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Politics and economy are closely intertwined perspectives in any national government. The interaction between the two determines to a large extent, the prowess of a nation through its initiatives. Different forms of political and economic dimensions exist depending on the inclination of a nation towards socialism or capitalism. Generally, the political and economic models that pursue the capitalist ideology tend to be liberal in nature compared to the ones that pursue the socialist ideology. Thus, despite the mutual relationship existing between politics and the economy, this relationship is to some extent determined by the practice of socialism and capitalism.
First, politics influences the occurrence of certain economic parameters of a nation. Despite the fact that people involved in the political arena usually have less knowledge about economic perspectives, their actions determine the direction of market trends. As a result, economists rely on politicians as part of their cautionary measures in addressing issues in the economic world (Stastny, 2002). This is mainly because politicians tend to have access to power instruments that enable them to make risky decisions. For example, in a local government situation, the county representatives may influence the desires of the people regarding an issue affecting them such as high interest loans. Consequently, their actions may either lead to the major or small changes being made by economists to address the issue. In this regard, the performance of a nation’s economy strongly relies on the existing political system, especially how well its initiatives merge with the major concerns.
Secondly, politics and economy under socialism mainly focuses on merging economic objectives with the needs of the common society. Consequently, socialism diverts away from Marxism ideals. In socialism, more focus is given to the operational principle that underlies specific economic problems. As a result, the economist is given more priority instituting corrective measures using the best mathematical models or optimization (Brus, 2003). This implies that decisions made by politicians under a socialist system may not necessarily override the professional views given by their economists. Thus, the politics under socialism tends to be rather conservative by focusing on the social aspects affecting the status of a society’s members and less on production potential. However, the decision making structure pursued in a socialist system of governance tends to undermine freedom with regard to politics and economy. By virtue of the conservative nature of socialism, only proven economic mechanism are used in the national framework, which further decreases the chances of politics influencing the economy.
Finally, politics and economy under capitalism mainly focuses on maximizing production initiatives. The main concern is the outcome by putting more focus on individual concerns. In the capitalism perspective, every firm must come up with the most effective strategies to solve arising problems such that there is minimization of the function used to obtain the means while there maximization of the objective element entailed in the function (Brus, 2003). In this regard, under capitalism, as long as the production potential is sufficiently high going by the national derivative, there is less concern given to the underlying principles. Thus, in a capitalist system, politics tends to focus on national issues that affect the production potential, for example, when the rate is low, politicians would move in to influence legislative measures to address the problems. Additionally, there is more freedom with regard to politics and economy in a capitalist system (Friedman & Friedman, 2002). Hence, the capitalism and socialism play a major role in determining the inclination of political and economic perspectives of a nation.