As the various chapters of this book explain, labor, agriculture, small businesses, large corporations, financial markets, the Federal Reserve System, and government all interact in complex ways to make America's economic system work.
     It is a system united by a philosophical commitment to the idea of free markets. But, as noted, the simple market model greatly oversimplifes the actual American experience. In practice, the United States has always relied on government to regulate private business, address needs that are not met by free enterprise, serve as a creative economic agent, and ensure some measure of stability to the overall economy.
     This book also demonstrates that the American economic system has been marked by almost continuous change. Its dynamism often has been accompanied by some pain and dislocation -- from the consolidation of the agricultural sector that pushed many farmers off the land to the massive restructuring of the manufacturing sector that saw the number of traditional factory jobs fall sharply in the 1970s and 1980s. As Americans see it, however, the pain also brings substantial gains. Economist Joseph A. Schumpeter said capitalism reinvigorates itself through "creative destruction." After restructuring, companies -- even entire industries -- may be smaller or different, but Americans believe they will be stronger and better equipped to endure the rigors of global competition. Jobs may be lost, but they can be replaced by new ones in industries with greater potential. The decline in jobs in traditional manufacturing industries, for instance, has been offset by rapidly rising employment in high-technology industries such as computers and biotechnology and in rapidly expanding service industries such as health care and computer software.
     Economic success breeds other issues, however. One of the most vexing concerns facing the American public today is growth. Economic growth has been central to America's success. As the economic pie has grown, new generations have had a chance to carve a slice for themselves. Indeed, economic growth and the opportunities it brings have helped keep class friction in the United States at a minimum.
     But is there a limit to how much growth can -- and should -- be sustained? In many communities across America, citizens' groups find themselves resisting proposed land developments for fear their quality of life will deteriorate. Is growth worthwhile, they ask, if it brings overcrowded highways, air pollution, and overburdened schools? How much pollution is tolerable? How much open space must be sacrificed in the drive to create new jobs? Similar concerns occur on the global level. How can nations deal with environmental challenges such as climate change, ozone depletion, deforestation, and marine pollution? Will countries be able to constrain coal-burning power plants and gasoline-powered automobiles enough to limit emissions of carbon dioxide and other greenhouse gases that are believed to cause global warming?
     Because of the huge size of its economy, the United States necessarily will be a major actor in such matters. But its affluence also complicates its role. What right does the United States, which has achieved a high standard of living, have to demand that other countries join in efforts to take actions that might constrain growth in order to protect the environment?
     There are no easy answers. But to the extent that America and other nations meet their fundamental economic challenges, these questions will become increasingly important. They remind us that while a strong economy may be a prerequisite to social progress, it is not the ultimate goal.
     In numerous ways -- the tradition of public education, environmental regulations, rules prohibiting discrimination, and government programs like Social Security and Medicare, to name just a few -- Americans have always recognized this principle. As the late U.S. Senator Robert Kennedy, the brother of President John F. Kennedy, explained in 1968, economic matters are important, but gross national product "does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it can tell us everything about America except why we are proud to be Americans."

United States Economy

Source: U.S. Department of State