capitalist economy:a comparative study between uk and us

8/10/2019 CAPITALIST ECONOMY:A COMPARATIVE STUDY BETWEEN UK AND US

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DR. RAM MANOHAR LOHIYA NATIONAL

LAW UNIVERSITY

ECONOMICS

FINAL PROJECT ON

CAPITALISTECONOMY:A

COMPARATIVESTUDYBETWEEN

UKANDUS

SUBMITTED TO SUBMITTED BYDr. Mitali Tiwari Tejaswa Kumar Gupta

(Assistant Professor) ROLL NO. -151

RMLNLU. B.A LLB(hons.)

1stsem.


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ACKNOWLEDGEMENT

I am heartily thankful to my subject teacher Dr. Mitali

Tiwari for his valuable guidance in the completion of this project. I

am also thankful to the Library of my university Dr. Madhu

Limaye Libraryfor the help and support which they provided to me

to complete this project.

Once again I would like to thanks to all concerned for theirvaluable help.


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TABLE OF CONTENTS

INTRODUCTION

RESEARCH METHODOLOGY

OBJECTIVE

ADVANTAGES OF CAPITALISM

DISADVANTAGES OF CAPITALISM

U.S AS A CAPITALIST ECONOMY

U.K. AS A CAPITALIST ECONOMY

CONCLUSION

REFERENCES


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INTRODUCTION TO CAPITALISM :

Economics is the study of how a society produces and distributes resources. Capitalism is an

economic system based on the private ownership of goods and services. Capitalist economies,

also called free market economies, empower individuals and private businesses to decide

most economic matters. This includes what things to make and sell, how much they cost, how

to use resources and where to live and work. This system of private enterprise has been

credited with unleashing human freedom and creating extraordinary wealth through

individual initiative.

Capitalism has also been credited with exploiting and oppressing humanity, spreading

inequality, starting wars, and propelling the wholesale destruction of the global environment.In order for you to weigh in on this debate you need to understand some basics about

capitalism. Capitalism is a social system based on the principle ofindividual rights.

Politically, it is the system of laissez-faire (freedom). Legally it is a system of objective laws.

Economically, when such freedom is applied to the sphere of production its result is

the free-market. It isan economic system based on a free market, open competition, profit

motive and private ownership of the means of production. Capitalism encourages private

investment and business, compared to a government-controlled economy. Investors in these

private companies (i.e. shareholders) also own the firms and are known as capitalists.

In such

a system, individuals and firms have the right to own and use wealth to earn income and to

sell and purchase labour for wages with little or no government control. The function of

regulating the economy is then achieved mainly through the operation of market forces where

prices and profit dictate where and how resources are used and allocated. Capitalism is based

on a simple processmoney is invested to generate more money. When money functions like

this, it functions as capital. For instance, when a company uses its profits to hire more staff or

open new premises, and so make more profit, the money here is functioning as capital. As

capital increases (or the economy expands), this is called 'capital accumulation', and it's the

driving force of the economy. In a world where everything is for sale, we all need something

to sell in order to buy the things we need. Those of us with nothing to sell except our ability

to work and give our time have to sell this ability to those who own the factories, offices, etc.

And of course, the things we produce at work aren't ours, they belong to our bosses. He may

use or sell in any way he wants. Capitalism has only existed as the dominant economic

system on the planet for a little over 200 years. Compared to the half a million years of


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RESEARCH METHODOLOGY:

This project is all about Capitalism, and comparison of capitalist economy of U.K. & U.S. .

Researcher in this work has been relied mainly on Doctrinal Methodof research. The above

method was considered apt for the given topic; because, it is a theory-based topic, for which

the doctrinal method of research is preferred as compared to non-doctrinal or empirical

method of research.

OBJECTIVE:

The objective of this research is to obtain a broad idea about capitalist economy, the purpose

it served in U.K. and U.S. is to find the similarities and differences of the capitalist

economies of U.K. and U.S.. Like in what way does it is helping these countries to grow their

economy. Its world approved fact that USA and UK are two of the biggest economies int hte

world, so it becomes more important for us to know how they have reached that equilibrium

position on which they are now so that we can learn from them and build economy too, as

India is one of the fastest growing economies.


