This was not supposed to happen and this is where blind laissez-faire economics fail. Capitalism has always been for regulation, so long as it makes sure that competition is fair and externalities are appropriately catered to. After all, we did ban slavery and child labour which are forms of regulation. The ideal condition for capitalism is so that the market can produce the best outcome for everyone, whether it be price of goods or wage. Regulations such as antitrust laws (that aims to break up big cartels or monopolies) and minimum wage (that aims to minimize the harms of a firm with too much market power) are not always bad for capitalism as it often corrects the market, and the absolute freedom of a market is not always good for capitalism as it sometimes derails it.
There are many other differences that needs to be taken account when looking at the theories of classical economists and applying it to today. But my main point is that the discussion on capitalism shouldn't be so skewed. Those supporting regulation shouldn't shy away from supporting capitalism as their regulations might actually improve it, nor should free market supporters frame their version as the only viable option for capitalism as it sometimes just does not work anymore. Only by understanding that, might we have a more civil discussion that does Adam Smith justice, and maximize capitalism's potential to bear fruit.
by Derril Pramana Tungka | Ilmu Ekonomi 2016 | Staff Kajian KANOPI 2017
References:
[1] Ha-Joon Chang 2014, Economics: The User's Guide. p.33-34
[2] "The rise of state capitalism | The Economist." 21 Jan. 2012, http://www.economist.com/node/21543160 . Accessed 15 Sep. 2017.
[3] "Mercantilism - Investopedia." http://www.investopedia.com/terms/m/mercantilism.asp . Accessed 15 Sep. 2017.
[4] Smith, A., 1976, The Wealth of Nations edited by R. H. Campbell and A. S. Skinner, The Glasgow edition of the Works and Correspondence of Adam Smith , vol. 2a, p. 456.
[5] "OPEC deal: How the cartel may move oil markets - CNBC.com." 2 Dec. 2016, https://www.cnbc.com/2016/12/02/opec-deal-how-the-cartel-may-move-oil-markets.html . Accessed 15 Sep. 2017.
[6] Ha-Joon Chang, 2014, Economics: The User's Guide. p38-40.
