Political, economic systems coexist with the state and market. The relationship between state and market determines the effectiveness of various political-economic systems. The state enacts policies that regulate the political-economic system applied in its jurisdiction. The guidelines by the state determine how efficient a political-economic system is with the market. The state is responsible for protecting the market against inefficiency (Alpidovskaya, et al., 78). Therefore, various political-economic systems require different relationships between the state and market to be efficient. There are several major political-economic systems; socialism, capitalism, and communism. Each system has its view of the ideal relationship between market and state.
Capitalism as an economic system operates by designating ownership of capital goods to private individuals and corporations. As a result, production tools are owned by corporations and private individuals. The private individuals’ and corporations’ amount of production is dependent on the supply and demand of the market. Capitalism is a market economy. Therefore, it does not require central regulation. According to Mattioli, capitalism view of the ideal relationship between state and market is the existence of a free market (45). In a free market, private individuals and corporations can decide on the kinds of investments, the products to sell to the market, and the pricing of different products. The lack of checks and control is the ideal circumstance for capitalism. However, the state has laws outside the scope of the free market that a capitalist political-economic system is required to operate under. Therefore, capitalism tends to thrive in select states with laws that favor private individuals and corporations that want to produce and sell goods and services.
In an ideal capitalist environment, private individuals and corporations can own property. Private individuals and corporations can’t accumulate capital goods if they cannot claim ownership of the goods. Therefore, the state has to protect capitalism by giving them the freedom to sell and buy goods and services freely (Renzaho, 38). Pricing is often determined by the supply and demand of the market rather than government policies. Apart from ownership, capitalism dictates control of production tools to private entities. Most companies operate by strategizing ways to maximize land, labor, and capital for profits. The private entities use the surplus product to obtain more profits. Capitalism is motivated by the desire to make profits. Therefore, the accumulation of capital is crucial for this system. Capital is used as an incentive to generate more products. Capitalism often leads to stiff competition among private enterprises to win over the market. An ideal relationship between the state and the market in a capitalist environment includes the state’s lack of monopolies and incentives. Therefore, private entities are at liberty to manipulate the system for profit.
Communism was developed to rival the concept of capitalism. Communism eliminates private ownership. Therefore, people are only allowed products that aid the day-to-day living. Communism’s view of the ideal relationship between the state and market involves a command economy. In a command economy, the state regulates production and pricing. Additionally, the majority of the corporations in a communist state are publicly owned. Surplus produce in a communist society is distributed to the market at large. The relationship between the state and the market in a communist society involves the establishment of monopolies. The state distributes the monopolies in all industries. As a result, the monopolies do not need to improve efficiency in their products or implement lower prices because their market has limited options. Communism as a political-economic system is practical when the state controls monopolies and outlaws private ownership for private individuals and corporations. As a result, private enterprises have no accumulation of capital goods, and the competitive aspect of the market is low due to monopolies.
Socialism shares several similarities with communism. Socialism does not allow private ownership of private goods. Therefore, the state owns and controls production tools for goods and services. In a socialist system, the state controls all the production and distribution of goods and services to the market. Therefore, the state determines the amount of production for goods and services with its pricing for its market. In communism, the state owns most of the capital goods while citizens in socialist states own an equal share of the capital goods directed by the state. Therefore, the ideal relationship between the market and the state in a socialist society requires the implementation of a command economy by the state. According to Scharfenaker, the state controls the distribution of capital goods to its market (90). Therefore, an ideal relationship between the state and the market in a socialist state does not permit a free market.
Conclusion
In conclusion, various political-economic systems have a different view on the ideal relationship between the state and the market. Capitalism requires the state to allow private ownership of capital goods, and its production is influenced by the supply and demand of the market. On the other hand, communism and socialism require the state to have ownership of capital goods while controlling the distribution of goods and services to the market.
Works Cited
Alpidovskaya, Marina L., and Elena G. Popkova, eds. Marx and modernity: a political and economic analysis of social systems management. IAP, 2019. https://books.google.com/books?hl=en&lr=&id=HGGpDwAAQBAJ&oi=fnd&pg=PP1&dq=political+economic+systems&ots=UYMX-V-Atq&sig=H9kwQdUXBAoF3nGCp8uvX28jL_E
Mattioli, Giulio, et al. “The political economy of car dependence: A systems of provision approach.” Energy Research & Social Science 66 (2020): 101486. https://doi.org/10.1016/j.erss.2020.101486
Renzaho, Andre. “The need for the right socio-economic and cultural fit in the COVID-19 response in sub-Saharan Africa: examining demographic, economic political, health, and socio-cultural differentials in COVID-19 morbidity and mortality.” International journal of environmental research and public health 17.10 (2020): 3445. https://doi.org/10.3390/ijerph17103445
Scharfenaker, Ellis. “Statistical equilibrium methods in analytical political economy.” Journal of Economic Surveys (2020). https://doi.org/10.1111/joes.12403
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