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ADVANTAGES OF CAPITALISM:

The advantages of capitalism are the government has limited control over business, which

lets business compete. Capitalism lets people choose what kind of work they want to do and

where they want to work and also lets people decide what they want to do with their money if

they want to put it into a retirement account or in the stock market.

Economic freedom helps political freedom. If governments own the means of production and

set prices, it invariably leads to a powerful state and creates a large bureaucracy which may

extend into other areas of life

Efficiency. Firms in a capitalist based society face incentives to be efficient and produce

goods which are in demand. These incentives create the pressures to cut costs and avoid

waste. State owned firms often tend to be more inefficient (e.g. less willing to get rid of

surplus workers and less incentives to try new innovative working practices.)

Economic growth. With firms and individuals facing incentives to be innovative and work

hard this creates a climate of innovation and economic expansion. This helps to increase real

GDP and lead to improved living standards. This increased wealth, enables a higher standard

of living; in theory, everyone can benefit from this increased wealth, and there is a trickle

down effect from rich to poor.

There are no better alternatives. As Winston Churchill, It has been said that democracy is

the worst form of government except all the others that have been tried. A similar statement

could apply to capitalism.

The advantage is that it provides people an incentive to produce work and innovate, whichbenefits all of society. If everyone was paid the same amount of money, there would be little

incentive to come up with new ideas, work harder, or put in the extra effort to produce higher

quality products.

Capitalism allows the economy to grow exponentially. It is a basic fact of economics that the

more money a firm makes, the more it can invest in production, and the more it invests in

production, the more money it makes. So long as no unfortunate events befall the firm, this


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growth can, obviously, continue indefinitely. Many see a problem arising with this: there are

only a finite, or scarce amount of resources on Earth, so this huge growth of production will

one day run to a halt.

Health - With capitalism, more choice is provided than ever before. You can eat low fat food,

organic food, free-range food and you know exactly what youre getting due to the

statistics on the packet. There are plenty of diets easily accessible and gyms with top of the

range equipment, unparalleled in other countries. There is greater awareness than ever of the

importance of fitness due to government campaigns. All of these contribute to an extremely

fit society, and, in desperation, one can always resort to liposuction or some other sort of

surgery. Which is why everyone is thin and healthyon the front of magazines, at least.

Social Good-It might seem at first glance that everyone is selfishly working for their own

money, but dig a little deeper and it becomes apparent that every job has a benefit for

someone else. Factory workers produce the products that we cant live without; hairdressers

perform a service that benefits us body and soul; and the police work to protect us and make

sure we live in a lawful society. Even unpopular and overpaid professions such as city

bankers and sportsmen have a positive effect on society, whether it be helping us manage our

money, entertainment or something else. The bottom line is that no matter the job; highly or

poorly paid, glamorous or dirty, competitive or easy; everyone can have the satisfaction that

they, as much as the well-known public figures, are doing their bit for society.

Equality-No matter where you start in life, everyone has an opportunity to make it big. The

basic principle is that the harder you work, the greater your reward.

Human Nature- One of the most common arguments that capitalists use is that capitalism

works perfectly with human nature or, more specifically, greed. And it does. Greed is

rewarded duly with large amounts of money and the entire economy is fuelled by people

working hard to furnish their own needs. In addition, greed causes competition, which is an

essential part of advancing the human race. The power of competition is shown during wars,

where huge technological achievements are made. For example, the Jeep was invented by the

Allies during WWII. Though greed and competition often damage society, one cannot deny

that these traits have moved forwards mankind at a rapid pace.

Being the Best- But what about the other aspects of human nature: altruism, patience and

kindness? These have their place, too, in the capitalist world. Left-wing politicians like to


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claim that an extensive, expensive welfare system is the only way to provide a safety net for

the poor, but in actual fact there are tens of thousands of registered charities providing not-

for-profit activities, from The National Alliance to End Homelessness to Save the Rainforest.

Centrally planned altruism is completely unnecessary and, in fact, limits what people would

otherwise give on their own initiative.

Freedom - Most of you reading this list will have grown up in a world-class education system

and taken it for granted that you can choose whatever career you want. At school you

selected your favorite subjects and could study them as far as you wanted, followed by

applying to a job you chose from the widest variety ever seen in history. This is capitalism at

its finest: freedom to live your life the way you want.

