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The future of Capitalism

Written By: - Date published: 9:00 am, December 23rd, 2019 - 128 comments
Categories: books, capitalism, Deep stuff, Economy, uncategorized - Tags:

2019 has been a remarkable year for those wanting social, economic, and environmental renewal. The level of protest remains high, the idealism as strong as ever, but the ferment is not generating progressive wins, is weakening democratic reflexiveness to challenge, and is weakening pan-national institutions.

It’s not that easy to get on the shelves here, but the book I’ve been wrestling with this year is Paul Collier’s The Future of Capitalism: Facing the New Anxieties. Most of his work is on understanding and alleviating global poverty, including his excellent The Bottom Billion which is still good at 12 years old.

Collier gets to the really tough problem. If you measure by things like GDP growth and lifespan, life is better for more people around the world and for much of New Zealand than it has ever been. Yet many questioning the capitalist system that produced those gains, loudly.

There’s an understandable sense that the system is in another crisis.

Why is this happening? Collier says we’re experiencing three big rifts:

  1. A spatial divide between booming cities and struggling small towns;
  2. A class divide between people who have a tertiary education and
    those who don’t; and
  3. A global divide between high- and middle-income countries on the
    one hand, and fragile states on the other.

Now, those aren’t the only things wrong with capitalism. But they are widening schisms that are making things a whole bunch worse.

(Collier can and does take things personally. He grew up in industrial Sheffield, England; now he makes his home in an upscale college town. Both of his parents left school when they were 12; he went to Oxford. He lives in a rich country, but because of his work he spends a lot of time in some of the poorest places in the world.)

As a result of the three trends, Collier says, capitalism is delivering for some people but more and more leaving the rest behind. What will feel familiar to anyone living in Gisborne, New York City, or my hometown of Auckland is that highly skilled workers have a big incentive to move to cities, where they can get high-paying jobs. When all those big earners cluster in one place, more businesses sprout up to support them. This large-scale movement into the city drives up the cost of land, making it less affordable for everyone else. A virtuous cycle for a lucky few and a vicious one for most.

So Collier has a compelling description of the problem. What should we do about it?

The central idea of his book is that we need to strengthen the reciprocal obligations that we have to each other. To me that pretty much rules out party-based politics as an answer to bridging any of the big divides, because they exist for intense non-cooperative competition. The essence of expressing the common good is expressed in this thing called public policy, but as he notes:

Public policy has gone wrong because of the trivialization generated by the strident rivalry of antiquated ideologies. The ideology of the right asserts faith in ‘the market’ and denigrates all policy intervention. Its solution is ‘get the government off the back of business: deregulate!’ The ideology of the left denigrates capitalism and condemns the managers of firms and funds as greedy. Its solution is state control of companies, and state ownership of the commanding heights of the economy. [B]etween them they have set the terms of public discussion, impeding productive thought.”

This staleness of thinking is pretty evident in Brian Easton’s 2019 column on The Future of New Zealand Capitalism. It was basically arguing with a few ill-defined labels and a few tired policy areas, and that was its limit.

We can start to evolve capitalism when we evolve our thinking, not wheeling out well-worn bromides and don’t face up hard to alleviating the big three schisms above.

What engaging in fresh public policy debate does do is help us talk. “As we recognize new obligations to others,” Collier writes, “we build societies better able to flourish; as we neglect them we do the opposite…. To achieve the promise [of prosperity], our sense of mutual regard has to be rebuilt.”

He looks at four areas where we can do this: the global level, the nation-state, the company, and the family.

I’m going to skip his themes on global institutional strength and rule-based orders. It’s a complete necessity for tiny states like us. I live in the tiny exception to entropy called New Zealand, within the same trade sweet-spot as Australia. We’re about as happy as we can be within our level of inequality, social mobility, and health.

At the corporate level, Collier criticizes the notion that a company’s only responsibility is to make money for its shareholders. This sole focus on the bottom line, he argues, means many companies no longer feel responsible to their employees or the communities where they operate. This has been a big driver, he says, of “the mass contempt in which capitalism is held as greedy, selfish, corrupt.”

I agree that companies need to take a long-run view of their interests and not just focus on short-term profits. It matters how businesses are viewed in their communities and by their employees. Our farmers are really starting to feel the shrinking borders of their social license.

Companies remain more dependent on the state in New Zealand because, while it’s footprint has been tracking over 40% of GDP for quite a while now, it is even more important because pretty much only the NZ state writes the big deals. Companies are always intersecting with public policy outcomes to get those massive deals.

