The Commanding Heights documentary revolves around the debate featuring market force and economy. The core of the topic is sparked by world war I in 1914. The concepts of socialism and capitalism give the factual and historical basis on how the two major pillar of commanding heights- market and government could lead to the rise or fall of an economy.The term commanding heights were originated from Lenin’s speech that as long the government owns the commanding heights, i.
e. significant industries, it is okay for the citizens to have a share of their properties.The video presented the battle of ideas between the two individuals who shaped the economy. They were intellectual rivals; John Keynes, who developed the Keynesian theory and Friedrich Hayek. Keynes theory revolved around the spending and its effect on output in the economy.
Keynes insisted that economic decision and government should regulate expenditures in the economy should exercise control over commanding heights. Keynes argued that Market is a positive force but like machinery, requires fine tuning. Hayek had a complete opposite view by stating that market is a self-regulating system that will sort by its own but governments were interested in sort of intervention due to the uncertainties of free market. He advocated that market should be left alone and do nothing to achieve favourable outcomes. He believed that inflation is severe and will erode the society.The documentary details how two theories were born and how governments viewed to the alternative such as communism or socialism. The Keynesian model was more popular, and government intervention stimulated the economic activity for short-term but in long-term produced inflation. As people started losing the money, inflation continued to spur up along with unemployment and stage of stagflation began to rise.
It was only during 80’s to early 90’s, the first world countries British- American leaders Thatcher and Regan decided to adopt Hayek way. Both nations believed that to attain the economic stability and prosperity; they must face the problem which lies ahead of them. The non-intervention was a hard hit for everyone in the economy for three years, but after three years the inflation was under control. They were able to attain such victory because the stakeholders strictly confirmed to the governance or prevented the incidence of corruptions in achieving the balance in the socio-economic system.There have been so many economic events since 2002 which are jam-packed in the USA and across the world, which was good, bad or newsworthy. I feel these financial events were important to small business from terrorist attacks, finance frauds, wars, a collapse of the economic bubble and natural disasters. For, eg, the dot-com bubble, a new economy boomed, and investors were getting rich from software companies.
The year 2007 witnessed a sub-prime housing crisis. Individuals who could not qualify for mortgages were qualified for adjustable-rate mortgage plan with less interest. When interest rate rose, adjustable value became expensive. The Year 2007-2009 witnessed a global recession which collapsed the Wall Street. Trust just vanished that market will work by its own and Government jumped in late 2008 to guarantee that Bank will fitfully start functioning again.
In 2008 a shift of opinion and Keynesian stimulus package was in favour. After repeatedly viewing the video, I think the real question is how much power a Government should exercise to run the economy or how much freedom should it give to function in balance?