GALBRAITH AND CAPITALISM IN AMERICA:
The French political scientist, Alex deToqueville, visited the United States almost 200 hundred years ago for the rare opportunity of examining a foundling nation in an isolated system. America had adopted a political system greatly influenced by European philosophical thought and which could be nurtured free of outside factors like invasion or warfare. Similarly, the economics of free trade were implemented in this isolated system, which developed into America's unique form of capitalism. In The Affluent Society (1958), John Kenneth Galbraith examines American capitalism not only though current trends but also through historical evidence, and concludes that it failed because of the unequal distribution of wealth among is stratified classes.
Adam Smith (1723-1790) is the first early economist Galbraith discusses as a shaper of today's economy and society. The time of Smith's writings was dominated by the great political and economic influence of Britain and France. These two superpowers pursued an economic system of government regulation which later became known as mercantilism. A nation would theoretically amass resources in the form of raw materials from its colonies to be used for production in the mother country. Furthermore, it was necessary to export a great deal more than competitor nations and implement governmental tariffs to attain a favorable balance of trade. In opposition to mercantilist theory, Adam Smith published The Wealth of Nations in 1776, postulating that "regulation was by competition and the market and not by the state, and in which each man, thrown on his own resources, labored effectively for the enrichment of the society" (Galbraith, 19). The Wealth of Nations asserted that government should assume a laissez-faire position and allow the economy to be guided by what Smith called the "invisible hand" - that is, supply and demand. Furthermore, he places empha...