I finished the book wondering if he thinks we can change the incentive structure so companies act differently. The state needs to develop more corporate instruments that allow massive and adventurous policy objectives which motivate corporations. You certainly see those interdependencies in the health, social welfare, and infrastructure industries – which is where tens of billions in deals are up for contest annually, and all with policy outcomes to express. Some of those are in Alliances and ECIs. Some in long term service contracts. Some of the PPPs fail and do so on a spectacular scale – most do fine. But we have to risk together, and risk more. Because if we don’t, our common purpose that remains will continue to weaken.

Collier’s world/nation/company/family argument is pretty easy to express around the word “community”. There are famous examples of New Zealand’s social cohesion expressed in times of crisis – which we get nearly annually. In New Zealand for 150 years it’s been mostly churches and church-originated NGOs that have underpinned much of that cohesive community. Since the 1990s Maori social institutions have also grown.

Collier is really good on the function of leadership within
capitalism, and it’s great to see this pulled out of MBA management tomes and into economics:

The transformation of power into authority is essential for building reciprocity across huge groups of people, such as everyone accepting the obligation to pay their taxes. Leaders are not engineers of human souls, but they can harness our emotions. The dangerous leaders are those who rely only on enforcement. The valuable ones are those who use their position as communicator-in-chief at the hub of their networked group – they achieve influence through crafting narratives and actions. All leaders add and refine the narratives that fit within the belief system of their group, but great leaders build an entire belief system.”

Voters in English-seaking democracies clearly get the necessity of charisma for authority within the political economy better than most political economists do.

But the peculiarity is family. There are good studies around on the utility of social cohesion for our new immigrants. But the role of family to provide meaning within capitalism is undercooked. Collins comments on this:

The distinguished psychologist Martin Seligman has conducted a sustained programme of research on the attainment of well-being. His conclusion is unambiguous: ‘If you want well-being, you will not get it if you only care about accomplishment . . . Close personal relationships are not everything in life, but they are central.”

Too few families broaden the shareholding of their business to be more than a couple working their asses off with the house as collateral. Successful genealogies are built around broad families who pull more related capital and more related skill into themselves. We are a nation of small businesses that stay small. But in the structure of family, there’s also a latent power to tilt capitalism. Family is still our strongest form of social cohesion and still provides most of us with the strongest meaning in our lives.

So a tax system that favoured relatives pooling capital to be carried forward (then getting taxed harder once very successful), would lead to capitalism evolving well here. The Future of Capitalism calls this kind of thinking “social materialism”.

He doesn’t talk enough about tax. Tax continues to be the strongest effective instrument to rebalance wealth and inequality, and needs to be deployed harder. Horizontal dispersals in capitalism occur only when governments make forceful tax moves.

Also he doesn’t talk much about the role of institutions such as weakening or strengthening rule of law and rights, regulation of banking, levels of corruption and gaming, public institutional responsiveness, or indeed the effects of colonialism. These all evolve capitalism.

Ultimately, Collier believes that “capitalism needs to be managed, not defeated.” We should do more to curb its excesses and minimize its negative aspects. No other system comes close to delivering the innovations and economic growth that capitalism has sparked around the world, and no alternatives are challenging its dominance. But we can make it evolve.

128 comments on “The future of Capitalism ”

  1. Adrian Thornton 1

    There is no future for capitalism/free market liberalism if we all want a planet to live on that is..contrary to to what 'free market pragmatist's like your Collier will try and have us believe, the markets hold none of the answers, and never will.

    Transformative change is coming whether we like it or not..the only question is whether that change is enacted by the looming specter of the populist Nationalist Right wing or a progressive Left..unfortunately for us it turns out the so called 'Left Centre' or third way Left would rather burn the whole house down and lose to the Right than see a win with the Progressive Transformative Left…as we all just witnessed in the UK.

    Turn Labour Left!

    • RedLogix 1.1

      the markets hold none of the answers, and never will.

      Yet markets have been a feature of all human economic life since forever. They pre-date 'capitalism' by at least thousands of years. You have nothing to replace them with, nothing by which we can assign value to things.

      • Siobhan 1.1.1

        So you don't think that Capitalism, especially modern Free Market Capitalism, hasn't changed the definition, meaning, purpose and 'power' of 'The Market'?

        I very much doubt anyone is advocating for the end of trade or the idea of a Market.

