Question

1. What role does government play in capitalism?

2. How does the concept of the "invisible hand" support this idea?
3. Why was capitalism viewed as an unfair system in the 19th century?
4. What role does the government play in socialism?
5. What did Marx think would happen in a socialist society?

Answer 1

In a capitalist economy, the role of government is extremely very restricted. The main functions of government, as given By Adam Smith, are to continue to keep going law and order in a country. Making national defense stronger, and regulate the money supply. According to Smith, the market system administers numerous economic functions.