July 09, 2020

Free to Choose: Critical Analysis on Government Intervention to the Market Operation and How the Intervention Should be Adjusted to Better Fit the Free Market System

16 minutes

In the 19th century, under the dominance of the market economic system, America experienced rapid economic development through market liberalism. During the 1930s, after the Great Depression affected their confidence in the market economy, the American people held great concern for the future. In 1933, Franklin Roosevelt was sworn in as a President and carried out his famous New Deal programs. The deal included insurance plans for natural and man-made disasters, as well as temporary plans such as creating employment and providing relief directly to the poor through the federal government. In 1936, Keynes published his epoch-making book The General Theory of Employment, Interest, and Money. He advocated that the government should act as a ‘rational economic man’ in order to overcome market failure. During the Second World War, the government even set budgets. This started an unprecedented control over all aspects of economic life. In light of the New Deal, the public increasingly began to accept government intervention.

However, with the expanding scale of government intervention, economic efficiency was constantly decreasing instead of steadily increasing, as was anticipated by the Keynesians. People started to question: does government intervention really promote social prosperity and improve social welfare? Does it bring damage? This book Free to Choose will answer these questions for you.

...more