In a capitalist financial system, a lot of the industrious assets are owned by private proprietors. In addition, most of the influential decisions with regard to manufacturing and delivery are guided by the market command rather than the government. Therefore, capitalism proposes a structure of economic directive that encompasses insignificant state participation (Cuddy, 2008). However, even the greatest capitalistic systems have certain governmental control. The government ought to form elementary institutional guidelines like contract laws. It should further legislate to resolve market problems or scenarios in which free markets do not operate well. In most democratic organizations, a good number of concerned groups frequently request the government to implement laws that impact market practices in their favor. On the other hand, a command economy allows the government to regulate both prices and supplies. In this case, government managers determine the kind of goods and services offered and their distribution. This system is best illustrated by the example of former Soviet Union (Kaletsky, 2011).
Hypothetically, firms in the United States determine their products, prices and how to distribute them. As such, firms are given total control over their operations. However, the US has a diluted system of capitalism. Its markets are not free as they are extremely controlled. The government’s rate-determining actions manipulate the currency value as well as exchange rates. Asset resolutions are not determined by yield expectations but are rather discouraged by the Revenue Code. Generally, the government, under both Republicans as well as Democrat administrations, has regularly interfered with the operation of the markets and the manner in which capital is used (Stockman, 2011). Therefore, the tax program is basically a device for wealth redistribution. Even though Americans have frequently differed on their beliefs with regard to the free initiative and government supervision, the kind of economic system where the two aspects are mixed, has proved to be extraordinarily fruitful.