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Chapter 13 Political and Economic Institutions 441
system for personal computers. Computer manufacturers typi- cally include Windows on the machines they sell. In the 1990s, Microsoft began to insist that manufacturers include its Internet browser, Explorer, on their computers as well. The manufactur- ers were also instructed not to install another browser in addi- tion to Explorer. If they refused, Microsoft would withhold their license to sell Windows on the machines. Because Microsoft had so much power over computer manufacturers, other makers of Internet browsers, such as Netscape, were essentially excluded from the market (Chandbasekaran, 1999). Eventually, the federal government took Microsoft to court, where it was ruled that Microsoft did indeed engage in monopolistic practices. The case is not resolved, however, and the corporation had some success in its 2001 appeal of this decision.
The Role of
Government in Capitalism
Adam Smith is often misinterpreted as saying that government
should have a strictly hands-off approach where the economy is
concerned. While Smith strongly opposed overregulation by gov-
ernment, he reserved a place for some regulation. Because one of
the legitimate roles of government was to protect its citizens from injustice, Smith knew that the state might have to “step in” to prevent abuses by busi- nesses. In fact, the U.S. government has always been involved in the workings of the economy.
How does the government contribute to the U.S. economy? The Constitution expressly provided a role for the national government in the pro- motion of a sound economy. Government functions include the regulation of
The enormous success of Bill Gates and Microsoft led to a federal investigation of the software giant’s business practices.
The Federal Aviation Administration (FAA) conducts jetliner crash tests as part of the federal government’s authority over private business. In what way might cultural values promote such government involvement?