As we sit on the economic precipice, It appears that for lack of better alternatives we’re headed toward a different model of capitalism.
Today’s Washington Post piece by Anthony Faiola poses the question: the end of American capitalism?
http://www.washingtonpost.com/wp-dyn/co … 25_pf.html
What will the model be when the current crisis recedes? The government may have large equity stakes in banks and perhaps some insurers. Sweden did this with some success during its crisis about a decade ago.
In a recent piece, Newsweek columnist Jacob Weisberg notes the myriad forms of modified capitalism.
Corporatism, where large industries function as adjuncts to the government. Mussolini’s facist Italy was organized along those lines. Russia, where many enterprises are being run by oligarchs with ties to the former Soviet state-security apparatus, may be evolving towards a corporatist model.
Social democracies or mixed economies are often seen in Europe. They feature strong labor unions, comprehensive safety net benefits for workers, more regulation, higher taxes, and a government that intervenes more in the economy. Even so, European economies are melting down at the moment. And with an aging population, those European economies feature special challenges.
Weisberg reminds us about the Charles de Gaulle policy of dirigisme, where the government allocates resources to chosen technologies (in the case of France, to nuclear power, aerospace manufacturing, rail systems etc).
In Mercantilism, the government may actually own enterprises, some of which compete with private firms. China has been moving towards such a system, layered over control of the media and political system. Mercantilism usually features use of tariffs and trade barriers to discourage imports and encourage exports.
Weisberg coins the phrase “life-jacket capitalism” for what may be evolving here. The assumptions about free markets and the evils of regulation and taxes are beginning to collapse.
Are we headed toward the “Third Way”?
Measures that would have been political suicide for politicians to suggest in a campaign are being implemented on the fly by free marketeers in the Bush administration.
Stay tuned. I’ll continue covering bread and butter California workers comp issues, but during the current crisis hope you’ll enjoy some commentary on the current situation.
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Category: Political developments