        • RedLogix 1.1.1.1

          Modern capitalism, along with science, engineering and a host of technologies, has indeed turbo charged everything about human society since the Enlightenment. There have been many, many missteps and disasters along the way, but overall we are far better off now than ever. Hands up anyone here who wants to unwind it all and return to the life lived by our ancestors even just 200 years ago?

          Yet no-one, certainly not me, is arguing that we have reached a perfect stage of evolution, and especially not in our economic affairs. In the light of the evidence of the many flaws in our world we need to update our beliefs and urgently consider what needs improving. Only fools demand we throw a mass tantrum and discard everything we have gained.

          • gsays 1.1.1.1.1

            *looks round and very tentatively puts hand up*

            I have long thought we are blessed here in Aotearoa to be able to make a radical shift in the way we live. The best of what Tangata whenua have combined with the best of what has come from overseas.

            To eat and live in harmony with the seasons. Beats going off and doing wage slavery for 40 (ish) hours a week.

            I am not sure if this qualifies as a non market option; sharing.

            Sharing time, resources, energy, knowledge. As it feels good to share with someone and it feels good to be shared with, it resonates with our nature.

            Gets rid of that pesky money, which the love of is the root of all evil.

            • RedLogix 1.1.1.1.1.1

              I'm deeply inclined by nature to be very sympathetic to what you suggest. And I hope that at some point in the future we will achieve something recognisably like it.

              But look at say Africa, where the majority of people are still solo artisans, peasants or live in rudimentary communes … "it has it's virtues, but in consequence their productivity is chronically low and the people are achingly poor".(Collier). A romantic leap backwards into the old times, in reality spells catastrophe for 7b people and instant environmental devastation.

              I believe the path through these very difficult times lies in evolving what we already have to better suit the new circumstances we now face.

              And note carefully, it is the love of money (ahead of human relationships and reciprocity) that is the root of evil. Money itself is neutral, a placeholder tool for measuring and storing value; an essential mediator in economic relationships. It's not money per-se the ancients denounced, but the worship of it they abhorred.

              • gsays

                I suppose the arrogant and privileged point I would make in regards to our African artisans is the motivation is different.

                In what way does Collier see them as poor?

                In relation to a global income?

                In relation to the mana they have in their community?

                In respect to the love of money, sheesh, if you are involved in a company or corporation, that love is enshrined in law. Feels like a double whammy of affection from where I sit.

                • RedLogix

                  Collier does acknowledge such a life does have it's virtues, but given the opportunity, almost all the global poor choose to become middle class as quickly as possible. Or vote with their feet in perilous migrations to wealthier nations ….

            • mikesh 1.1.1.1.1.2

              1 Timothy doesn't say that love of money is the "root of all evil". It says that love of money is "a root of all kinds of evil". Which of course is not at all the same thing.

              • gsays

                I know better than to get into a 'biblical quote-off', I am sure you get my gist.

                It all comes down to greed.

                When some-one wants more than their share of the pie, some-one else has to go without.

      • soddenleaf 1.1.2

        Capitalism isn't the problem. Lazy stupid capitalists are. That's essentially the conclusion if you take the ideal that market left alone will produce what we need. So, since, it isn't hasnt we can only conclude the actors were too greedy, but not greedy enough, since the imagination horizon was entirely profit.

        It all started getting much much worse when cheap high energy dense Arabian oil gushed onto the market and the ideal of govt as a check on capitalism was sacrificed. However, this was actually a media coup, a propaganda class mantra, that essentially let polluters, profiteers be unencumbered by regulation.

        Look today at White Island, is it any wonder for 9 years of the Tourism PM, who did not hire enough mine inspectors, wasn't going to ask why the dock was in the mouth of the Volcano. That we since get this absurdity argued, that regulation guts innovation. No, regulation chooses the form of innovation. No regulation and we choose the winner to be big polluter, big profiteer, and loser us all.

  2. John Clover 2

    The final paragraph suggests I am correct in calling for a meld of Lab/Nat so that the capitalism is moderated and becomes better for humans.

    • Adrian Thornton 2.1

      "..suggests I am correct in calling for a meld of Lab/Nat so that the capitalism is moderated and becomes better for humans."

      Do you really think that? …holy crap.

      The video included below is a good indication where capitalism will always go, for the one simple reason, that is it unlocks that most unwanted of human drivers..greed, uncontrollable, powerful and ultimately destructive to all attempts at peaceful human communities and co-existence.

