Question

Do you think that the current economic system of the US is a true capitalist system according to Adam Smith's view in "The Wealth of Nations"?

Answer 1

The existing economic system of the USA, is a capitalistic economic system, but it does not fully adhere to the principles , mentioned by Adam Smith in his book. Adam Smith, mentioned the division of labor and invisible hands that are applied to the US economy and it creates opportunities for others when a person starts doing business and creating wealth. It makes opportunities for the others. But, Adam Smith also demanded minimal government intervention or laissez-faire in the economy with a view that market is self regulatory in nature. But, it is not the case and government plays an important role with necessary interventions. The government forms regulation to create and maintain the free and fair market competition so that bigger firms do not employ anti competitive policies. Further, the government acts to help those sectors who are unable to grow on its own for the sake of the broader interests of the society. Besides, the government along with Federal reserve, acted swiftly to pull the economy out of recession after the crisis of 2008. These aspects of the role of the government are not mentioned by Adam Smith, but these are the roles, the government has to play in USA even if the economic system is capitalistic in nature.