• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Should the government take an active role in the management of national economies?

Extracts from this document...

Introduction

Should the government take an active role in the management of national economies? In the 15th and 16th centuries with the growth of trade, industry and banking, capitalism became more prominent. The Industrial Revolution brought changes to the economies of many countries. Factory owners did not want governments to control trade. They wanted to run their companies by themselves. Adam Smith suggested a laissez-faire approach should be followed, leaving consumers and producers to make their own decisions and thus gain maximum benefit from all of the market system. During this period countries produced more and more products and goods and many capitalists became rich. However, normal workers did not earn very much and had to work long hours. World War I lead to the destruction of the four factors of production: land, labour, capital and enterprise. Socialism after the war was promising and people thought of it to be a more just society. The principle being that fairness and equality determine government policy. ...read more.

Middle

Lenin knew he needed a different kind of policy. His institution became known as ?The New Economic Power System?. Lenin said farmers can sell their own goods, and own their own land. He said that small businesses can operate and they started to get an economic revival. After the death of Lenin, Stalin introduced ?central planning?. Under him the communist party planned and managed every aspect of the economy. While communism seemed to be forging ahead, capitalism looked to be doomed. In 1923, Germany and Austria were living with the economic consequences of the peace after the war. Forced to pay unbearable war reparations the defeated government simply printed more money. The result was inflation. More inflation. Hyperinflation. Hyperinflation wiped out the savings of the middle class, due the government intervening in the economy. The 1920s, was a boom time for American cities. Americans were buying stock. The stock market, the New York Stock Exchange, became a National Past-time. It was a classic stock market bubble. Then on Black Thursday, October 24th 1929, the bubble burst. ...read more.

Conclusion

It was the first time that the government took an active role in attempting to secure American individuals from unseen drastic changes in the market. For Roosevelt and the New Deal, they were at war with the Great Depression, and they responded with frenetic activity, relief programs for the unemployed, for the hungry; programs to get people back to work. They instituted a program of regulating capitalism in order to protect people from what they saw as the recklessness of the unfettered market. Privately, Roosevelt feared the market system had failed, so he created an entire alphabet of new agencies to regulate banks, the stock market, capitalism itself. In conclusion, in the battle of ideas, the pendulum had swung from government to market, from Keynes to Hayek. Today Keynes? theory is widely accepted and modern countries combine capitalism with some kind of government control. Most people feel that free market economy should remain but the government should still be around to see that economic rules are kept, and solve issues such as unemployment and inflation. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our International Baccalaureate Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related International Baccalaureate Economics essays

  1. Strategic Business Management - Cadbury

    to lead the organization as it delivers on its commitment to achieve superior shareholder performance through Vision into Action. CUDBARY'S VISION AND STRATEGY What Cadbury is doing to achieve its vision of being not just the biggest but also the best confectionery company in the world?

  2. World Economics assignment. The core economic issues that are focused on in this ...

    Then, from 1990 to 1997, it roughly remained same which around �10 billion deficits. What is worse, the UK trade has a substantial decline which from �21 billion deficits in 1998 to �90 billion deficits in 2008 during the ten years.

  1. The role of MNC headquarter

    local customers, governments and regulatory agencies for its ongoing institutional legitimacy and economic success1. Every single subsidiary must be aware of the local environment, and react to changes. Global responsibility There is on the other hand, also a need for a global responsibility, as the main purpose of globalization is acting across borders.

  2. Outline briefly- with a diagram, the key economies and diseconomies of scale, both internal ...

    specialized inputs, such as specialized machinery and labour, iv) improving selling and distribution strategies. Internal and External economies Alfred Marshall categorized economies of scale into internal and external economies of scale. Internal economies of scale are economies made within a firm as a result of mass production.

  1. Korean War

    Conectar otro caim�n a la terminal positiva del generador. Finalmente conectar ambos camines por la parte anterior de los mismos de tal forma que la corriente fluya correctamente. 4. Realizar el paso anterior, pero con el electrodo negativo. Temperatura Mayor 1. Colocar el metal, es decir el Cobre (Cu)

  2. Fair Trade

    over the Taman river, and is home to a wide array of flora and fauna. The lodges and chalets incorporate local bamboo construction methods and are artistically decorated by local artists to give the resort an original and different appearance.

  1. Role of ICT for "Make in India" government initiative.

    (4) (5) (6) 45(7) On-site Services 450.1 9.9 20.7 442.2 9.2 17.8 -1.8 Off-site Services 1720 37.7 79.3 2042.1 42.6 82.2 18.7 Total 2170.1 47.6 100 2484.3 51.8 100 14.5 Defence Manufacturing : ICT is the key for Modernization of Defence in India.

  2. 15 Historical Economic Questions on Mercatilism and the Development of European Countries.

    When the Portuguese first sailed down the Atlantic coast of Africa in the 1430's, they were motivated by simply one commodity. Surprisingly, considering the present atmosphere, it was not slaves but gold. Ever since Mansa Musa, the king of Mali, made his pilgrimage to Mecca in 1325, with 500 slaves

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work