This seems worth tossing out for discussion (I agree with some of this, but I don't see the world through the same eyes as Phelps and Ammous):
Blaming Capitalism for Corporatism, by Edmund S. Phelps and Saifedean Ammous, Commentary, Project Syndicate: The future of capitalism is again a question. ...
The term “capitalism” used to mean an economic system in which capital was privately owned and traded... This system of individual freedom and individual responsibility gave little scope for government... Corporations could exist only as long as free individuals willingly purchased their goods – and would go out of business quickly otherwise. ...
Now the capitalist system has been corrupted. The managerial state has assumed responsibility for looking after everything from the incomes of the middle class to the profitability of large corporations to industrial advancement. This system, however, is not capitalism, but rather an economic order that harks back to Bismarck in the late nineteenth century and Mussolini in the twentieth: corporatism.
In various ways, corporatism chokes off the dynamism that makes for engaging work, faster economic growth, and greater opportunity and inclusiveness. It maintains lethargic, wasteful, unproductive, and well-connected firms at the expense of dynamic newcomers and outsiders, and favors declared goals such as industrialization, economic development, and national greatness over individuals’ economic freedom and responsibility. Today, airlines, auto manufacturers, agricultural companies, media, investment banks, hedge funds, and much more has at some point been deemed too important to weather the free market on its own, receiving a helping hand from government in the name of the “public good.”
The costs of corporatism are visible all around us: dysfunctional corporations that survive despite their gross inability to serve their customers; sclerotic economies with slow output growth, a dearth of engaging work, scant opportunities for young people; governments bankrupted by their efforts to palliate these problems; and increasing concentration of wealth in the hands of those connected enough to be on the right side of the corporatist deal.
This shift of power from owners and innovators to state officials is the antithesis of capitalism. Yet this system’s apologists and beneficiaries have the temerity to blame all these failures on “reckless capitalism” and “lack of regulation,” which they argue necessitates more oversight and regulation, which in reality means more corporatism and state favoritism.
It seems unlikely that so disastrous a system is sustainable. ... If politicians cannot repeal corporatism, it will bury itself in debt and default, and a capitalist system could re-emerge from the discredited corporatist rubble. ...
Posted by Mark Thoma on Wednesday, February 1, 2012 at 12:28 AM in Economics, Income Distribution, Politics |
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