American Capitalism, Term Paper Example

American Capitalism began officially in 1776 with the signing of the U.S. Declaration of Independence.  This document officially ended the colonial ties that America had with Britain and allowed American merchants the freedom to sell their goods without having to operate under British laws.  Britain had funded the American colonists originally because it relied heavily on the raw materials that were shipped out back to Britain for sale around the world.  England, the motherland, is a small landmass and does not have an abundance of natural resources. The British Empire relied heavily on raw material from its colonies in order to maintain its lucrative trade practices.

Britain’s economy was heavily dependent on America and when it lost its American colonies, the British economy suffered tremendously.  The ending of the American colonies ties to Britain began in 1763 when the war known as the French Indian war ended.  At the end of the war, Britain was the winner and France signed over many of her territories in North America over to her.  However, the war was very costly to Britain.  In order to subsidize the costs of war, Britain decided to uphold the Navigation Acts.  Previously it had not forced the colonist merchants to comply with these acts but after the war and in need of money, Britain demanded the taxes that were required under the Navigation Acts.

Up until this time the colonial system of Britain operated under a mercantile system.  This was the main economic system of Britain where it promoted trade by exporting goods but limiting import.  This system had come into effect almost 200 years prior with the set of laws called The Navigation Acts.  Under this act Britain limited foreign trade through shipping.  The price of goods was set by the state and all trade items had to come through Britain in order to be sold by its merchants and colonists.  Up until the end of the French Indian War, Britain had been lenient with the colonists but after the war ended they started enforcing these laws in order to tax the colonists in order to recoup war costs.  Wealthy colonist merchants were not happy with their trade being limited and a cap put on the price they could sell their goods for so they began to demand freedom from British rule.  The colonists, though officially under British law, did not have any representation in England’s Parliament and were not allowed the vote.  This “taxation without representation” became the call under which the colonists ousted the British officials.

At the end of the war, Britain could no longer control the trade with the American colonists under the Navigation Laws since they were no longer a colony of the crown.  This destroyed the economic system of Britain since it had based it economy under the ability to control trade and also to set the price of items to be imported and exported.  With the end of the colonies, Britain was forced to buy goods from merchants at prices they set.  In addition, the motherland of Britain, England, was itself poor of raw materials for export.  It depended on its trade monopoly in order to fund its economy.   When it no longer had control of the raw materials and goods coming out of its colonies, it was left in a very bad situation economically.  Britain not only lost a very lucrative monopoly on trade, but it also had to import goods at the prices set by foreign merchants. They now had to “import” the goods, such as cotton and tobacco, from the colonies that they had once controlled.

With the end of British rule in America, free trade was born in America and with it Capitalism.  Capitalism has become the dominating force in American politics as well as its economy.  Free trade allows sellers and merchants to sell their goods to whomever they want at a price of their choosing.   This allows a great amount of freedom but also has some inherent problems that have become apparent in today’s society.   For example, although merchants can compete on a free market, businesses that have more capital and can produce goods at a lower price because they spend less on labor can often price out their competitors.  This has led to a rise of the corporation, entities that leverage power because of the amount of capital they have at their disposal.  This has forced out many smaller businesses and led, in some situations, to monopolies.  This has been one reason for the death of the American Dream.

America, though a country where each man is “created equal”, does have a very apparent class system.  The difference between America and other developed nations it that it has traditionally had a large middle class.  This is due to the process of Capitalism and the fact that it creates a large labor force over self employment.  Capitalism has traditionally allowed a large middle class to develop, which has further led to a strengthening of the American economy through re-investment in American goods and services by the middle class.  However, as businesses, and more importantly corporations, are continually searching for a cheaper labor force to produce their goods, many have moved their operations overseas, lessening the American labor force and leading to a diminishing middle class.  The American class system is now changing to one that is more restricted to a small group of upper class elite and a large lower class with a small middle class struggling in between.