Built on Democracy - One of the greatest things about capitalism is that it works perfectly

with democracy: everyone gets 1 vote, and thus equal power politically, whatever their race,

political views or gender. In Britain, recent legislation has even allowed some prisoners to

vote. Once you reach a certain age, you have as much power to choose the new government

as everybody else above that age whether that be your father, your boss or Bill Gates.

Right?

Growth - Capitalism allows the economy to grow exponentially. It is a basic fact ofeconomics that the more money a firm makes, the more it can invest in production, and the

more it invests in production, the more money it makes. So long as no unfortunate events

befall the firm, this growth can, obviously, continue indefinitely. Many see a problem arising

with this: there are only a finite, or scarce amount of resources on Earth, so this huge

growth of production will one day run to a halt.

However, as argued by Julian Simon, the rarer a resource, the greater its monetary value,

which leads to innovation. For example as oil begins to run out we are seeing significant

increase in prices, which has increased the reward and made it economically viable to search

for new oil fields. Sites which were previously too expensive to profitably drill have now

become available; and we are also developing new methods of harnessing alternative energy

such as wind, solar and nuclear power. The oil scarcity isnt particularly our problem,

anyway, since by the time it is depleted, our generation will be long gone.


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Viable Alternatives - Perhaps the strongest argument working in favor of democratic

capitalism is that there is no alternative politico-economic system which has proved itself to

work in our modern age. Almost every attempted implementation of communism has failed

(for example, look at China they abandoned total communism long ago and are slowly

creeping towards capitalism) and any central government risks large amounts of corruption.

Whats more is that if, for example, America became socialist and imposed many strong

measures on corporations to regulate their behavior, the largest companies (Trans-National

Corporations) would most likely move their industry elsewhere, and potential entrepreneurs

would be scared to invest in capital, irreparably damaging Americas economy. So as you can

see, changing the economic system isnt even an option.

Happiness - If you look at the happiness map published by scholars from the University of

Leicester, you can clearly see that the foremost democratic, capitalist countries like the USA,

Canada, New Zealand and the whole of Europe are the happiest in the world. This is because

in these countries, thanks to the free-market, whatever products people want, they can get.

Where do all these thousands of products come from? Well, the less happy countries like the

Asian Tiger economies tend to be the main exporters of consumer goods. In conclusion, all

these unhappy countries need to do is start consuming more than they produce, like Europe.


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DISADVANTAGES OF CAPITALISM:

Government control is so limited that it lets a few businesses to dominate their industry and

then they become able to make the rules for their industry.

Income Inequality.. Because the capitalist system compensates people based on the work that

they are able to do, and does not accord all work the same value, serious income disparities

quickly arise. In the capitalist system, the ability to direct the production of tens of thousands

of automobiles is viewed as more important than the ability to keep drains clean. This income

inequality can lead to social unrest as well as sharply unequal distribution of wealth --- the

extremely wealthy own yachts and many houses, while the poorest citizens may not even be

able to afford an automobile.

Lower Employment Rates. In many socialist economic systems, the desire for equality and

the lower efficiency that comes from a planned economy has at least one positive side: high,

or even universal, levels of employment. In a capitalist economy, there are systemic benefits

to unemployment, and little impetus to make sure that everyone has a job. While this may

benefit the economy as a whole, it has serious repercussions for those who are left jobless.

Overproduction. Free-market economies tend to suffer from overproduction for two reasons.

Firstly, capitalist economies tend to be more efficient, meaning that a greater number of

goods are produced. Secondly, the income disparity means that a low-paid factory worker can

create many more goods than he or she would ever be able to purchase. Additionally, because

decisions on what to produce are made based on profitability, items that are necessary but

don't make money may not be produced in sufficient quantity.

No Guarantee of Welfare. Because business owners are motivated by the desire to make

money, it's to their advantage to ensure that their workers are paid as little as possible. This

accrues benefits to the business, and eventually increases the performance of the entire

economy, but there's no guarantee that the low wages associated with the bottom of the

economic ladder will be sufficient for housing, food, health care or other necessities --- to say

nothing of education, entertainment or luxury goods.

Inequality-- The common capitalist mantra that anyone can be rich if they work hard

enough is a fallacy. Theres only so much room at the top. In order to make money, first you

have to take it from someone else. This can be done through selling things, taxation or any


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other means. But this means that the rich cannot exist without the poor. Any way you look at

it, theres never going to be equality under capitalism.

