Adam Smith put high hopes on the power of the invisible hand of the market and its capacity to ensure common welfare and prosperity. In the meantime, the latest change in the economic trends shows that the economist’s expectations were inflated as well as the potential that he assigned to the free market turned out to be exaggerated.
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The initial formation of the EU might be interpreted as an attempt to put Smith’s theory into practice. Except for the political implications of this union, it was, most importantly, created for the purpose of strengthening the common economy through establishing the classic free-market environment. Less than a half a century after the union’s creation, one of its most significant members decides to leave. The question consequently comes up, regarding the prospects of the so-called, laissez-faire economy in the modern context. In other words, it is no more clear in which direction today’s capitalism is moving.
It seems that Smith’s ideas have been successfully adopted by the European states but rejected by their residents. In his article, Porter discusses the results of the recent research among the residents of the EU which illustrates that the major part of them is dissatisfied with the free market environment and expects its government to influence the local economy more actively (par. 8). The overall disapproval of the free market rules is grounded. Hence, instead of receiving the universal opulence promised by Smith, the European employees have faced high unemployment rates, low wages, and unstable working prospects constantly shattered by the new waves of immigrants.
In order to understand where capitalism is moving now, it is essential to consider the roots of its initial establishment and strengthening. Thus, Porter elucidates an interesting idea referring to the economic crisis of 1970 that “fatally undermined people’s trust in the state” (par. 15). Therefore, it might be assumed that the ultimate reason for the capitalistic system’s prevalence over the socialistic model resides in the fact that the society, disappointed in the government’s managerial capacities, decided to take a punt on the powers of the free market.
As long as the latter has already illustrated its inability to ensure general welfare, it is natural that the shift is being made back to the governmental party. Porter points out that today’s model of capitalism that is “based on tax cuts, privatization and deregulation” is no more accepted by society (par. 17). Otherwise stated, today’s workers are more likely to follow Keynes’s guidelines than to believe in the prospects outlined by Smith.
It should also be noted that another symbol of the capitalistic disaster is the growing popularity of Donald Trump. His radical proposals and appeals would initially appear to be excessively eccentric. However, the Brexit phenomenon illustrated that these appeals resonate well with the public mood. Thus, it would be irrational to speak about the complete destruction of the capitalistic model, but it is already evident that the latter will be inevitably reshaped in the nearest future.
Porter, Eduardo. “In ‘Brexit’ and Trump, a Populist Farewell to Laissez-Faire Capitalism.” The New York Times. Economic Scene. 2016. Web.