Thursday, November 16, 2017

Zac Tate — Capitalism is losing support. It is time for a new deal.

The financial crisis has led many to question the legitimacy of capitalism. The verdict, 10 years on, has not been favourable. In an opinion poll by YouGov, three-quarters of German adults, two-thirds of Britons and over half of Americans believe that, “the poor get poorer and the rich get richer in capitalist economies”.
Their sense of injustice is not only a reaction to bank bailouts, years of austerity and corporate scandals. The challenge is fundamental. There is a growing awareness in the rich world that most of the benefits of technology and globalization flow to people who own investible capital and to the well-educated, while the costs are borne by unskilled workers, local producers and people who have little property and savings.
The problem, however, is not capitalism itself. Instead, the issue lies with policies that extended the role of the free market beyond sensible limits. These have undermined the essential bargain between labour and capital, and pushed those with few assets into precarious working lives.
Rawer forms of capitalism are unsustainable if too many people do not have capital. Restoring faith in the system requires making amends, and rethinking how capitalism creates and distributes value....
Here we go again. These are the issue that Keynes faced at the time of the Great Depression. He came forward to save capitalism from socialism by moderating it.

This article is a useful backgrounder.
In this situation, demands for fairness have centered around two ideas. Either there must be a significant redistribution of wealth so that everyone has a fair stake in the economy. Or policymakers must reintroduce protections against market forces for those without the insurance of investible capital. Thomas Piketty, in his bestselling book Capital, advances the first solution; Dani Rodrik, in Straight Talk on Trade, promotes the second.

Each of these should be considered as parts of a new deal on capitalism. But there is also a third strand that looks to the future and responds to the thirst for something new. It says that capitalism itself must be redesigned. Private enterprise and public policy need to be realigned to the creation of public value and this requires changing how we think about economics....
In 2016, Mazzucato published Rethinking Capitalism, a collection of articles from distinguished thinkers who challenge the conventional wisdom on a range of topics from fiscal policy to inequality. It concludes that many of our economic theories are not only inadequate but lead to poor policies that often have harmful impacts.
Mazzucato argues that to nurture public value, the state has a key role to play. The state uniquely has the time-horizon and the financial and organizational capacity to create and shape new markets. Embedded in the innovation process with firms and research institutes, it can also influence both the rate and direction of technological development.…
Unfortunately, no mention of MMT and the fiscal space its understanding opens up to use.

World Economic Form
Capitalism is losing support. It is time for a new deal.
Zac Tate | Economic strategist, Hottinger Group

See also
A Goldman Sachs banker [Bobby Vedra] has likened the UK under Jeremy Corbyn to “Cuba without the sunshine” in a nervy attack on the Labour leader at the Super Investor private-equity conference in Amsterdam.
The London Economic
UK would be like “Cuba without the sunshine” under Corbyn – says fat cat banker
Jack Peat

3 comments:

Unknown said...

No, it is not time for a New Deal. It is time to stop holding society hostage to the excesses of capitalism. Never was I asked whether I was willing to devote my life to cleaning up the messes and sufferring the indignities of an unstable, unfair and unfree system so the people at the top could keep their power and privilege.

We cannot roll back the clock with some social democracy and make things great again; they always sucked, and anyway there is simply no capacity for reforms in a system this far gone.

We either transcend capitalism or we go down.

Andrew Anderson said...

He came forward to save capitalism from socialism by moderating it. Tom Hickey

What part of any definition of capitalism requires government privileges for private credit/debt creation?

Yet that's what the West has had for centuries - government privileges for private credit/debt creation.

Not that unchecked real wealth accumulation is Biblical either - see Leviticus 25, for example.

Hint: One should not "moderate" theft but eliminate it.

Tony Wikrent said...


A great but little discussed tragedy of USA history is the replacement of republicanism--which is very amenable to socialism imo--by capitalism.

The Historical Context of Mercantilism, Republicanism, Liberalism and Neoliberalism
https://m.dailykos.com/stories/2016/7/24/1551761/-The-Historical-Context-of-Mercantilism-Republicanism-Liberalism-and-Neoliberalism