Humanities 30-1M. P. May 31, 2010

Mr. Kabachia2010Modern ProsperityHumanities 30-1Peter Derks

During the Great Depression, Franklin Roosevelt addressed the United States Congress, "I shall ask the Congress for one remaining instrument to meet the crisis- broad Executive [branch] power to wage a war against this emergency, as great as the power would be given to me if we were [in fact] invaded by a foreign foe." The ideological perspective being pursued by Roosevelt in his address is modern liberalism, which allows for government intervention in the economy while still keeping capitalism within the economy. Throughout history many governments have used government implemented acts and programs to create security and stability. However, advocators of Capitalism, which is practiced in the US economy, would state that allowing government intervention within the economy would eliminate the principle of Laissez-Faire economics, Adam Smiths theory of the invisible hand, and capitalism to an extent. Another fear of allowing the government to take an active role in the economy is the partial loss of classical principles of liberalism such as economic freedom of the companies, self-interest of individuals seeking enterprise, and reduction of competition due to governments establishing publicly owned corporations. A philosopher who would oppose allegations of not allowing government intervention would John Maynard Keynes, whose policy of Keynesian economics allowed for government intervention in the economy in order to stabilize it. This Keynes theory, however, requires the introduction of modern liberalism into the economy and certain principles of classical liberalism, such as: economic freedom, self interest, and competition, will be rejected. During times of economic crisis, it is necessary for governments to introduce acts and programs that promote principles of modern liberalism to secure and stabilize the economy; however, the extent to which these acts and programs may be embraced stops when human rights, individual rights and freedoms and rule of law are negatively affected. Individuals embracing classical liberalism, especially principles such as economic freedom, self interest, and competition, will state that allowing government intervention into a capitalist society will ruin the economy. An example of failed government intervention in the economy was East Berlin during the Cold War period; failure was enquired due to strong communist control over the economy. By not allowing the East Berlin economy to pursue economic principles of classical liberalism, Laissez-Faire economics, or Adam smith's theory of the Invisible Hand, it can be perceived that East Berlin has such a high poverty rate and low gross domestic product due to these factors. That being said, during the time of the East Berlins depression, the economy was suffering severely and individuals were seeking government aid through social programs, safety nets, and lowering of taxes; which can be achieved through modern liberalism and not classical liberalism.

Keynesian Economics requires government involvement in the economy in order to bring the state out of a time of crisis, and create a more stable economy in the long run. During a period of economic prosperity, it is crucial that governments raises taxes and save money; during periods of economic recession, governments lower taxes and begin investing in the economy and development of public works such as highways, bridges, etc. By allowing this type of government intervention within the economy, the Natural Law of economics, which is the belief that prosperity is followed by recession, is stabilized and there are less severe spikes in the economy. In the midst of the Great Depression, it was viable for the government to use Keynesian economics to stimulate the economy, principles of classical liberalism, such as economic freedom, self interest, and rule of law were not equally accessible to all citizen; making it possible for governments to set aside the principles of classical liberalism in order to establish a Keynesian economy.

Authoritarian rule over the economy works in theory, where the collective interest and common good are used as opposed to self interest, economic freedom and competition. However, in practice the governments continually want more from the economy and from its citizens, leading to the rejection of human rights, individual rights and freedoms, and rule of law. The economy will fall into a great state of depression, due to high poverty rate and a low standard of living. An instance where this occurred was in Adolf Hitler's Nazi Germany; the economy was rule by an iron fist and the individual had very limited control over their relations with the economy. Self interest was unjustified, because Adolf promoted the collective interest; competition was rejected due to the seizure of business' from minorities and leading to cheaper labour and poor working condition; economic freedom was disregarded because there low private ownership and individuals belonging to minorities had very little control over their career. Due to the poor working conditions, high poverty, low quality of life, and low standard of living, Adolf rejected principles of liberalism such as human rights, individual rights and freedoms, and rule of law.

Times of crisis restrict opportunities for individuals, leading to a recession; these restrictions may be due to threats on the state, high poverty rates or economic depression. However, specific principles of classical liberalism are already being rejected due to the economic down turn; these rejected principles include economic freedom, self interest and competition. The purpose behind having these principles of classical liberalism being rejected, it to allow for the government to establish an investment in the economy and regulate it through the use of safety nets, taxes, and government spending. Franklin Roosevelt introduced the New Deal policy, which created more government involvement in the capitalist US economy than ever before. Even though the American government was passing laws and acts to help the economy; individual rights and freedoms, human rights and rule of law are still protected, because the term for people had been broadened to not just include the wealthy. During times of economic recession and depression it is acceptable for governments to reject economic freedom, self interest and rule of law; leading to a period of economic prosperity.

By allowing government involvement in the economy through modern liberalism, the economy is able to recover and enter into a period of prosperity and economic stability. However, economic freedom, self interest, and competition are partially rejected, this is necessary for the economy to eliminate a period of recession; this rejection of economic principles of liberalism should only be allowed as long as they do not interfere with rule of law, individual rights and freedoms, and rule of law.