Waste-- In a society where resources are not evenly distributed, there is always going to be

the wealthy who have an excess of resources. While occasionally these resources are given to

the poor, often this excess is wasted. Millions of dollars worth of food is wasted by those who

have more than they need, while there are many others who desperately need it.

Starvation-- Of course, if some have an excess of the resources in society, there are others

who do not have enough. In Third World countries, many are starving because they cannot

afford to feed themselves, while those in Western countries fatten themselves with an excess

of food, and waste the rest of it. There is enough food in the world to feed the entire world

population.

Anti-social-- Under a capitalist system, the profit motive is far greater than altruism. If people

are worried about whats in their own pocket, they will avoid helping their fellow human

beings because theyre concentrating on looking after themselves. People feel the need to put

themselves first because they think no-one will be there to help them if they lose all their

money.

Danger-- Often companies will cut corners in health and safety restrictions, because it costs

them less to pay off the families of those who die in industrial accidents. Often staff are not

properly trained in certain areas, or provisions have not been put in place to protect them

from certain risks. This has often resulted in injuries and sometimes death.

Undemocratic-- While every individual has a single vote in a democracy, in a capitalist

system, they have very little say in the actions of government. Greater influences on

government than ideology or public opinion are the wealthy. Governments will listen to big

business and banks because they fund their election campaigns. They will listen to big

newspaper barons because they know that they can influence public opinion.

Pollution-- It shouldnt be hard to convince people not to kill themselves, however, this is

what companies are doing as they refuse to put in environmental measures because it will

reduce their profit margins. It doesnt matter to them that, in the long term, well all be dead,

as long as in the short term theyll have the most money.


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War-- Many of the wars fought in recent years have been over profit. In Iraq, the war was

largely funded by oil barons, and it was private firms who handled most of the security after

the initial invasion. In Libya, western forces intervened when the civil war caused oil supplies

to be cut off. They only sided with the rebels because they thought they were the most likely

to win. In Iran, military intervention is being threatened over the blocking of trading routes to

transport oil.

Dictatorship-- We wouldnt stand for dictatorship in our governments, so why do we stand

for it in the workplace? CEOs get paid massive salaries, and award themselves huge bonuses

on top of them, while they pay their workers minimum wage. The bosses dont do the work,

they dont produce the goods we consume, and they merely own the means of production. As

for those who do? The workers dont have any say in how it is controlled.


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U.K. AS A CAPITALIST ECONOMY :

It was capitalism that first made Britains regions great in the 19th century; and only the

return of a buccaneering market spirit will rejuvenate them today. The UK is a capitalist

country based on private ownership and free trade. Under this heading it will be discussed

that how U.K. has a capitalist economic system.

In the 1930's at the height of the Great Depression, British capitalism was forced to accept the

Keynesian medicine of government regulation or face the possibility of a workers' revolution.

In reality, it wasnt regulation but subsidization of industry to stimulate demand during the

depression which helped inspire the confidence needed to boost investment. More goods and

services were produced and hence full employment was reached.

Capitalism with a conscience

Thus in June 97 we saw the worst Conservative electoral defeat since the Great Reform act

of 1832. For New Labour however it was their best majority in many years. New Labours

attraction to the ex-Tory voter and the relatively conservative middle class as a whole was

Labours notion of capitalism with a social conscience. New Labour have now taken centrestage by announcing a synthesis between free trade and social cohesion. The bottom line is

that the Conservatives are out of a job for at least a couple of terms until they can think of a

better line than their back to basics campaign.

Of course in politics, as everyone really knows, elections are never won, they are only lost.

New Labour is already alienating many disadvantaged groups, including the unions, students,

disabled and the aged. Nurses and teachers will be next and anyone else who dares ask for a

decent wage.

Post-ideological era?

On the surface, it appears that we live in a post-ideological era. We seem to have run out of

ideas. Social Democracy, once popular in the post-war boom, is a relic of the cold war, when

Western capitalist countries wanted to give the impression of a socialist society to hold the

fort against possible revolution. Now it is in retreat everywhere. It has been severely curtailed


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in Sweden; in Italy, Christian Democracy has almost vanished. Only Norway is going strong,

but that is because the country is now reaping in the profits from infrastructure investment to

develop its tremendous oil reserves. The traditional Right is also in disarray in France, and in

Germany the long conservative rule is nearly over. The traditional Left and Right are fast

disappearing.

