Laissez-Faire Economy

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Inthe great transformation by Polanyi, equal rights for all the peopleare advocated and supported. That is evident from what the authorsays about free-market capitalism. The author says that free marketbrought inequality, war, oppression and social turmoil. Whereas thereis an element of truth in the claims, it`s also true that free marketeconomies have self-regulating mechanisms, and it`s the preferredsystem preferred by the majority. Regions and nations known for theirsupport of the communist or socialist models of economics are slowlyembracing laissez-faire economies. Examples of such countries includeIndia and China. However, the free market economy brought aboutchallenges as articulated by Polanyi, which required governmentinterventions. With the emergence of the free market, the workerswere compelled to work for longer, and working conditions dwindledwhile the gap between the rich and the poor widened. This researchpaper delves into the evolution of social rights in the face of theincreasing income inequality. The paper also aims to find outgovernments’ intervention measures that have been adopted byvarious nations to address the income inequality among societies.

Liberalconception of the market

Laissez-faireeconomy was deliberately created by different administrations aroundthe world at the height of the industrial revolution. It was a moveby governments to enable businesses to chart their destiny whileletting the market forces into play (Hillset al, 2013).The economy played its roles as expected. There was an injection ofprofessionalism in the management of businesses. There was anincrease in productivity and hence expansions in all sectors of theeconomies(Neckerman, 2004).Manufacturing and service industries flourished, and there was anemergence of a highly paid class of executive professionals in allthe areas. Huge revenues were generated by both the business ownersand the managers in the private and the public sector. Competition isincreased among the players in different areas in an effort bymanufacturers to capture larger market shares than rivals. Thecompetition led to the improvement of the quality of goods andservices with the intention of winning more customers. There wasintense price rivalry and the market forces were allowed to determinethe direction of the market(Auf, &amp European University Institute.2015).More wealth was generated than ever before. All was well for theeconomies. However, it led to sharp increases in the incomeinequalities. The business owners and the top echelon of themanagements earned much more than the small cadres of workers(Neckerman, 2004).Due to market forces, the rich and the poor would buy goods andservices at same prices which further enlarged the inequality gaps.There had to be intervention measures by administrations andgovernment to address the widening gap so that the poor could affordnecessities in the face of the low pay. There had to be strategiesaimed at resolving the inequalities in the effort to avail essentialservices to all.

Fromstudies done in the recent past, income inequality in the USA hasincreased in the last 40 years. The total amount of revenue achievedby the top one percent had increased by 10% than in the1970’s.However, the trend is worrying considering that it hadincreased by 20% by 2012.The increase has been attributed to highersalaries for senior management executives, together with emerginggroup of entrepreneurs(Roland, 2013).It has also been found out that levels of poverty are also increasingat an alarming rate and hence the various government measures toaddress the disparity. Despite advocating for free market economy,the administration`s realized that the dignity of the people has tobe maintained via an acquisition of basic necessities. There wastherefore the need to end monopolies in the organizations so thatindustries were made competitive and therefore make them competefairly(Carl, 2011).Monopolies would ensure that organizations are not exploitative tothe consumers through higher and unjustified prices of goods andservices. Such a measure would promote economic and social rights ofthe lowly paid and the poor. Such monopolies were eradicated throughnationalization of essential industries such as telecommunications.The nationalization of services in the basic industries ensures thatthe prices could be controlled and maintained at affordable rates byall irrespective of the increasing economic gaps.(Alperovitz, 2005).There were also enactments of consumer protection laws so that theconsumers were protected against unscrupulous businesses and firmskeen to take advantage of their vulnerability. Before the advent ofindustrialization, the social connection ensured that people couldnot be subjected to the erosion of human dignity due to lack ofincomes(Neckerman, 2004).Resources were distributed across communities, and inequality levelswere most nonexistent. Free market capitalism, however, reversed allthat. Administrations, however, realized that it would be disastrousin they don`t introduce measures that would ensure the basic socialright to the citizens. However, the free market economies werealready deeply rooted and could not just be done. What followed isseries o affirmative action`s to address the disparity. Measures inhealth, for example, are popular in the USA, where the Obama healthcare program has been introduced to increase accessibility to healthcare. Despite the USA’s open support for a free market, theadministration realized that it had intervened and enables thelow-income earners and the poor afford the health care(Neckerman, 2004).The evolution of the social rights has been implemented in anentirely different aspect from what Polanyi had advocated. Thedevelopment of social rights in the modern era has taken thedimension of affirmative action. However, they are the same rightsthat Polanyi supported. The wars and oppression mentioned in the bookexist albeit disguised. There is oppression of workers through lowwages, which is evident from around the world. Workers are known toearn less and work for longer hrs in India, China, and Bangladesh.There are ongoing wars in the Middle East informed by conflicts inthe struggle for natural resources and just creating social turmoilas Polanyi envisioned.

Inseveral countries of the world including the USA, there has been theenactment of laws for necessary housing and decent shelter(Stiglitz, 2015).The low-income earners are therefore, beneficiaries of housingprograms as ways to protect their dignity as human beings. Anyonewould have imagined that such rights wouldn`t prevail in the adventof the free market economies and capitalism systems ofadministrations(Neckerman, 2004).In both the USA and the UK the right to primary education is anchoredin the constitution to ensure that the low earners and the have-notsaccess education just like the rest of the population in therespective countries.

