Macroeconomics
Analyze and explain the chapter’s main point regarding the tradeoff between the human desire for both stability and growth.
Globalization and capitalism prove to be the main competitors to the act of global trade that aims at enhancing the living conditions of the poor individuals in the developing and undeveloped countries across the globe. The nature or forces that determine capitalism in relation to unfolding market competition reflects on collision with the human desire for stability and growth or certainty. This is because the majority of the society members develop the growing sense of injustice in relation to the allocation of capitalism’s rewards or benefits. Capitalism’s greatest tool, competition is vital in the creation of anxiety amongst the individuals within the society. For instance, the essence of job loss associated with capitalism in the creation of anxiety among individuals within the society. Competition is also vital in the alteration of the status quo to the best or worst aspects within the economy of the society. Despite the fact that competition leads to the development of tug or wars within the society, it results in the creation of quality services, improved products, and increase in the volume of production. The article also focuses on the illustration on the need to adopt and implement capitalism like in the economies of the three crucial countries discussed in the context: Russia, China, and India. The increase in income and wealth through capitalism continues to draw extensive debate in relation to the need and accomplishment of the societal welfare. It is essential for the economy to enhance the happiness of the human beings as it relates to the stability and growth of the economy.
What does this fundamental tradeoff have to do with economic policy?
Accumulation of wealth, exploitation, and increase in income, competition, and human desires contribute towards the development of an economic policy. The fundamental tradeoff is vital within the economic policy towards the enhancement of societal welfare such as justice, fairness, and equity among the citizens. This indicates that the economic policy should enhance competition and exploitation of the scarce resources with relevant checks governing the need for societal welfare. This is essential towards the overall satisfaction of the economy thus the need to regulate the institution of capitalism within the American and other global economies (Muller p. 34).
What does this tradeoff have to do with creative destruction?
The need for capitalism in relation to increase in wealth and income through exploitation has replaced the old essence of fairness and justice within the economy. The act of replacement is a reflection of the creative destruction in that capitalism through competition has revolutionized the economy by enhancing the quality of services and levels of production. This leads to availability of goods and services at the disposal of the consumers within the market settings. Capitalism develops through exploitation and competition to offer improved services thus replacing the traditional concept of the market structure and entrepreneurship model (Gane p. 32).
Give examples mentioned in the text of how certain countries have made this tradeoff
The first example is the case of China that is developing the act of capitalism with some partial regulations in relation to the property ownership. The other example is the case of Russia illustrating the role of political aspects in the determination or implementation of the rules governing this tradeoff. The third example is the case of India in relation to the adoption and implementation of the legal property rights with relaxed legal system to attract foreign investors into the nation’s economy. The three nations seek to follow the market rules with certain regulations a reflection of the fundamental tradeoff between capitalism and human desires for growth and stability.
Works Cited
Gane, Nicholas. Max Weber and Contemporary Capitalism. Basingstoke: Palgrave Macmillan, 2012. Print.
Mueller, Dennis C, and Uwe Cantner. Capitalism and Democracy in the 21st Century: Proceedings of the International Joseph A. Schumpeter Society Conference, Vienna, 1998 “capitalism and Socialism in the 21st Century”. Heidelberg: Physica-Verlag, 2001. Print.
