Capitalism, Economic Systems, and US Economy: A Comparative Analysis

This essay provides a comprehensive analysis of capitalism and its impact on the United States economy, examining the transition from a 'pure capitalist' system to a mixed economy with government regulation and a social safety net. It contrasts the US economic model with the transitional economies of China and Russia, highlighting the influence of socialist principles and the evolution of their market-driven systems. The essay further explores the differences between political and economic systems, and economic policies. It discusses the virtues of capitalism, its role in wealth creation, and its adaptability to diverse cultural values. The author concludes by emphasizing the importance of understanding the distinctions between political systems, economic systems, and economic policies, providing a framework for evaluating economic arrangements across different countries and historical periods.

Capitalism and the United States Economy
The New World was always a distant expansion of the European economy from the
perspective of the European settlers (Walton & Rockoff, 2017).The United States currently
features a mixed economy. It is an economic arrangement that features characteristics of both
capitalism and socialism. The United States economy has both private and public ownership.
It features an open market that permits free trade with some degree of government regulation
and oversight (Orr, 2011). In other words, it is private economic freedom mixed with
government regulation and a social safety net (Orr, 2011). This mixed economic arrangement
is a shift from the ‘’pure capitalist’’ system prevalent during some periods of US economic
history. A ‘pure capitalist’ system is a true free market economy without any government
regulations (Ross, 2018). However, the United States remains a capitalist country. As
responded by President Roosevelt that he tried to save capitalism from itself - on being
accused of undermining Capitalist policies as the New Deal (1933-36) took shape (Galston,
2009).
The Difference between the US, Chinese and Russian Economic System
Unlike the American free market mixed capitalist economy, both Chinese and Russian
economies have transitional features with strong socialist influences. The Chinese People's
Republic is a bureaucratic-authoritarian one-party state governed by the Communist Party. It
is not a democracy like the United States, but not a dictatorship either (Kroeber, 2016, p. 1).
Since the introduction of economic reforms in 1979, the country has witnessed remarkable
economic growth averaging more than 9% annually (Noland, 1995). According to Hu Jintao,
the president of the Chinese Communist Party, the Chinese economic system is a
combination of socialist and capitalist values, often regarded as the Socialist Market
Economy (Ding, 2009). Another way of describing The Chinese economy would be as a post-

Communist transitional economy. This is the transition from a planned centralised economy
to a market-driven one (Kroeber, 2016, p. 6).
Like China, the modern Russian Federation also adopted a transition towards market
economy post the fall of the Soviet Union in 1991. Until 2008, the country experienced a
high annual growth rate of over 7%. Its massive international currency reserve reached $598
billion in 2008. However, the country’s economy faced a huge shock by the end of that very
year due to a sharp fall in the global oil price (Åslund, Guriev, & Kuchins, 2010). The
Russian economy has shown trends of ‘statism’ since 2003, due to an increasing power
struggle within the country’s political elites (Hanson, 2007). And later due to the Russian
government’s standoff with the West (Index of Economic Freedom, 2019).
Political systems
A political system is one that deals with politics and the government. It can be related
with the legal, economic, cultural and social systems. A political system comprises members
of a social group in power. It comprises of a complete set of institutions and the respective
policies and rules which govern them. Political system refers to the way of policymaking of
the government. I am more familiar with democratic system of politics in the USA where the
people elect their representatives and the majority that belongs to a political party will govern
the nation. The elected head among the representatives of that party will become President. I
am more familiar and prefer democratic system of politics where people’s opinion determine
their government. Here some decisions are directly taken by democracy and some are taken
by the representatives of the democracy.
Contrasts Between American And Chinese Policies:

The American Republic was formed amidst protests and war against the British
Crown. Since its formation, the United States has not been hesitant to use force against its
adversaries. Military readiness, use of force to defend American interests abroad have been
the constant objectives of US policymakers. The interventions in Vietnam, Iraq and
Afghanistan are some of the prime examples (Viotti, 2010). China, on the other hand, puts
much emphasis on its soft power. Most Chinese scholars believe the Chinese culture and
traditions to be the core sources of its soft power strategy (Feng, He, & Xuetong, 2019).
The Virtues of Capitalism
The capitalist free market economic system is based on the real world and operates
through its key institutions, the firms and business co-operatives that must contemplate the
values and needs of the customers, employees, suppliers and investors (Smith Jr., 2016). The
critics of capitalism often claim that capitalism undermines beliefs and institutions of a slow-
growing culture by unleashing rapid change in technology (Walberg, 2003). But they fail to
recognize the role of a capitalist system in making people much wealthier. The capitalist
society also advances other values and concerns like justice and fairness. According to
economist Deirdre McCloskey, the almost 30-fold increase in living standards since the
1750s remains one of the foremost achievements of the capitalist system (Smith Jr., 2016). In
today’s multicultural world values differ from country to country. A capitalist organization
can attain legitimacy if it caters to those values.
The difference between political systems, economic systems, and economic policies:
There are some fundamental differences between political and economic systems
besides economic policies. A political system can be defined as a structure authorized to
perform a certain function for society. This includes making legitimate policy decisions in an

