State Versus Free Market Capitalism: A Comparative Analysis

Abstract

Capitalism has been dominating in the most part of the world and the countries have been adopted it due to its so-called efficiency and wealth maximization through joint stock companies and corporation. But the experience of last two centuries have highlighted fact that capitalism based on free market economy and no-government intervention and profit-maximization has generated severe income inequality, social segmentations and concentration of wealth in a few hands. These anomalies have made this system unattractive to some an extent and some economists have expressed pessimistic views about its validity in future. They are supporting state capitalism, which has been flourishing in different countries during last three decades.The objective of this paper is to analyze the controversies about capitalism in the light of facts and examine the possibility of the success of state capitalism. The author has used secondary data for the analysis and used descriptive techniques has been used to draw the results because this study is qualitative in nature. For analysis we describe the characteristics both economic systems and then compare them. The evidence shows that income inequality is increasing in western countries and it has become a serious issue in these societies. In contrast, state capitalism is flourishing particularly in East Asian economies and uplifting these economies and has posed a serious threat to free market capitalism. In fact, is a paradigm shift in world economy.

Keywords: free Market capitalism, income inequality, state capitalism