The term "Anglo-Saxon economy" refers to an economic model of capitalism. The use of Anglo-Saxon in its name reflects the fact that it is primarily practiced in English-speaking countries such as the United States, the United Kingdom, Ireland, Canada, Australia, and New Zealand. At its most basic level, an Anglo-Saxon economy enforces low levels of taxes and government regulations. It promotes reduced government involvement in providing public services and a greater freedom for private property and business rights. Its focus is on making business easy to carry out in order to support economic growth. The common belief behind this economic model is that change should occur naturally rather than suddenly. In this view, government interference is seen as a sudden disruption.
Origins of Anglo-Saxon Economics
The origins of this free market model date back to the 1700’s and the economist Adam Smith, who is often considered the father of modern economics. He believed that self-regulation would lead to economic growth, a similar concept to laissez-faire economics. This idea was expanded upon by several economists in the early and mid-1900’s. These theories are now referred to as the Chicago School of Economics which led to the Anglo-Saxon capitalist model of the 1970’s. This acceptance of a liberal market economy was motivated by a period of economic stagnation and inflation that led to a rejection of previously practiced Keynesian economics.
Advocates of the Anglo-Saxon economic model claim that it encourages entrepreneurship because it makes conducting business easier given the reduced level of government involvement. This ease of doing business purportedly allows companies to focus on the interests of the shareholders rather than its employees. Additionally, it is said to lead to market competition. This competition fuels innovation which results in increased wealth generation. According to this model, private companies that are not able to work creatively and efficiently will go out of business, making more opportunities for new ventures.
Opponents of this capitalist model claim that it focuses too much on earning profit as quickly as possible, and therefore does not place enough emphasis on long-term planning and sustainability. Critics claim that the focus on ease of business and reduced government interference results in job insecurity, reduced social services, and increased social inequality. This is because the Anglo-Saxon model focuses on the interests of private businesses, which is believed to lead to a healthy economy.
Other critics suggest that, due to the fact that the interests of shareholders are more important, it promotes inequality among employees and other stakeholders. This inequality, in turn, results in higher levels of poverty. One theory even suggests that the liberal economics of the 1970’s contributed to the 2008 global economic crisis. Others oppose this argument because not all of the countries with Anglo-Saxon economies were affected in the same manner.
Types of Anglo-Saxon Economic ModelsSome researchers suggest that not all liberal economics models are created equally. Instead, there are sub-types and variations of the Anglo-Saxon capitalism practiced throughout English-speaking countries. These variations include the "neoclassical model" and the "balanced model". American and British economies exhibit more of a neoclassical liberal economy whereas Australian and Canadian economies are considered balanced. Differing interpretations of the Anglo-Saxon economic school of thought led to policy differences within these countries. These policies then went on to determine the relationship between the public and private sectors. In the United States, for example, the government enforces significantly lower tax rates than in the United Kingdom. Additionally, the United States' government invests less money on welfare programs and social services than the government of the United Kingdom.