independent society (Johari, 1982). In contrast, economic systems are empirical constructs
contrived designed by economic policymakers to compare the essential economic
arrangements prevalent in different countries at different periods of time (Gottlieb, 2013).
Economic policy, on the other hand, are the core activities of any public policymaker or
governing body. This includes crucial economic decisions like taxation, public expenditure
and interest rates (Smith, 1999, p. 3).
References
Åslund, A., Guriev, S., & Kuchins, A. (2010). Russia After the Global Economic Crisis.
Columbia University Press. Retrieved 2019, from https://books.google.co.in/books?
id=5raxDQAAQBAJ&printsec=frontcover&dq=economic+systems+used+in+Russia
&hl=en&sa=X&ved=0ahUKEwiLpP60x9riAhXiX3wKHRcmBg8Q6AEIKjAA#v=on
epage&q=economic%20systems%20used%20in%20Russia&f=false
Ding, X. (2009). The Socialist Market Economy: China and the World. Retrieved 2019, from
https://www.jstor.org/stable/40404550?seq=1#page_scan_tab_contents
Feng, H., He, K., & Xuetong, Y. (2019). Chinese Scholars and Foreign Policy: Debating
International Relations. Routledge. Retrieved 2019, from
https://books.google.co.in/books?
id=zfeCDwAAQBAJ&printsec=frontcover&dq=Chinese+policy+use&hl=en&sa=X&
ved=0ahUKEwjHjIDN1triAhUO63MBHbdaDcIQ6AEIKjAA#v=onepage&q=Chines
e%20policy%20use&f=false
Galston, W. A. (2009). The U.S. is Still a Capitalist Country. Brookings. Retrieved 2019,
from https://www.brookings.edu/opinions/the-u-s-is-still-a-capitalist-country/

Gottlieb, M. (2013). A Theory of Economic Systems. Elsevier. Retrieved 2019, from
https://books.google.co.in/books?
id=tnyLBQAAQBAJ&printsec=frontcover&dq=economic+system+definition&hl=en
&sa=X&ved=0ahUKEwiM_ZTr4triAhUh73MBHTKGB2IQ6AEIKjAA#v=onepage
&q=economic%20system%20definition&f=false
Hanson, P. (2007). The Turn to Statism in Russian Economic Policy. Retrieved from
https://www.tandfonline.com/doi/full/10.1080/03932720601160336
(2019). Index of Economic Freedom. Retrieved 2019, from
https://www.heritage.org/index/country/russia
Johari, J. C. (1982). Comparative Politics. Sterling Publishers Pvt. Ltd. Retrieved 2019, from
https://books.google.co.in/books?
id=A5tzpYUHMvYC&pg=PA65&dq=political+system+definition&hl=en&sa=X&ve
d=0ahUKEwjzhLup4driAhULOisKHeFCC1kQ6AEIKjAA#v=onepage&q=political
%20system%20definition&f=false
Kroeber, A. R. (2016). China's Economy: What Everyone Needs to Know. Oxford University
Press. Retrieved 2019, from https://books.google.co.in/books?
id=jit2CwAAQBAJ&printsec=frontcover&dq=economic+system+of+china&hl=en&s
a=X&ved=0ahUKEwje3Pe3tdriAhWLMY8KHfELCbgQ6AEIKjAA#v=onepage&q=
economic%20system%20of%20china&f=false
Noland, M. (1995). China and the International Economic System. Retrieved 2019, from
https://piie.com/publications/working-papers/china-and-international-economic-
system

Orr, T. B. (2011). Understanding Economic Systems. In T. B. Orr. The Rosen Publishing
Group. Retrieved 2019, from In this assignment, you will explore and demonstrate
knowledge of capitalism, market, and economic systems and policy gained through
the assigned readings and additional research.
Ross, S. (2018). Retrieved 2019, from Investopedia:
https://www.investopedia.com/ask/answers/031815/united-states-considered-market-
economy-or-mixed-economy.asp
Smith Jr., F. L. (2016). The Morality and virtuesw of Capitalism and the Firm. Retrieved
2019, from https://cei.org/sites/default/files/Fred%20Smith-%20The%20Morality
%20and%20Virtues%20of%20Capitalism%20and%20the%20Firm_0.pdf
Smith, D. (1999). UK Current Economic Policy. Heinemann. Retrieved 2019, from
https://books.google.co.in/books?
id=iD6usXgL6G8C&pg=PA3&dq=economic+policies+definition&hl=en&sa=X&ved
=0ahUKEwitvfri5NriAhWBjeYKHW5tDhIQ6AEINzAC#v=onepage&q=economic
%20policies%20definition&f=false
Viotti, P. (2010). American Foreign Policy. Polity. Retrieved 2019, from
https://books.google.co.in/books?
id=WpgjGiPEwhEC&pg=PA77&dq=american+policy+use&hl=en&sa=X&ved=0ah
UKEwjG0K-l1NriAhXHrY8KHV64CZ0Q6AEIKjAA#v=onepage&q=american
%20policy%20use&f=false
Walberg, H. J. (2003). Education and Capitalism: How Overcoming Our Fear of Markets and
Economics Can Improve America's Schools. Hoover Institution.

Walton, G. M., & Rockoff, H. (2017). In History of American Economy (p. 22). Cengage
Learning. Retrieved 2019, from https://books.google.co.in/books?id=g-
I1DwAAQBAJ&printsec=frontcover&dq=American+economic+history&hl=en&sa=
X&ved=0ahUKEwj_xLLHndriAhUQU30KHcs_ARkQ6AEIMDAB#v=onepage&q=
American%20economic%20history&f=false
Worstall, T. (2015). America Has The World's Second Largest Social Welfare State. Forbes.
Retrieved 2019, from https://www.forbes.com/sites/timworstall/2015/10/08/america-
has-the-worlds-second-largest-social-welfare-state/#272ca324c6f9