Is America A True Capitalist Economy?

Pure capitalism: a case study of USA
Capitalism is an economic and political system in which the private sector controls all the commercial and trading activities of a country. Furthermore, the state only serves as the regulator of the activities of the private sector. This essay’s discourse is to establish that America is not a purely capitalist country but a mixed economy.
Perfect competition is one of the attributes of capitalism. In perfect competition, the forces of demand and supply ultimately determine the price. Government intervention does not distort the price in the system. Furthermore, monopolies or cartels are not allowed in the system. Similarly, all the players in the economy have equal access to information. However, perfect competition is not a realistic idea. It is a theoretical assumption for academic purposes. Given this, America cannot be considered as a genuinely capitalist country.

Furthermore, all the players in the capitalist economy should have equal opportunity. Likewise, financial decisions are taken on a rational basis with perfect knowledge and information dissemination in the order. However, occurrences in America suggest otherwise. There are lobby groups in America that influence the government’s economic decisions. For instance, the Cigar industry is lobbied by the pro-Israeli group.

Even in America’s aviation industry, foreign airlines cannot quickly fly interstate within America due to the Chicago Convention on International Civil Aviation. This is a form of protectionism that distorts the market.
American constitution allows the promotion of the general welfare. The government is encouraged to utilize central planning in some vital areas such as defense, transport sector, and telecommunications to grow the national economy. This is antithetical to the concept of the free market economy. The private sector can never control the American defense and is also the case in other countries.

In the same vein, the scope of the general welfare was extended during the great depression of the 1930s to include compensation for the unemployed, income for retired individuals, and money being paid to mothers with independent children. Those above are general welfare that is not supposed to be practiced in a capitalist system. Also, government funds to bail out failed corporations and industries are also not allowed in a free market economy. However, Bush and Obama’s administrations paid billions of dollars to as bailout for failing enterprises to save the economy.

Accordingly, the private sector that is supposed to dominate the production in a free market economy is also supposed to be the biggest spender of money. However, the United States government is still the largest spender of money in the USA economy. The government influences most of the financial decisions of American citizens through policies.

Conclusion; is America a true capitalist economy?

In conclusion, the American economic system is not truly a free market system but a mixed economy. The government engages in social welfare for the citizens, make laws to protect local businesses against their foreign counterparts, and lobby groups that influence government decisions are among the reasons that define America as not indeed a capitalist country.

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