The issue of economics is one that dominates politics as we know it, and the economy is in an awful state. How do we fix it?
Firstly – it is clear at least some form of capitalism is necessary in order for everyone to have good living standards. Since the advent of capitalism, and the spread of it globally over the past century, we have seen standard of living rise dramatically, and not only the proportion of people in poverty is declining, but also the number of people. Capitalism is not a perfect system, but we see again and again that across the world, the richest countries and the best places to live are ones with free markets.
What makes free markets work though? The lack of a ceiling. Whilst it may be incredibly difficult, anyone with a business can turn that business from a local startup to a multi-billion company. These companies drive production, and the consumerist nature of capitalism means they will try and have prices as competitive as possible, reducing the cost of living across the board. The free market is always at work, and prices will be the balance between what is most profitable for the merchant, and what is as cheap as possible for the consumer. It is this which allows for increased profits, which leads to increased production and increased wages, which overall reduces the relative prices of goods.
So long as production rises faster than wages, the prices will rise slower than wages.
However, people will be able to afford less in real terms if their essential expenditures rise higher than wages. These are things like electricity bills, water bills, heating bills, rent and travel costs. It is in these areas it is essential there is a state-owned option. These industries should not be state-owned, but instead the state acts as a competitor, keeping prices as low as possible whilst still allowing for those with the ability to pay more for better services to get better services.
For instance, council and social housing are massively important for those who work low paying jobs, or cannot work at all. Without these, millions would starve and suffer, since all houses will be subject to the will of the market, and therefore rise as high as possible.
The responsibility therefore of the state is to allow for a free market, whilst also competing in said free market to keep the market in check and level the field for everyone. These state-owned competitors should be profitable, so the state can afford tax breaks and expand the scope of these businesses without taking money away from responsibilities of the state which are not profitable.
The state exists to protect the liberties of all, and to allow capitalism in its fullest extent to thrive. In levelling the field for everyone, the state will help ensure equal opportunity within capitalism, and raise the odds for those who were not fortunate to be born into a position where they can fulfil their potential far easier. Whether someone be a refugee who has just lost everything, or the child of a billionaire who will inherit a company upon the retirement of their parent, the state should seek to ensure the refugee has as much an opportunity as the billionaire’s child to fulfil their potential.
No matter the system, these will never be equal, however closing the opportunity gap is something necessary of the state, and that is not possible without the incentive of a free market, or the enabling of levelling the opportunity.
Not everyone will get a fair opportunity to fulfil their potential, however. For the ill and disabled, and for the carers, it is very difficult to fulfil their potential, or even fulfil it enough to be able to afford to survive. This is what is necessary of the state to help with. Those who are unable to earn enough still deserve the opportunity to survive. The state’s competition in the economy must be profitable in order to afford to allow for a system of benefits, which will pay for those unable to afford to survive to be able to survive.
With the collection of tax, the state knows who is not earning enough, and therefore will be able to top up, and help people to survive. This will need to be a careful process though, as there are many in society who will see no incentive to work if they are having their life paid for. This is why the system should mainly focus on those unable to work, and should not act as a welfare state. The state should encourage as much economic growth as possible.
In a system like this, everyone will thrive. Those who are at the bottom will always have the opportunity to rise to the top, employers will always be able to make more money, and due to that will offer competitive wages in order to have the best possible employees. This is not something that is only possible in an ideal world, it is one that is possible in our world, and something humanity is doing better and better.
A Liberal economy is the way forward, and it is one we must campaign to ensure.