Mexican immigration has become a necessary part of the American economy because of the constant attempt of businesses to find cheaper labor to produce their goods.  American workers must make a minimum amount of money in order to support themselves in the ways in which they have been accustomed.  American businesses who have not chosen to move their operations overseas must find ways to lessen their production methods in order to compete with the cheaper goods that are offered by businesses that have moved overseas and can offer products at a fraction of the cost because of cheap labor.  This has created a situation where the average American is caught in the middle.  Average Americans cannot work for cheaper wages because the cost of living in America is so high.  Mexican workers will gladly fill these jobs at a fraction of the minimum wage and do not require incentives such as insurance.  American businesses that hire Mexican workers can thus save money on production costs and still offer products that can compete in the American market.

Redefining the American Dream

The American Dream was born with the American Revolution.  It is rooted in the Declaration of Independence, in which it is stated that “all men are created equal.”  This idea was revolutionary since under colonial rule, it was the Royal Family that was superior, and the “common man” could never be equal to them.  It was the dream of the colonists that now, without the restrictions imposed upon them by the British Royalty; they could, through hard work and dedication, become as wealthy as the lords that once ruled them.  Indeed, under the capitalist system and free trade, many colonists became very, very wealthy.  Merchants were now free to sell their goods to a global market and could set their prices as high or low as the market would bear.

However, the American Dream is full of unrealistic expectations that have caused many people a great amount of unhappiness.  As well, the American Dream of today is closely associated with capitalism and with possessions.   This seems very beneficial to merchants but it is unclear as to how much the people are actually benefitted by all the possessions that they work so hard to acquire. This has led to it becoming more of an “American Nightmare” for many.

The American Dream has also been exported throughout the world via American movies and TV shows.  This has allowed people in impoverished countries to dream of achieving the American Dream as well and has led many to leave their homelands and immigrate to America hoping to make a better life for themselves and their family. This has been the case for millions of Mexicans.  Conditions in Mexico have left many people poor and since America is their closest neighbor and has often been in need of cheap labor, many Mexicans have immigrated to America to pursue the American Dream.  They have taken the poorer paying jobs that Americans do not want.  In addition, they have filled the niche created by capitalism in which many businesses need cheap labor in order to make their production costs less, leading to higher profits.  In recent times America has tried to curb this influx of Mexican immigrants, but this has not lessened their desire to reach America and participate in the American Dream.  Instead, it has forced many to try to reach America illegally.  As chronicled by Luis Urrea in The Devils Highway: A True Story, many Mexicans have risked their lives in the hope of reaching America, and many too have died.

I believe that the American Dream paradigm is one that has been propagated by Capitalist interests that thrive on a large labor force of individuals.  In order to entrap laborers into the system, propaganda has been fed to the masses to believe that everyone can achieve the success of a Rockefeller or a Sinclair.  However, this is a lie.  These elite classes have money and power that is practically unobtainable by the average worker. That does not stop many from trying however.  The average worker labors 40 hours a week or more at a job they hate or barely like in order to achieve the American Dream.  Often all they achieve is a credit card debt they can never pay off and a home they don’t even own.  The American Dream has failed countless Americans.  In order to free ourselves from this situation, a new dream needs to be created, one that doesn’t depend on countless plastic goods being imported from China and millions of gallons of oil being pumped from our seas.  Capitalism was born out of an idea of freedom by our forefathers but things have changed and the idea has taken on a life of its own.  My belief is that the American Dream should be happiness in spirit, not in money.

References

Bacher, Christian. Capitalism, Ethics, and the Paradoxon of Self-exploitation. University of Otago, 2006.

Kamp, David. “Rethinking the American Dream.” Vanity Fair April 2009. Web. Retrieved 10 May 2009 from http://www.vanityfair.com/culture/features/2009/04/american-dream200904

Urrea, Luis Alberto. The Devil’s Highway: A True Story. New York: Little Brown and Compnay, 2004

Zinn, Howard. A People’s History of the United States: 1492-Present . New York: HarpersCollins Publishers, 1980.