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How Did Big Businesses Differ From Regulated Capitalism

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BIG BUSINESSES FROM REGULATED CAPITALISM TO NEOLIBERALISM
Big businesses caused also shift from regulated capitalism to neoliberalisim. They played huge role for that. Before big businesses influenced from regulated capitalism negatively, they did not have strong political idea. They supported regulated capitalism because of fear that Great Depression’s return. They thought that government stabilize the economy. The regulated system worked well till 1966, but then lots of problems emerged. The cost was high because of the barriers and big businesses were paying for the social welfare program also. They needed to have flexible rules because they could change production according to consumer’s willingness. So, that caused decrease in production. …show more content…

In the global economy, barriers were removed. Firms could decide a place where they could produce at the lowest cost. Before this time, they must choose one place and produce just there which increased their cost. So, globalization of production was performed. This movement allowed free movement of services, money, capital and good across national boundaries.
In the role of government, there were lots of changes. According to neoliberalists state interventions could harm economy. Monetary policies were used to stabile prices. Unemployment rate and inflation were not taken into account. Tax cut was implemented to support big business’ investment. It was aimed to have small government but big private industry. Public goods were deregulated and deregulated finance was performed. Risky investments were allowed. Market competition could assure optimum point. Social regulations were diminished which were about consumer product safety, job safety, environment protection. All these were seemed as anti-business and barrier for economic growth. Due to diminishing social regulation, the number of people who worked for government decreased. Of course there was no complete elimination of social regulations. Anti-trust enforcement diminished. Privatization of public functions emerged. In US, privatization appeared in social …show more content…

In regulated capitalism, financial institutions controlled nonfinancial sectors. Financial institutions forced them to allocate capitals. This was kind of dominance over nonfinancial sectors.
After Second World War people who lived in America started to find a job. These people’s consumption and saving increased. Therefore, they began to put their money to bank and they did their life insurance. The control of savings turned to again to banks. Because of that savings were increasing, the importance of banks was increasing.
People thought that the benefit from their saving was not good enough because of regulated finance. So, they started to look for more profitable way which was borrowing to third world countries. They borrowed their money to China, India instead of to domestic institutions. They believed that borrowing to third world countries would bring more money.
This situation caused a change in the system in America. Finance must deregulate and savings must stay in country to decrease the deficit in America. People did not prefer to save in US because of constraints but if finance deregulated, they would start to save in

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