      Just look at out own so called "housing crises' a construct driven purely by the unending capitalistic need to commodify everything that it touch's, including the very essence of our lives, our homes…it is obscene.

      be.com/watch?v=R5lZPWNFizQ

      Turn Labour Left!

      • RedLogix 2.1.1

        that is it unlocks that most unwanted of human drivers..greed

        That's an narrow characterisation. It also unlocks other equally powerful motivations, the desire to improve, the drive towards competency and mastery, and most vital of all … the need to have purpose and meaning in life.

        I've met and worked with many successful business people in my life. I've met more than a few people in political life. While there are no perfect people, to suggest they are all driven by sheer greed and nothing else is just wrong. People are a lot more complex than this.

    • Incognito 2.2

      No, I don’t think so for the very reason that in their current state it would be like mixing two shades of grey and expecting a completely novel bright radiant colour to emerge.

  3. so..we can restrain the greed of the most rapacious business minded folk, those with with psychopathic tendencies by guiding them – pragmatically, and reminding them of the "reciprocal obligations that we have to each other"

    I guess you don't get Knighted for advocating anything that might actually change the balance of power.

    • pat 3.1

      appealing to their 'better selves'….hasnt worked to date has it….is a tad naive

      • RedLogix 3.1.1

        Probably because it was not their 'worse selves' that created the problem in the first place.

      • Stuart Munro 3.1.2

        It worked in the 18th century – and it can work again. But it requires a moral consensus, and the scoundrels will resist any such endeavour.

        • pat 3.1.2.1

          It worked (at least for about 4 decades) post WW2 as well but as you say it will be resisted but a consensus isnt needed merely a clear majority

          • Stuart Munro 3.1.2.1.1

            A consensus is much more powerful and capable that the epiphenomenal bare majority governments that have afflicted NZ since Rogergnomics.

            I tell you again that the recollection of the manner in which I saw the Queen of France, in the year 1774, and the contrast between that brilliancy, splendour, and beauty, with the prostrate homage of a nation to her, and the abominable scene of 1789, which I was describing, did draw tears from me and wetted my paper.Edmund Burke, letter to Philip Francis, 20 February 1790.

            This was Burke attempting to show that he was a moral being by exhibiting sensibility, a virtue propounded by Adam Smith, which had caught the popular imagination. Even conservatives felt obliged to do this, rather than indulge in tropes like the childish and dysfunctional lying that make Simon Bridges or Trump or Johnson figures of universal contempt.

            Any progress on suppressing or discouraging this kind of lying would inevitably improve the standard of our democracy, and by persisting Bridges has made of his party a disloyal opposition – unequivocally and persistently acting against NZ interests – indulging de facto in low level treason.

    • John Clover 3.2

      "most rapacious business minded folk, those with with psychopathic tendencies."

      simce I have never met one of these folk I think it is silly leftish mythology

      • Incognito 3.2.1

        How many of the 7.8 billion people on the planet have you met? The others don’t exist because you have not met them, obviously. Very Zen, or very silly.

      • KJT 3.2.2

        Met more than a few.

        A requirement in many corporations.

  4. Bill 4

    The future of capitalism is one of two paths that lead to a meet up with physics.

    One path involves the failure of "green new deals" that social democratic governments might pursue.

    The other is essentially corporatist/fascist in nature and is the path socially liberal and socially conservative liberals are currently forcing us down.

    I reckon we should listen to physics and avoid meeting up if we can.

    • adam 4.1

      To late eco-facscim is locked in. We can't get out of our own way.

      The UK election just showed us that – liberals (of all stripes) would rather eco-facscim than a "green new deal"

      As for avoiding the clash with Physics not going to happen we are locked into that too. Just how bad that lock in is not sure, but I'm thinking bad.

      • Bill 4.1.1

        Green new deals don't cut it – they're a part of the "pretend and extend" mindset.

        We are locked into about 4m of sea level rise. Ignore everything else, and just that one inevitability is more than enough reason to rip off anyone's rose tinted anythings.

        • adam 4.1.1.1

          But, but – incrementalism…

          probably have to do /sarc as people might miss it.

          I agree on "pretend and extend" mindset of the 'green new deal'. I'm just saying a 'green new deal' just 'ant going to happen either.

        • John Clover 4.1.1.2

          But until it happens the idea will be ignored and when it does it will be too latecrying.

