, governments, currencies and individual perceptions is immense for each nation. The internet has created communication channels across the globe allowing even small companies to do business internationally.
A large constituency of capitalists believes that capitalism will serve as a platform for evolving the worlds less developed nations and indeed, to some extent, it is. The free flow of information, skills, labor, technology and other resources from one nation to another has a tendency to lift developing nations as a whole by providing jobs, money and new ideas and processes. The benefit to developed nations is primarily financial and is realized in less expensive labor and materials etc.
The call for “Conscious Capitalism: – A return to values:
In recent years, Capitalism in the United States has fallen under scrutiny for its inherent greed, ignorance, and apathy with regard to social issues such as poverty and the environment. The past decade has been riddled with scandals that rocked some Americas largest corporations. The actions of executives at Enron, Adelphia, and The World Bank have strengthened many Americans fear that corporations are solely profit seeking institutions with little regard to the consequences of their actions and the opinions of their sole reason for existence Ð- Their customers. The exorbitant rise in executive salaries, lack of responsible actions of executives, destruction of the environment and elimination of American jobs in favor of less expensive foreign labor has left us to question what are these corporations giving back?
Patricia Aburdene, author of ÐMegatrends 2010, lists “The Dawn of Conscious Capitalism” number 2 on her list of todays hottest trends and says an interview with The Christian Science Monitor:
ÐWeve now become conscious of the uncalculated social, economic and environmental costs of that kind of “unconscious” capitalism. And many are beginning to practice a form of “conscious capitalism” which involves integrity and higher standards, and which companies are responsible not just to shareholders, but to employees, consumers, suppliers and communities. Some call it “stakeholder capitalism”
In an era of heightened public consciousness, and an abundance of information thanks to the internet, there has been an increased pressure on companies and governments to “do the right thing” so to speak. This call to consciousness serves as a wake up call to those who pursue growth and profits without concern for the bigger picture. This pressure has resulted in an increase in philanthropy, in new “green” technologies that are a win-win for companies and consumers, new initiatives to give back to the people. Companies are starting to realize the benefits, profit potential, and positive press in appealing to the values conscious customer. An example is the hybrid car. As growing concerns about the environment mount, companies are providing a product that serves the needs of individuals and comes with a “feel good” bonus.
Challenges and opportunities
Can capitalism and globalization save the world?
Proponents of capitalism claim that globalization is good for the developing nations and the world