Laissez Faire
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I don’t view laissez-faire as the best economic system. In fact, under it the economy would suffer and only the big businesses would thrive. Laissez-faire is an economic theory which states that there is an Invisible Hand guiding the economy, thus there is no need for government involvement. The Invisible Hand refers to uncontrolled competition, with greed as the major factor, in fact it is considered by some to be the purest form of competition due to the fact that laissez-faire is basically the economic version of Darwin’s survival of the fittest theory. He who is best will prevails, in theory anyway. The theory asserts that economy is capable of being its own guardian. An example of this is when two businesses produce similar products. Laissez-faire supposes that each business will begin to make better and cheaper products in order to overcome its competition and earn more of a profit. As they do that, they will be fulfilling society’s need for that product. The businesses are not producing the products out of social responsibility or as a result of some sort of government involvement. Their sole motivator is money, yet they are still producing superior products for less, which is beneficial for the consumers.
I think government should have a limited role in the economy, it should regulate it just enough to keep it stable. In laissez faire big business is basically allowed to do whatever it wants, short of murder without any legal ramifications. If big businesses are allowed to grow unrestrained they will most likely do so until monopolies are the only form of business left. If this happens there is nothing to stop these monopolies from taking advantage of the consumers who in the end would end up having no choice but to shell out large amounts of money for any and most likely all products produced by those monopolies. The way that big business would go about doing this in a laissez-faire system is by driving its competitors out of business. Big business can afford to lower prices for their merchandise below that of smaller businesses. Eventually the smaller businesses would just not be able to stand the competition and be forced to close down. Without government control over business those monopolies could then begin to charge consumers any price they want. The consumers would have no other choice but to pay it, since by then no one else would be offering the product. If competition should happen arise from a smaller vendor the big business would simply drop their prices once more just long enough to drive the new competitors into bankruptcy, than it can once again charge whatever it wants. When this happens the consumers get taken advantage of.
The government has laws in place to prevent this from happening. It has antitrust laws as well as laws to prevent price gouging. Price gouging is substantially raising the price of a product when it is in high demand or extremely low supply. The antitrust laws prevent one business from becoming too big and preventing fair competition. They also prohibit a variety of practices that restrain trade, such as price-fixing conspiracies, corporate mergers likely to reduce competition of particular markets. In a laissez faire society none of these laws would exist, so the people of those societies would be getting the short end of the stick, so to speak.
Minimum wage is another way that government regulates the economy. Minimum wage is the lowest hourly salary an employer has the right to pay an employee. In a laissez fair society no such thing exists, wages are determined by supply and demand of the work force. Meaning, that the more workers there are that want a particular job and are qualified for it, the less the employer will be able to pay the people that work for him. Since a laissez faire society is basically motivated by greed, businesses try to save money in any way they could. The employers want to find the cheapest labor, because the less they pay their employees the more money they can pocket. This would most likely lead to companies hiring people who are less and less qualified in order to save money. This woud have a negative effect on the producats that the company produces. However, therer is a small silver lining and that is if there are few workers that are qualified for a specific job, for example if it required multiple skills, and cannot be done by someone with less qualifications then the employer will be forced to pay a higher salary to fill the position. However, said employer would then most likely find another place to save money, such as underpaying its other employees.
Another way our economic system goes against laissez faire is the establishment of the Social Security system. The Social Security program is meant to provide benefits for a wide variety of individuals from the elderly to the simply unemployed. As part of the program a certain