In the U.S., Reaganomics Americas Free Market agenda was defeated by Clintons centre

Democratic party. That Clinton is also promoting the basic neoliberal agenda - free trade, no

restrictions on international investment, cutbacks in welfare - doesnt negate the point. That

Clinton doesnt attract the same animosity as Reagan and Thatcher before, is the whole point.

The key point is that in the public eye Clinton is still basically a centralist. Capital must now

be represented by "ideological-free" politicians who seem to be listening to the people.

Only capitalism has survived. Not only in England and Europe, but throughout the world,

owners of capital in superbly orchestrated moves have won every democratic election since

the beginning of universal franchise. Keynesian Labour and later Keynesian Conservative

parties were a smoke screen to fool the people into thinking capitalism had been transformed

into a mixed economy. The post-depression New Deal package given by American

President Roosevelt was from the same box of tricks. So from the war to the mid-70s capital

had to compromise with Keynesian economics.

For many years it could afford to do so. The Neo-Liberal rationale was that if capital is

allowed to find its own way unhindered by state bureaucracy, economic recovery is sure to

follow. Social Democrats were now on the defensive. All social institutions were now to be

measured according to the yardstick of the market.

Later on in the 90's, after the demise of socialist Eastern Europe, there was less need to keep

up with the pretence of Social Democracy. Public institutions like universities, hospitals and

transport were all affected by the privatisation process. And since the beginning of the 90s,

multinationals, through international free trade agreements NAFTA, GATT etc., have been

getting away with unilateral mayhem.


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Tony Blair, British Capitalisms Errand Boy

In England, however, big business was becoming unpopular and could not risk the direct

approach of the Neo-Liberal Tories anymore. The Neo-Liberal experiment had been going on

for almost two decades. The chaos and infighting that marked Majors administrations were

causing uncertainty in the markets and general confusion in the public eye. Capital therefore

needed to have its interests protected by a new image. It needed the softer touch of the

Blairites. In the guise of a peoples government and a consensus approach, capital now has a

perfect disguise. Who would accuse a Labour government of ripping off the people?

In Proutist terminology, this practice of always backing the winning horse, of always

cunningly changing the disguise of exploitation, is called Metamorphosed Sentimental

Strategy. As the future unfolds, we will surely see more twists and turns as capital slowly

finds itself with its back against the wall, which is the raison detre for economic

globalisation - a mad rush to secure the last markets. The period cannot last forever, however:

It can end in two ways - another world war to revive economies involving the most dominant

capitalist countries, using poor people again as cannon fodder. Or a massive uprising of

disaffected soldiers, militant workers, unemployed, disgruntled intellectuals and the general

exploited mass. These are the choices that will face much of the world in the not-so-distant

future.

Current Position :

Both Prime Minister David Cameron and Leader of the Opposition Ed Miliband opened 2012

by calling for 'responsible capitalism'. In a speech on 'moral capitalism' delivered at New

Zealand House, London on 19 January this year, Cameron envisaged a market 'fair as well as

free', one in which 'the power of the market and the obligations of responsibility come

together'.

This theme was discussed on BBC's Newsnight recently, where Eric Hobsbawm and Tristram

Hunt explained the primacy of 'irresponsible' capitalism today. While Hobsbawm and Hunt

railed against capitalism's current sins, the subtext of the debate emerged. It concerned the

English left's broader position on the 'fairer' consumer capitalism favoured by the current

Labour leadership, one informed by a co-operative ethic dating back to nineteenth century

reformers like Robert Owen (and beyond).


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I purposely refer to the 'English left' because, firstly, the theme of fair market practices has a

distinctly English lineage which is often overlooked and, secondly, because recent events -

notably the question of Scottish independence and the English riots of last summer - have

served to underscore the distinction between England and the other parts of the Union.

It is worth exploring the relationship between the rhetoric of 'responsible capitalism' and

'moral economy'. E.P. Thompson popularised the latter term in his seminal 1971 article 'The

Moral Economy of the English Crowd in the Eighteenth Century'. Thompson, a Marxist with

a Methodist background, prefaced his piece with the biblical proverb 'He that hideth up corn

shall be cursed amongst the people'. He outlined how the late eighteenth century political

economy of Adam Smith disinfested economics of its moral imperatives, comparing

prejudice against the middleman as a superstition akin to witchcraft.