  5. Stuart Munro 5

    I think your source mischaracterises the drivers of the Left, and probably from mischievous motives.

    The ideology of the left denigrates capitalism and condemns the managers of firms and funds as greedy.

    This paints the Left as interfering moralisers – which characterises some of those who self define as Left, but leaves out the traditional core – those who are impoverished by the crude accumulations of capital, and who experience the behaviour of the disproportionately rewarded as oppression, much as they might from an oppressive state. Prime examples of this oppression might be the US company towns where ultimately all resources fell into the hands of single families, denying the rest of those communities the resources to enjoy a modest prosperity. Local examples include the Quota Management System, which supercharged the monopoly of the processing companies until they were obliged to depend on slave crews – being far too precious to dirty their hands with catching work, and local anomalies like the accumulation of Stewart Island property by the Cave family.

    I live in the tiny exception to entropy called New Zealand, within the same trade sweet-spot as Australia.

    There are no exceptions to entropy, and there is no sweet spot here – As Amartya Sen observed, suicide rates objectively track the quality of governance, and ours, thanks to decades of utterly misguided neoliberal policy, are at record highs.

    • Ad 5.1

      Presumably you're aware of the Vic paper by David Hall which compares Amartya Sen's framework about capital with the current governments' Living Standard Framework.

      I still can't figure out why New Zealanders are on the whole so contented.

      • Incognito 5.1.1

        I still can’t figure out why New Zealanders are on the whole so contented.

        Because we live in relatively safe isolated bolthole in the South Pacific that is a 100% pure holiday destination. Throw in a few platitudes about Hobbits, ABs, and GDP and you’ll have a sizeable fraction (with some notable exceptions) of the population smoking (the same) homegrown dope. To top it off, don’t overthink things, because it’ll give you a headache and you might fall out with your peers. If I were a cynic, I would go on …

        • Ad 5.1.1.1

          Exactly. Sweet spot.

          Low unemployment, high trust in government, low corruption, institutions strong or getting stronger, good climate, no exterior threats, we pull together well, the entire world adores us … and yes we got the tv series.

      • Stuart Munro 5.1.2

        I wasn't – though it's here for other readers.

        why New Zealanders are on the whole so contented

        Chances are they're not – when the numbers tell you a pleasant fiction, a rigorous habit would note that a high suicide rate is not consistent with actual contentment.

          • Stuart Munro 5.1.2.1.1

            You can shove a lot under the mat with stats if that's your object – but if you're after the truth you abstain from such practices.

            • Ad 5.1.2.1.1.1

              If you're not interested in how actual data builds rational debate, try the theoretical one if you must. But it better be good.

              • gsays

                Would it be fair to say Amaryta Sen is used as a buffer/transformer to make the average relate to the individual?

                A kind of interpretation of statistics to what is going on.

                For example, the average wage is light years away from what I, and most of us earn.

                Up-thread Ad showed us, stastistically 'how lucky we are'.

                Unfortunately those statistics are a blight, they show that a lot of us don't give a fuck that our children and our men are killing themselves at a horrific rate.

                i am alright, blow the bridge.

                • Ad

                  I see the shadow of Amaryta Sen in Ardern's wellbeing framework from Budget 2019, this in itself being a refinement of what Treasury had been working on under English.

                  https://www.weforum.org/agenda/2019/05/new-zealand-is-publishing-its-first-well-being-budget/

                  I can't decide yet whether to be optimistic that they are trying to form their own common accountability framework. My observation is that in most big policy areas the state agencies are way too weak to be effective even if dump-trucks of fresh funding come their way.

                • Stuart Munro

                  Sen was, at first, looking for data points that would cut through the massive GDP disparity between nations as different as the US and Somalia, and say something meaningful about quality of life. He found suicide a robust indicator because it represented not just a rejection of the status quo by the individual, which might be considered subjective, but also reliably indicated grief/unhappiness among their surviving family and/or friends. It was and is a triangulating point to test the comfortable assumptions that tend to come from soft data like the self-reported happiness survey Ad linked above.

                  A robust happiness measure would be reluctant to repose much trust in a self-reported exercise like this, preferring to track down independent data that should show important components of happiness. GDP per capita is pretty loose because much of the reported earnings may be corporate or offshore. But something like median income vs median cost of living ought to reflect the economic component of happiness or unhappiness to some degree.

