American Free Market Economy example essay topic

Much has happened in American history since 1932. Throughout all those seventy years the United States has witnessed great developments of its society and economy and has also experienced great transformations. The connections between corporations and science and engineering establishments, credit cards and finally Reaganomics are the ones that I find the most important. All of them might be united by a common theme of boosting economic growth and promoting free market economy. The development of big business gave new order to American society and economy.

Although it brought deskilled workers, low standards of work and work relations that Porter calls in The Rise of Big Business, 'the drive system', corporations had also a positive influence on American economy. The big business connections with science and engineering establishments gave boost to 'research and development of new products and processes'. ^1 Different firms, such as mentioned by Porter, General Electric, AT&T, Du Pont, Eastman Kodak and many others developed their R&D departments. Corporations were constantly developing and enhancing their products and services so they could launch their high quality products to the market. So the customers could find a wide range of goods, spend their money and consequently make the economy tick faster. But to make R&D working the firms needed well educated and trained professionals to run the departments.

Hence the universities got involved in the connections with corporations. 'First true research and development laboratory in the United States, that of General Electric'^2 pioneered in the emergence of research and graduate studies programs at universities. Education system could meet the needs of the corporations, so the needs of the market. Trained people could find themselves as useful in the economic growth. As the century progressed the corporations strengthen their ties with the science, engineering establishments and universities. And later in that century another connection took part in the market development, that of military - industrial complex.

As Hughes noted in American Genesis, it stimulated the growth of such large scale-technological systems as wireless telegraphy and telephony. The development of new products enhanced the competition in the market and that consequently led to the growth of economy. Not only is the wide range of products important for the market development, but also an easy access to money. American banks found a solution to that problem by issuing credit cards. The two dominant national organizations, as Mandell calls them in The Credit Card Industry: A History, BankAmericard and Master Charge were trying to beat each other in fight for the clients.

The bigger number of credit cards in circulation means bigger profits. The banks make money by lending it. And with a credit card people do not have to worry about paying for something. One pays 1$ with a credit card today instead of paying for the same product 1.50$ next year. As Mandell noted, credit cards once reserved for only businesspeople and the wealthy, in the 1970's were carried by nearly half of all American consumers. Banks were mailing their credit cards to their customers.

The number of cards in circulation increased substantially. Most banks firstly concentrated on 'upper - middle - income Americans'. ^3 This group thought to be the most creditworthy. And in fact it was. They were paying their interests on time, and banks did not get their interest income.

Banks were forced to aim their strategy at lower income groups. Also college students, seen as future businesspeople or professionals, as Mandell writes, got their free credit cards. Banks were landing the money, the society was using its credit, buying goods, the companies offering the products and free market could thrive. Since there was no need to worry about buying a product one day and paying for it another day, people could have more.

Americans got used to the fact of being able to afford whatever they want, and they would not settle for less. After the oil embargo of 1979 and the economic slump it would seem American society would have to do with less. President R. Reagan kept the standards of American life. He believed in free market and self-regulation. Reagan's administration introduced De Regulation; the regulatory offices were taken off so free market could develop. Taxes were radically cut.

And the process of converting government enterprises into privately owned companies implemented. So transportation, cleaning services, even police forces were open to privatization. In 1982 the unemployment decreased and the economy regained much of its energy. The market was full of different goods and a service with varied prices, the competition was fighting the battle for the customers. Apart from Reagan's sheer economic tactics; his military build up and SDI could be argued to have caused the economic slump in Russia and the end of the Cold War, which also had a positive influence on American free market economy. Even if not for long, as in 1987 economy slumped again, Reaganomics stimulated the growth of American economy.

The growth is the fundamental goal of many economic systems. In theory, the whole system is wanted to expand and provide more businesses, more jobs, and more wealth for everyone. In practice, however, it is difficult to achieve the economic growth. All of the three developments, connections of corporation, credit cards and Reaganomics stimulated this growth in different aspects. Corporations mainly through connections with high technology industries, credit cards through the ability of customers to revolve the money in the market, Reaganomics through stimulating the economy in the crisis.

All of them promoted rules of free market economy and that allowed the economy to grow..