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LAISSEZ-FAIRE VS. REGULATED CAPITALISM: A CROSS-NATIONAL ANALYSIS OF SOCIAL COSTS

Neo-liberal economic principles are viewed positively by many people in government, the media, and academia, as they are thought to increase rates of economic growth and thereby produce outcomes beneficial to society as a whole. This project endeavors to test the second part of that notion, hypothesizing that excessive reliance on open markets is positively associated with social “costs,” which may be interpreted as a quantitatively diminished standard of living. Specifically, by limiting our focus to the relatively small sample of advanced capitalist democracies, it is expected that among these wealthy countries those with relatively low levels of adherence to market principles perform better on a number of important social indicators than those which favor minimal governmental activism. Regression analysis is employed to test the relationship between laissez-faire economic policy and 6 social maladies in 18 countries. Results show that a neo-liberal economic orientation does indeed lead to suboptimal social outcomes among advanced capitalist democracies.