“Liberalism is a political-economic system, then, is defined by its emphasis on individual freedoms over collective equality and on the power of markets over states” (O’Neil, 2013, p.89). Liberalism assumes that individuals are best suited to take responsibility for their own behavior and well-being. Adam Smith used “liberal” in a similar sense in The Wealth of Nations, published in 1776. If all nations, Smith says, were to follow “the liberal system of free exportation and free importation,” then they would be like one great cosmopolitan empire, and famines would be prevented.
Then he repeats the phrase: “But very few countries have entirely adopted this liberal system” (Klein, 2014). This idea of a cosmopolitan empire is obviously not possible because tariffs placed on imported goods is one of the major sources of income in a political-economic system. In order to keep the world trade flowing, it is essential to regulate markets and properties being imported and exported within and beyond the state boundaries. With that being said, Economic growth will be maximized in countries where there are minimalistic conditions and people are allowed to do as they please.
Capitalism is an economic system. At its most simple, it is a system where things are privately owned, rather than owned by a government entity, and a belief that the free market essentially regulates itself, and the end goal of it is profit. One may be a liberal and prefer Capitalism as an economic system. Capitalism as an economic system has been found in fascist regimes, absolute monarchies, single-party states, as well as in more liberal democracies. According to the American constitution, capitalism specifically states the right of the people to own property; physical property, intellectual property and to create a corporation establishing property. This has never occurred in the history of the world in any form of government. That is why coming to the USA is, and has been, the dream of many people who have not been able to own property in their home country. Here, they can have the ‘American Dream’ to go from rags to riches in just one generation. And it is the Constitution that supports that endeavor; and that is capitalism.
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Liberalism on the other hand is more of a political viewpoint than one of economics. However, it is reasonable to say that it means more government involvement in the economy, and that is not a bad thing. Many federal guidelines have been made that support the people and keep them safe in areas such as: medical, food, vehicle safety, workplace safety, building codes, transportation, etc., And, as America has experienced, the ability to compromise is the key to a running a successful government: Of the People, By the People, and For the People.
Bruce Scott, a business administration professor at Harvard, states that, “Capitalism, as I define the term, is an indirect system of governance based on a complex and continually evolving political bargain in which private actors are empowered by a political authority to own and control the use of property for private gain subject to a set of laws and regulations” (Scott, 2006, p.4). Capitalism should not just service basic materials needs while exciting us to buy frivolous things. Instead, it should generate money from goods and services that deliver true fulfillment.
Trade should be managed in a way that it benefits both domestic labor and consumers as well as make profits in the overseas market. A good capitalistic society doesn’t just offer customers choice, it also teaches people to exercise this choice in a judicial way. The most critical task then is the education of the consumer. Consumers need to be taught to buy better quality products and pay a fair price for those products, one that justifies the true burden and handwork of the workers and their environment.
Adam Smith aimed at making a capitalistic economy more humane and meaningful. He was the greatest thinker because his concerns went far beyond the economic and he wanted to understand the money systems. His is underlying goal was to make nations and people happier. He was the first one to set up the theory of specialization. “This great increase of the quantity of work which, in consequence of the division of labour, the same number of people are capable of performing, is owing to three different circumstances; first to the increase of dexterity in every particular workman; secondly, to the saving of the time which is commonly lost in passing from one species of work to another; and lastly, to the invention of a great number of machines which facilitate and abridge labor and enable one man to do the work of many” (O’Neil, 2013, p.138).
He observed that in modern businesses the tasks formerly done by one person in a day could be far more profitable if those tasks were divided by sectors and multiple people could work simultaneously. He predicted that national economies would become highly profitable and richer, the more specialized they were. However, he noticed that company with large labor force struggled to maintain any sort of purpose. So, Smith proposed that these specialized corporations have extra sense of responsibility to remind their workers about their purpose, role and ultimate dignity of their labor. Smith’s age saw the development of what we now call, consumer capitalism.
Luxury consumerism has a significant role in the good society — it generates the surplus wealth that allows societies to look after their weakest members. Consumer societies in spite of their frivolity, don’t let young children and the old starve, because they could afford to provide hospitals and poor relief. Therefore, consumer capitalism does more good for the poor than societies that thrive to achieve high ideals.