Anothersocial right that is being provided by several administrations thatsubscribe laissez- faire economy is the right to acquisition of food.The increases inequality in the free market economies has led to somehungry people who cannot afford basic food requirements compellingthe administrations in several nations to come up with interventionmeasures to alleviate the situation(Neckerman, 2004).Social welfare programs have been introduced in several countries toprovide for necessities. In the USA, social welfare benefits andprograms were meant to ensure that the poor and the destitute getminimum funding to take care of their basic needs such as food andhousing(Rossin-Slater, 2013).The minimum allowances in the form of social security were meant toinstill dignity in the citizens by providing minimum allowances forfood and other necessities. It has been a gradual evolution of thesocial rights in several countries of the world. According toresearch conducted in 2014, 14% of families or one in every sevenhouseholds in the USA were likely to go hungry at some point. Thefigure was a reduction from 2011 when 14.9% were experiencing foodchallenges. From the same research, 5.6% of families had a low foodsecurity, which had compelled the parents to alter the eatingpatterns as a result of limited resources. It was also found out thatchildren who were food insecure consisted of 9.4% of the households.Such food insecurity in American families had compelled thegovernment to introduce Supplemental Nutrition Assistance Program(SNAP) to enable the low-Income earners to meet nutritionalrequirements of their families(Stiglitz, &amp Rosengard, 2015).All these are efforts by the government to ensure social, economicrights of the American public. In the UK, research conducted in the2012- 2013, an Oxfam partner gave food to more than 350,000 hungrypeople who were more than double the number provided with foodrations in the previous year. At around the same time, more than 2million were facing malnourished, and 3 million were confronted withthe threat of the same.

Healthis a social right that has considerably evolved too. Due to theincome inequalities in several countries, the majority of thelow-income earners could not meet their basic health care needscompelling the respective to come up with measures to alleviate thesituation(Stiglitz, &amp Rosengard, 2015).At some point medical care rates were lowered, but the silentmajority couldn`t afford the fees forcing the governments to createbetter programs that could be offered by most of the low-incomeearners and the have-nots(Stiglitz, &amp Rosengard, 2015).After a lot of experimentation with several health care programs, the American government finally settled on the Obama health plan thatwas implemented in March 2010.The plan aimed to make health careaffordable to the majority of the low-income earners and the poor ofthe American public. Since then millions of the American citizenshave benefited from the program which is in its sixth year.

Restrictionson laissez-faire started in a natural way. The introduction ofLaissez-faire in the management of the economies around the world mayhave been planned but the limits of the system being experienced inthe world in the modern times are not expected(Congressional Quarterly, inc. 2010).It is spontaneous as administrations of national economies realizethat they cannot afford to ignore the suffering masses who arevictims of the increased inequalities. Several governments in Europeand Asia have experimented with several welfare programs in the bidto cater for the social rights of their citizens. It is however uponthe administrations to assess programs that suit their contextsregarding economic capabilities.

TheUSA government has struggled with the housing issue for the smallcadres of the population for long, leading to subsidized housingprograms. The introduction of the housing projects was an endeavor bythe government to offer affordable housing to the majority of thepoor and low-income earners(Stiglitz, &amp Rosengard, 2015).

Theincome inequalities in the free market capitalist economies haveprovided several governments around the world with the option ofadhering strictly to the forces of the market and let the low-incomeearners bear the blunt(Carl, 2011).The government has however responded to fill the gaps to provide forthe basic social rights leading several programs. The right to fairlabor conditions is one of the social rights that most governmentadministrations have observed. Despite the existence of libertiesallowing workers to work for employers they deem appropriate fortheir needs, the governments realized that most employers could beexploitative. Market forces alone could therefore not adequatelyaddress the plight of the workers leading to the emergence of laborunions to fight for the rights of the employees(Giroux,2014).Such unions would be entrusted with bargaining for better terms andconditions of the workers in a bid to fill the growing inequality.

Theright to education had been contentious in many countries for longdue to high cost(Manza,&amp Sauder, 2009).At some point in the history of the developed countries, there wasthe emergence of open centers to provide education to the poor andthe low-income earners. The administrations, however, intervened toprovide quality education leading to education loans and grants aimedat ensuring that the poor and the low wage earners can afford toeducate their children in the face of the widening incomeinequalities. Primary education is therefore guaranteed in theconstitution of several countries in the world that subscribe tolaissez-faire systems of economies.

Theappropriate legal aid has been observed by several administrationsfrom around the world. In the USA, for example, the government hadlet the market forces determine legal representation, but the realityfinally set in, making the government realize that most people couldnot afford legal representation. The government was thereforecompelled to initiate programs to provide legal assistance to peoplecannot afford the legal representation due to lack of resources.Legal representation was considered paramount in the provision ofjustice in ensuring Legal equality(Carl, 2011).Despite the deliberate efforts by the government especially those inthe west to observe laissez-faire economies in free markets, theadministrations realized that the systems cannot be useful foreveryone under all the circumstances. This has forced the governmentsto introduced intervention measures aimed at achieving the socialrights of the people.


Thelaissez-faire economies were products of deliberate state actionsaimed at allowing the forces of the market to determine all aspectsof commerce. However, the resulting inequalities regarding theeconomies compelled the starts to intervene to the suffering of themasses in the small cadres of income groups(Carl, 2011).That forced the states to introduce measures in the provision ofhealthcare, housing, education, labor and legal aid. The consequenceis that the poor and low earners can achieve more dignified lives. AsPolanyi rightly asserts, the-the notion of the broad market, needs tobe re-evaluated although different administrations have taken thefirst step in that direction.


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