This thinking, which has become dominant today, clashed with popular conceptions of

fairness in the marketplace. Thompson's key argument was that 'mob' actions of the day were

often inspired by righteous anti-profiteering sentiment rather than loutish violence. The

'legitimising notion' of English crowd action, based on the defence of traditional rights and

customs, often served to directly overturn market abuses in the interests of the community.

Since then, the term moral economy has been used in divergent contexts and periods. Likeresponsible capitalism, moral economy has become shorthand for the idea of customs

antagonistic to profit. It has described modern rural societies in South-East Asia and Canada's

welfare-based economy compared to the United States.

Understandably, some view these later manifestations of moral economy as anachronistic.

Demonstrations in defence of moral economy differ from the clashes at factory and mine in

the industrial era; and from modern political ideologies and markets today. As Thompson

admitted, the moral economy was 'not "political" in any advanced sense.'

Yet neither was agitation for moral economy 'unpolitical', he said. Based on a 'highly

sensitive consumer consciousness', Thompson claimed that embryonic English capitalism

was regulated by an 'irascible market which might at any time dissolve into marauding bands

who scoured the countryside with bludgeons or rose in the market place to set the price at the

popular level'. Far from mere 'rebellions of the belly', England's food riots were based on

popular consensus against illegitimate and unscrupulous economic practices.


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With recent reports suggesting the 2011 English summer rioters were more politically

motivated than previously thought, should we guard against dismissing the pilfering of

widescreen televisions and the like as merely materialist 'rebellions of the telly'?

Eric Hobsbawm warned against attributing too much political motivation to these

demonstrations. But his choice of words revealed the discursive shift within the English left.

He shied away from explaining the riots in conventional Marxist terms as the product of

'alienation': a reaction against the inability to determine the character of one's actions under

capitalism.

Instead, Hobsbawm argued the 2011 rioters were 'demoralised' by the current economic

malaise, language that echoed the current moral approach of capitalism's discontents in

England. Assailers of capitalism in the Occupy Movement and UK Uncut insist they are not

'political', and yet neither are they 'apolitical'. Often Church leaders are the most outspoken

against capitalist injustices while the English political left complain about pricing, yet accept

market capitalism implicitly.

Does this signal a return to an England where 'marauding bands' and the prospect of a

'thundering good riot' are condemned by both the paternalist political order and the non-

violent dissenting left, yet rioters periodically deliver one in the eye for large profiteers bylooting and violence?

The answer is no, as David Cameron knows well, because responsible capitalism, like moral

economy, is the stuff of pantomime in an age in which England's place in global capitalism

rests on the continued primacy of the City of London, bonuses and all.

Ed Miliband should note that moral economy is an inherently conservative language of

protest. And no one does Merrie Old England quite like the Conservatives, past or present.

Engels derided the mid-nineteenth century Tory Young Englandersfor clinging to an obsolete

feudal vision. But sentimentality for 'the way things were' before greed intervened persisted

on the English right even during the Thatcher years, when the Institute of Economic Affairs

spoke of morality around markets.

Labour can trace its responsible capitalist roots back to Owenite utopianism and beyond, but

Ed Miliband will never trump David Cameron on the harvest-home-and-roast-beef of

Christian pastoral. That is what underpins, to varying degrees, both the terms underconsideration. In articulating Labour's case, Miliband should therefore discard the all-too-


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malleable 'responsible capitalism'. A la Sir Toby Belch in Twelfth Night , the Prime Minister

likes to strike the role of the defender of 'cakes and ale' against state puritanism. But

according to Miliband the 'basic difference' between Labour and the Tories is exactly this

dichotomy between the party which 'wants the government to step out of the way', and the

one which 'wants the government to step in and defend the public'. It is a distinction which

demands a more fitting and challenging term.


