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parul9
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ESSAY QUESTION:
"Individuals living in capitalist economies suffer a higher degree of personal risk than in other types of economies. Creating regulations that protect a society can't help but interfere with free market forces, a basic tenet of capitalism."
From your perspective, how accurate is the above statement? Support your position with reasons and/or examples from your own experience, observations, or reading.
RESPONSE:
Capitalism is often seen as a two faced monster fed by greed and exploitation. However, history has amply proved that countries that have embraced capitalistic ideologies have benefited a lot more than those that have tried to curtail the free market forces using regulations and legal formalities. The topic instantly brings to mind the once super power of the world - USSR, which had embraced the socialist ideologies and had strove to put the state before the interests of a handful profit oriented individuals. On the other hand, the United States of America, with its capitalistic outlook, became a breeding ground of great entrepreneurs and visionaries like Bill Gates and Steve Jobs.
There is a very interesting comparison of all the countries that got independent around the same time as India and chose a different economic path than India made in the book "India Unbound" by Gurcharan Das. India, with Nehru as the stalwart, took up the idealistic path of socialism like its greatest influence of the time, the USSR, and continued to tread that path till until 1991, when the then Finance Minister, Manmohan Singh opened the Indian Economy to the rest of the world. On the other hand, the likes of Honk Kong and Japan, took up capitalism and embraced a more western approach of growth. China too, despite its closed nature, opened its doors to foreign investment in in the 1970s.
If we compare the performance of these countries among themselves, it is not difficult to note that the ones that embraced capitalism earlier grew farther ahead than the rest. In fact, if independent India before the 1991 economic reforms is compared with the India after the 1991 economic reforms, one can easily assess the leaps of growth that India was able to take once it opened its doors to foreign investors and encouraged its own home grown entrepreneurs to spread their wings and fly high.
The socialistic India with a very conservative nature of growth, had a tight grip on all the major industry segments until 1991, including steel and heavy electricals. It had a strict licensing system for any new business and the bureaucratic setup was such that it took a very long time to finally get a license for business. The most distressing part of the story was that if a company produced more than what it was licensed for, it became a punishable offence. This stifled entrepreneurship and encouraged the great businessmen of the time, like Aditya Birla, to set up companies outside India in places like Malaysia, Bangkok etc. It also fostered market monopoly as it was virtually impossible for a novice to start a new business.
Post 1991 reforms, India experienced a paradigm change. The huge human capital resource of the country found the right utilization in the various multinational corporations that flooded the country. And there has been no looking back since then. The start of home grown companies like Infosys and Wipro prove the fact that Indian entrepreneurs with the right encouragement can bring great profits and pride to the country.
Market forces are self regulatory as they has historically proven and regulations only stifle free and natural economic growth.
"Individuals living in capitalist economies suffer a higher degree of personal risk than in other types of economies. Creating regulations that protect a society can't help but interfere with free market forces, a basic tenet of capitalism."
From your perspective, how accurate is the above statement? Support your position with reasons and/or examples from your own experience, observations, or reading.
RESPONSE:
Capitalism is often seen as a two faced monster fed by greed and exploitation. However, history has amply proved that countries that have embraced capitalistic ideologies have benefited a lot more than those that have tried to curtail the free market forces using regulations and legal formalities. The topic instantly brings to mind the once super power of the world - USSR, which had embraced the socialist ideologies and had strove to put the state before the interests of a handful profit oriented individuals. On the other hand, the United States of America, with its capitalistic outlook, became a breeding ground of great entrepreneurs and visionaries like Bill Gates and Steve Jobs.
There is a very interesting comparison of all the countries that got independent around the same time as India and chose a different economic path than India made in the book "India Unbound" by Gurcharan Das. India, with Nehru as the stalwart, took up the idealistic path of socialism like its greatest influence of the time, the USSR, and continued to tread that path till until 1991, when the then Finance Minister, Manmohan Singh opened the Indian Economy to the rest of the world. On the other hand, the likes of Honk Kong and Japan, took up capitalism and embraced a more western approach of growth. China too, despite its closed nature, opened its doors to foreign investment in in the 1970s.
If we compare the performance of these countries among themselves, it is not difficult to note that the ones that embraced capitalism earlier grew farther ahead than the rest. In fact, if independent India before the 1991 economic reforms is compared with the India after the 1991 economic reforms, one can easily assess the leaps of growth that India was able to take once it opened its doors to foreign investors and encouraged its own home grown entrepreneurs to spread their wings and fly high.
The socialistic India with a very conservative nature of growth, had a tight grip on all the major industry segments until 1991, including steel and heavy electricals. It had a strict licensing system for any new business and the bureaucratic setup was such that it took a very long time to finally get a license for business. The most distressing part of the story was that if a company produced more than what it was licensed for, it became a punishable offence. This stifled entrepreneurship and encouraged the great businessmen of the time, like Aditya Birla, to set up companies outside India in places like Malaysia, Bangkok etc. It also fostered market monopoly as it was virtually impossible for a novice to start a new business.
Post 1991 reforms, India experienced a paradigm change. The huge human capital resource of the country found the right utilization in the various multinational corporations that flooded the country. And there has been no looking back since then. The start of home grown companies like Infosys and Wipro prove the fact that Indian entrepreneurs with the right encouragement can bring great profits and pride to the country.
Market forces are self regulatory as they has historically proven and regulations only stifle free and natural economic growth.
