Essay by BigtimerHigh School, 11th gradeA+, August 2005

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"Underlying most arguments against free market is the lack of belief in freedom itself." [Milton Friedman] When deciding to what extent should the government intervene in the economy, the following questions must be answered: Does the economy experience periods of boom and bust? Are the goods of high quality? Is there equality, or disparity? Answering these questions spawned many philosophies; the most prominent being capitalism and socialism. Capitalism is an economic system in which the nations economic decisions are the result of individual decisions by buyers and sellers. The economy is flexible, technological advancements are welcomed and occur readily, and consumer get the best quality goods for low prices. But, the economy is unstable, disparity is prominent, and there tends to be higher unemployment rates. This system was one founded and promoted by Adam Smith, who believed that the economy should be left untouched by the government and will take care of itself, because it's driven by self-interest.

Socialism is on the other end of the spectrum. Socialism goes by the idea that the collective rules over the individual, and that state-controlled income will benefit the whole nation equally. Socialism generally has low unemployment rates. It also experiences fewer booms and busts, making the economy more stable. But technological change was discouraged because of the demand to meet production quotas. Also, lack of incentive leads to lower quality goods being produced. Consumers are only offered a small selection of goods and services, which sometimes leads to the creation of "black markets," or secondary economies. Robert Owen believed in a perfect society, where people will work harder if they receive better wages, and that will increase profits, called utopian socialism. Scientific socialism followed, developed by Karl Marx, which involved a complete turnaround of society, and the collective would be promoted over...