Government Involvement in the Economy

Topics: Capitalism, Economics, Monopoly Pages: 3 (1015 words) Published: September 21, 2011
Government Involvement in the Economy

In the capitalistic society in the United States, Government plays many roles in the economy. Government has been regulating, overseeing, and providing many services in the economy since the inception of our nation. Modern day government has had an increasing presence in the American market as it has gotten larger and more complex. It has become necessary for government to interject its involvement into the economic system to maintain the sustainability of the economy. The fact is, capitalism cannot and will not regulate, enforce, or provide all the necessary goods and services that consumer need. Government is needed to regulate corporations, provide public services infrastructure, and protect the rights of the consumer. Government involvement is a quintessential factor for the success and growth of a capitalistic economy.

Although some economists and businessmen believe that the economy should be allowed to move freely based on the laws of supply and demand without government intervention, government involvement is necessary to ensure a competitive market and help prevent market failure. Ever since the Clayton Anti-trust Act was passed in 1890, government has regulated and broken apart monopolistic businesses. Since businesses are constantly moving towards a monopoly or oligopoly, government regulators must be increasingly vigilant in regulating monopolistic businesses to prevent a non-competitive market. If the government did not regulate businesses to prevent monopolies, then those corporations would become too politically powerful, decrease total output, and increase their prices. An example of the harmful effects a monopoly can have on politics is when a monopolistic company threatens to raise the price of a good or service that is important to the government in order to bring about a desirable result. Another reason government must stop monopolistic companies is because they artificially raise their...
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