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U.S. AS A CAPITALIST ECONOMY

The American economy became predominantly capitalist only by 1900. The earlier years fall

into three periods. The first, from 1600 to 1790, is characterized by handicraft-subsistence

production alongside elements of a semi-capitalist economy stemming from commercial

production of tobacco. The most commercialized sectors of the economy were predominantly

staffed by enslaved and semi-enslaved workers. During the second period, 1790-1865,

several industries became organized along capitalist lines and some sectors of agriculture lost

their subsistence character until by the period's end agriculture as a whole was producing for

the market. A working class of free and unfree elements is then growing rapidly. In the third

period, 1865-1920, economic development attains an extraordinary pace as industry and,

increasingly, agriculture becomes subject to capitalist forces. All capitalist economies are

commercialized but not all commercialized economies are capitalist.

in the U.S. free, semi-free, and unfree labor was important; capitalism in England evolved

out of feudalism but only some of the latter's remnants could be glimpsed in the U.S.; in

England, the agricultural economy first became capitalist while in the U.S. it lagged behind

manufacture. The U.S. was the first modern capitalist country to develop from a colonial

status, from a slave base, and with an enormous natural-resource endowment. Above all,American capitalists utilized more violence in the class struggle than their confrres in any

other capitalist country.

American society from the colonial period onwards was the very opposite of equalitarianism

and self-denial in economic affairs. The greatest economic swindle in American history was

not the Lincoln Savings & Loan affair, although this is what we have been told repeatedly.

Rather, it was the stealing of the Indians' land, which constituted the basis of America's claim

to unparalleled economic sufficiency and generosity. Without Indian land, the developments

in nearly two centuries of colonial history would have been unthinkable. During the 17th and

18th centuries, land was the principal means of production in America. Instead of acquiring

wealth by retail means such as piracy on the high seas, European Americans stole other

people's wealth wholesale.

By the end of the 19th century, land had receded as the central means of production.

Manufacturing and railroads took the forefront, along with new financial industries. Untilaround 1900 or so, the distribution of wealth and income in the U.S. had been less


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concentrated than in Europe, reflecting mainly relatively easier access to land ownership

herebut this ended around 1900. Thereafter, concentration of wealth in the U.S. exceeded

or matched that of industrial capitalist countries elsewhere. Around the same time, the United

States became the most favoured home for great wealth throughout the world.

By 1850, America was a commercialized society. It had become normal for men to conceive

of themselves as producers and sellers for impersonal ends. About a third of the total labor

force worked for wages or salary and thus were sellers of their labor power. In agriculture,

world markets claimed major portions of the cotton and other crude materials output of the

country. Factory production in the textile industry and transportation advances were hurtling

America toward economic predominance. By mid-century, American per capita output

lagged behind that of England, but exceeded that of France.

During more than 150 years before the American Revolution, an economic and political elite

held sway in just about all the colonies. Bureaucratic capital accumulated as offices in

government became a main avenue for acquisition of land. Prodigious land grants were

assigned by top officeholders to themselves or handed over to family, friends, and business

associates. The elites treasured such golden connections and closely superintended access to

official positions in county- and province-wide government. Almost invariably, large-scale

merchants, landowners and slaveholders, and occasionally professionals occupied the top

rungs of colonial society. Even where politics was more democratic, as in colonial Boston,

concentration of economic power did not fade away. One difficulty for Americans in

understanding the rise of capitalism in the United States is the very fact that capitalism is a

system. Adam Smith once explained that "a system is an imaginary machine invented to

connect together in the fancy those different movements and effects which are already in

reality performed."Thus, economic systems are not fixed representations like constellations

of stars, each essential part of which is visible to the viewer. Instead, they are combinations

of real actions and mental interconnections. Since the whole machine "works," one would

consider its existence to be beyond dispute. The opposite is true. History is all but absent

from the pages of the Left and the Right in the United States. Left journals rarely deal with

the history of American capitalism. Nor do references to the subject appear in articles

devoted to analysis of the contemporary scene. In other words, economic history seems to be

irrelevant. Capitalism in Left discussion becomes only contemporary American capitalism.

And it is an unchanging capitalism. How it originated is a mystery. More is written about the

history of English capitalism, although the particularities of English and American history are


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extremely different. On the Right, capitalism is conceived as eternal and unchanging, as part

of human nature. Clearly, then, capitalism has no history. In this view, capitalism did not

develop, it was created whole. Since it is eternal, it neither ages nor decays. Criticism of

capitalism is blasphemy, and heretics are banished. Gifted devotees are venerated and

awarded great wealth. The business press of the United States is largely devoted to

celebrations of capitalism, certainly not to a critical history of its origin and development.

When a specific criticism of capitalism is occasionally voiced in public, it is countered with a

charge of faultfinding or, curiously, is characterized as "past history." Americans, who seem

peculiarly attracted to celebrating centenaries, bicentenaries, and such have never celebrated

one of these for the origin of the capitalist system.


