Democratic Capitalism And Individual Liberty

Democratic Capitalism And Individual Liberty

United states over the last 200 years have been defining the connection between individual liberty and the free markets (Tocqueville, 1835). The country’s foundation has the basis of allowing its citizens to move freely leading to the growth of capitalism and enterprises. Liberty, happiness, and life are the principles that give the relationship between the individual liberty and the free markets. That is, each citizen has equal opportunities of pursuing that which is of interest to him or her. Though individual freedom is vital for the growth of free markets, some level of government is essential to achieve this. In a comparison between Latvia and the United States economies, it is not surprising that shelves in Latvia supermarkets are empty in comparison to those in United States (Read, 2009). The reason is that the later economic values allow its citizens to exercise their freedom in pursuit of their self-interest while in the former experts make decisions for the entire economy.

To this extent, the manager of the supermarket in the United States makes individual decisions depending on his interest. He/she does not have to go into homes seeking to have an understanding of the needs of his/her customers. Government intervention is only at regulating unethical behaviors in the pursuit of individual interests (Williams, 2006). This allows the individual to continue with their personal pursuits but unknowing to them, their activities contribute into the economy of the society. Free markets will hence depend on individual liberties and successive governments have been trying to increase the freedom of individuals. Some of them include the freedom of speech, movement, and association (Williams, 2006). As individual freedom increases, free markets thrive, which is the reason for the continued prosperity of this country.

Free markets are ideal for an economic growth. Three scenarios exist on the determination of the ownership of property. The first is that ownership of property will depend on the ability of individuals to grab. Such provisions mean that the economy returns to the rule of the jungle, whereby it is the mighty is always right. On the other hand, the second situation involves another party making decisions of ownership of commodities that they did not take part in their production. This is a legal of way of stealing given that it involves taking other parties properties without their consent. Finally, owners are those that produce certain commodities. In such markets, cotton producer can claim the ownership of cotton but not of coffee. This is free market and the role of the government is to ensure that there is no foul play among the parties involved.

The level of intervention of government has the limitations of only regulating the environment that supports a free market. That is, an individual is free to operate to his or her own interest and their personal gains. While in their individual endeavors, they will have an impact on the entire society (Read, 2009). The role of the government is ensuring that such individuals will not engage in actions that will affect the market negatively. Adam smith (1809) stated that the only way that free markets will survive is if there are regulations that ensure individual freedom does not compromise the freedom of others in the society. These way federal and state governments are able to intervene in the market without interfering with the proceedings but ensuring the highest level of ethical standards.

In earlier discussion, there was the identification of three scenarios of government intervention. The second one entails a situation that the government regulates the ownership of products it had no role in production. Such levels of intervention will render the market unhealthy leading to its underperformance (Ebeling, 2009). For instance, the intervention of government into the Latvian market allowed experts to make decisions for the entire population to the disadvantage of the market. As such, the government took part in the deteriorating economy of the nation. Another example is that of the former USSR that suffered huge economic loses due to increased government intervention into the markets. Having the government making ownership decisions of private properties is a violation of individual rights to ownership. Individuals will as a result lack motivation of producing more commodities serving a severe blow to markets evident in these two nations.

The United States prosperity is due to the free markets though there are experts that dispute this fact. Allowing innovators and entrepreneurs to operate with minimal political interference lead to growing businesses and a thriving nation (Ebeling, 2009). Recently, government intervention is increasing having negative effects on the country’s economy. Research indicates that in the 1980s, only around two million individuals received checks from the government but now more than twenty million are part of the scheme. Such reliance on the government is increased intervention of the government into the free market. The argument of redistributing wealth is not convincing. Federal and state governments should allow individuals to fend for themselves. That is, produce commodities that they can sell to better their lives and that of the entire country.

Bailing out businesses has become a source of public debate in the modern America. From major banks to General Motors, the government has been bailing out falling companies. Such a behavior is a characteristic of continued interference of the free market by the United States government. Entrepreneurs should be responsible of their actions. This has the meaning that once an individual decides to ventures into a business, there ought to be ready and aware of the risks and the threats that they expose themselves. Once that person’s policies lead to the collapse of their business, the government should not intervene and should allow such businesses to collapse to allow responsible behaviors of entrepreneurs. Bailing out businesses is allowing them to engage in risky behaviors with the knowledge of government support in case of failure. This promotes monopoly and gives them a competitive advantage over other similar organizations.

Though bailing out businesses should not be part of a free market, there are exceptions necessary. Such exceptions include failure due to unfair policies on the part of the government and in instances when an entire sector of the economy is facing the threat of collapse leading to human crises. Sometimes the government enters into agreements or formulates policies that are unfair to certain businesses. Such interventions may lead to the collapse of a business and the government has the ethical mandate of bailing out such enterprises. On the other hand, if there is the threat of collapse of an entire sector such as communications that might hamper the entire economy, there is need for government intervention. The government has however, no mandate to make such decisions single-handedly and consultations are necessary.


Tocqueville, A. (1835). From Democracy in America. Langley: J. & H.G. Langley Publishers.

Smith, A. (1809).An inquiry into the nature and causes of the wealth of nations. California: University of California Press.

Williams. E. W. (2006).Entrepreneurship and the spirit of America. Virginia: University of Virginia Press.

Ebeling, R. M. (2009).The conditions of free market capitalism. Michigan: Hillsdale College press.

Read, L. R. (2009). I, Pencil. New York: Foundation for Economic Education Publishers.