Enforcement of Laws (L2) uses Power-centred Principles
Regulators must actively enforce laws to prevent and punish fraud and unfairness in contracts, in markets, and other aspects of commerce.
Adopting and adapting a capitalist ideology enables people to accept their responsibility for thriving and to tolerate periodic crises.
Governments need to be sensitive to the operation of power in markets and be prepared to use their coercive power to prevent and punish abuse.
Improper power may be gained via ●monopolies, ●cartels, ●restrictive practices, ●monopsonies, ●labour unions, ●dumping, ●insider trading, ●front-running, and other predatory activities.
Regulatory preservation and protection of markets by governments include: ●laws prohibiting anti-market behaviours; ●support for fair contracts; ●secure property rights; ●regulatory authorities for specific markets; ●enforcement of laws and regulations; ●bankruptcy proceedings so people can make a fresh start.
However the concern in this Centre is the power to enforce existing regulations: the introduction of new regulations will be a matter for L4: Intervention.
At the extreme, a government may use its power to take over markets entirely by ●nationalizing the industry; ●becoming a major or even sole purchaser; ●guaranteeing or setting prices, and more.
Enforcing regulation and targeting known criminal activities can reduce improper market behaviours and reassure honest participants. This is unequivocally valuable.
However, government enforcement needs to be bolstered by its activities at other Levels: ●an understanding and belief in market mechanisms amongst the populace (L3), and ●properly designed regulations, laws and regulatory authorities (L4).
The failure of markets due to lack of enforcement or poor regulatory practices reflects a cultural problem (L3). In such cases, it is most unlikely that more detailed rules or more regulators or simply «better» regulation" (L4) will be the solution.
Adam Smith’s work The Wealth of Nations, combined with his analyses in A Theory of Moral Sentiments, still provide the touchstone for a humane and realistic capitalism. However, only the essence is relevant here i.e. basic matters like private ownership, market transactions, property rights, legal recognition of contracts &c.
No value or belief takes root spontaneously in a society. Active promotion of the necessary beliefs and principles is required.
An established and workable capitalist paradigm (ideology) can unite people and ensure that all know what is expected of them in regard to their work life. Some adaptations that take cultural traditions and values into account, are usually necessary and appropriate.
If society can develop a tradition of capitalist economic beliefs tailored to cultural proclivities, then commerce will be strengthened. Appropriate beliefs channel individual efforts constructively, restrain unrest at disappointments, and permit tolerance of inequality and periodic economic hardship.
Most criticisms of capitalism should be directed at governments which distort markets for political gain, or allow wealthy individuals or corporations to brazenly use political connections to take advantage of the general public.
When economic crises strike, enforcement is irrelevant and ideology is insufficient.
Governments are expected (rightly or wrongly) to devise and implement policies and strategies to help people. These should make a real difference that benefits society as a whole.
This takes us to the heart of government activity in regard to prosperity.
Continue to the core of government activity.