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CONCLUSION

Admittedly, Britain is among the countries that have managed to remain successful in the

international market in addition to having enjoyed a substantial share of the total global

exports. After the World War II, majority of Britains export market was closely tied to the

colonial links, which formed majority of its trading partners and this was one of the leading

factors for the strengthened forces in the global share. The shift from the production of goods

towards the production of services. Additionally, the composition of UK exports has since

evolved over time with much focus being directed towards the importance of service exports

as compared to the expense of locally produced goods. However, the emergence of BRIC

countries has had effects on the UK exports has accounted for the declining competencies of

UK exports because the low production costs has led the production of certain goods beingredirected to these emerging markets. British exporters have rather found it difficult to

penetrate these emerging markets despite them having higher percentages of consumers.

Britain has managed to remain competitive in the weak but competitive global economy by

retaining its comparative advantage in the few remaining good export sectors. The weakening

of the Sterling Pound has enabled the country to remain competitive because British

exporters are able to reduce the prices of their products or keep them constant leading to

higher profit margins. Furthermore, the weakening of the sterling pound makes British

products to be relatively cheap in the international market thereby attracting more traders.

Lastly, British exports have started finding their way into emerging countries such as those in

the Eastern Block and BRIC countries.

Finally yet importantly, the governments participation in trading activities has been critical

in controlling trading activities of various organizations in addition to bringing about the

desired macroeconomic effects. Allocation of resources and government controls are some of

the activities that the government uses to influence the change in planning processes of many

organizations. The British government facilitates the process of re-orientating exports to

some of the emerging markets and enacts policies aimed at the reduction of regulatory

barriers for exporters and companies wishing to enter into these emerging markets (Stiglitz,

and Charlton, 2005).

So After studying Americas Whole economy through these days, I found this.

The economic expansion following the 2008 recession has been the weakest of the postWorld War II era. Four years after the start of the recovery, GDP has risen about half as much


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as in the average postWorld War II era recovery. The federal budget deficit, which was

larger than in any other postWorld War II era recovery for much of the past four years, has

shrunk rapidly in recent months and is now smaller than in the recoveries which began in

1980 and 1982. House prices rose again in the first quarter of 2013 but remain 7 percent

lower than they were at the start of the recovery. Household debt fell in the first quarter of

2013 and remains below its June 2009 level. The current recovery was initially stronger than

the recovery from the 1980 recession, which was interrupted by another recession in 1981.

However, at this point, the current expansion is the weakest in the postWorld War II era.

Four years after the start of the economic recovery, GDP is only 9 percent higher than it was

when the recovery officially began. In the average postWorld War II recovery, GDP is 17

percent higher at this point. However still remains 19 percent below the peak reached in the

first quarter of 2007 and is 7 percent lower than when the recovery began. Household debt

decreased in the first quarter of 2013 and remains 3.7 percent below its June 2009 level. In

every previous post-war recovery, the stock of household debt has risen as the recovery has

begun. The Federal Reserve's senior loan officer opinion survey revealed that banks modestly

eased lending standards and that demand increased for certain categories of lending to

households in the second quarter. Job losses continued throughout the first eight months of

the recovery. Payrolls have increased for the past thirty-four consecutive months, adding 6.1

million jobs to the economy. However, there are still 2 million fewer Americans on nonfarm

payrolls than there were at the start of 2008.Because of the depth of the recent recession, one

might expect stronger-than-average improvement in industrial production. Despite the

predicted snapback, the increase in industrial production during this recovery has been fairly

typical of post-war recoveries. Capacity in manufacturing, mining, and electric and gas

utilities usually grows steadily from the start of a recovery; however, during the current

recovery, investment was initially so slow that capacity declined. Since the start of 2011, this

trend has reversed itself and industrial capacity has steadily risen.Capacity is now 1.7 percent

higher than it was at the start of the recovery. The federal deficit was much larger at the start

of and throughout most of this recovery than it was in any other postWorld War II era

recovery. However, the deficit has shrunk rapidly in recent months and is now smaller than it

was following the recessions of 1980 and 1981. The deficit has declined from over 9 percent

of GDP at the start of the recovery to 4 percent of GDP as of June.


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capitalist economy:a comparative study between uk and us

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