The U.S. economy is essentially a free market economy which is an economic market that is run by supply and demand with certain government regulation. In an actual free market economy, buyers and sellers operate their own business without any government policies however there is an argument among politicians and economists on the actual policies. For example, based on a mutual agreement on price without state intervention in the form of regulation, subsidies, and taxes. In financial markets, free markets stocks are securities that are traded and prices are not affected by availability. Also, in foreign-exchange markets, it is a market where exchange rates are not controlled by the government and thus rise and drop freely though supply and demand for currently.
Historically, no nation actually had an authentic form of a free-market economy. With that being said, it is purely a theoretical concept. However, given contemporary usage by economists such as Canada, Hong Kong, Singapore, Australia, New Zealand and Switzerland are considered to be among the “Free economies” as of 2014. Lastly, when a free money economy spins out of control, the disadvantages can be extremely severe. For example, the Great Depression of the 1930’s to the real estate market crash of 2008, market failures has negatively affected the lives of millions of Americans in homelessness, unemployment, and lost income.
Laissez-faire represents the following axioms such as, the individual is the basic unit in society, the individual has a natural right to freedom, the physical order of nature is harmonious and self-regulating system, and corporations are creatures of the State and therefore must be watched closely by the citizenry due to their propensity to disrupt the order. It is interesting that Adam Smith does not us this term in his work. Smith introduced a similar term however more radical and detailed than the basic term of “Laissez-fare” known as “let us be”. Adam smith was making an argument that when government protects individual’s freedom and this is classical liberalism. Adam smith viewed the economy as a natural system and market as part of the system. Smith viewed laissez as a moral program, and the market its instrument to ensure men the rights of natural law. Smith believed laissez-faire that the program was for the abolition of laws constraining the market, a program for the publishing of order and the potential growth.
Smith utilized the metaphor “invisible hand” in his books to describe the unintentional effects of economic self-organization from economic self-interest. Comparing corporation to other business structures is important because they may be significant differences such as sole proprietorships and partnerships, the corporation is less simple to maintain and establish. To establish the corporation the incorporator must file articles of incorporation with the secretary of state’s office in the state which it will be incorporated, as well hold a meeting to elect a board of directors. In various jurisdictions corporations, whose shareholders benefit from limited liability, are required to write yearly financial statements and other important information regarding the corporation. This structure also require the shareholders to lose some privacy in return for limited liability.
Secondly, this structure of business has various pro’s which I will explain in the following. One of the most interesting advantages of the corporate structure is the protection of personal assets. Directors, officers, and stockholders of a corporation are typically not liable for the company’s debt and responsibilities. Limited liability is only the amount they have invested in the corporation. Also, the corporation does not shut down due to the death of any shareholders, directors, or officers of the corporation. Lastly, another benefit of the corporate structure is that specifically in the United States, corporations are generally taxed at a lower rate than individuals. Darwin’s influence is far from limited to only science. His work influenced a wide range of topics such as political and economic issues. Natural selection is based on a very simple concept: some characteristic are better for survival than others, and so are going to grow into the population. As soon as Darwin proposed his theory, people started trying to apply it to different types of human relations. Natural selection was typically used to reinforce existing ideas and prejudices by adding a scientific justification.
Darwin’s theory of natural selection was seized upon as scientific proof that competition was natures’ method for improving the world. Herbert spencer, who supported some of Darwin’s work, established the “the survival of the fittest” which soon became a slogan for unrestrained and economic competition. The trouble with applying natural selection to economic relations is that the goal of capitalist is to create a monopoly, at which point competition and evolution cease. Labor unions are legally recognized as representatives of workers in many industries in the United States. Their work in this modern day covers looking over wages, working conditions, and benefits. Labor unions also typically engage in lobbying activities and electioneering at the state and federal levels. Generally, it is to ensure that workers were not taken advantage of however now it’s more to maintain quality of labor and safety to workers. Also, to prevent unskilled or unqualified workers from walking into a position and taking over one elder by a higher paying, more skilled worker.