Why Is the American Free Market System So Stable?

Abstract

Whatever one’s feelings are about the merits of the American free market system, it has certainly proved to be a remarkably stable system that has remained relatively immune to major alterations in the hundreds of years it has been in existence. This is not to say that the type of capitalism, the size distribution of firms, or the role of government we have today are the same as in earlier centuries. Rather, the average American’s trust in the free market has remained relatively unshaken over the years despite repeated economic crises and occasional flirtations with socialism. This is true because the free market system satisfies what I feel are four basic criteria of any successful and stable economic system. In this chapter I will discuss these criteria and investigate the extent to which the American free market system satisfies them.