                  “Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” ~ Dickens

                  If social interaction frequency were also mapped, and perhaps mean employment intervals, underemployment, access to professional development or promotability, home ownership, and health, one might have the bones of a decent framework to discuss happiness. One of the advantages of the harder numbers, if they can be processed to yield happiness data, is that these might be objectively compared with the results of the do-nothing Key government, producing something more meaningful than the disgruntled sabre-rattling of "business confidence" to rate governance.

                  Ideally though, a sound happiness measure would begin to suggest possible directions for future policy.

      • John Clover 5.1.3

        "I still can't figure out why New Zealanders are on the whole so contented."

        Maybe they are resigned to the fact that they cannot win and get on within the limitations they face instead of ranting about evil capitalism and strident lefties as we read here smiley

        After all we live in "God's own country"

    • RedLogix 5.2

      These kinds of monopolies are a feature of all human life. Consider for example art, or music. There are millions of talented artists and musicians, but only a tiny fraction gain almost all the benefits. Or consider life in the millenia before capitalism, only a tiny fraction of individuals were politically and economically powerful, the vast majority were lived lives of brute poverty and abasement (at least by our standards).

      No matter how you organise human affairs, some individuals through some combination of either talent, competency, hard work and luck will be more successful than others … and that success always generates more opportunities and consequently more success. Economists label this variously as the Pareto 80/20 Principle, or the even more brutal form of it known as Price's Law.

      The factors that lead to inequality are largely neutral and immutable facts of life in a free society. The left opens the door to populist demagogues when it ascribes motives of greed, theft and vileness to these natural outcomes. Whipping up feelings of anger and resentment only serve of course to increase the demagogues power, but does nothing to improve the lot of the ordinary person. Given the remarkable fact that in 2016 fully half the human race is now middle class by local standards … for the first time ever … it is evident that while relative poverty has unquestionably increased, at the same time absolute poverty has declined dramatically. How to reconcile this paradox?

      Let me be clear, I am making no argument for more inequality. But I do suggest that if we are to address it effectively we must understand it properly, accept that it's causes are not necessarily malign, it's impacts are largely psycho/sociological in nature, and that our proposed solutions need to be far more nuanced and subtle than just 'smashing capitalism'.

      • Stuart Munro 5.2.1

        I'm not arguing against the natural heterogeneity of outcomes, but the policy errors that extended the range of outcome inequality, bringing genuine homelessness and grinding intergenerational poverty into NZ, which had managed for a long time, to do without them.

        Moreover, the growth of inequality in NZ frequently owes less to merit or striving than to abuses like those of Lianne Dalziel or Gerry Brownlee, or Geoffrey Palmer, who have exploited the potential of public office not for the public good but for personal advantage.

        • RedLogix 5.2.1.1

          No sane person would argue that corruption and tyranny are not the reasons why some individuals prosper, there are no perfect people and no perfect systems. And while NZ certainly has it's share of these things, they pale into comparison to almost all other nations on earth.

          But corruption and abuse of power are not new problems, they are age old and we have developed systems to deal with them. Arguably they are not working as well as we'd hope, but this is an incremental problem.

          On a global scale, the vast majority of inequality is mapped by the three factors Colliers outlines; geographic, educational and moral. For example if you live in inner Wellington you likely have a much higher income than if you live and work 100km north in the Wairarapa. There is surely no sense in which we can attribute this difference solely to corruption and abuse of power … there are many more powerful factors at work in creating this difference.

          • Stuart Munro 5.2.1.1.1

            Arguably they are not working as well as we'd hope,

            They're not working as well as they used to. The enthusiasm for market based reform created an environment in which dishonesty prospered relative to the regulated system that preceded it.

            • RedLogix 5.2.1.1.1.1

              The left assumed that the state knew best, but unfortunately it didn’t. The vanguard-guided state was assumed to be the only entity guided by ethics: this wildly exaggerated the ethical capacities of the state, and correspondingly dismissed those of families and firms.

              The right put its faith in the belief that breaking the chains of state regulation – the libertarian mantra – would unleash the power of self-interest to enrich everyone. This wildly exaggerated the magic of the market, and correspondingly dismissed ethical restraints.

              We need an active state, but we need one that accepts a more modest role; we need the market, but harnessed by a sense of purpose securely grounded in ethics.

              Collier, Paul. The Future of Capitalism (p. 21). Penguin Books Ltd. Kindle Edition.

              Collier argues that the left overweighted the capacity of the state, while the right made the same mistake with markets. Both have yielded dishonest outcomes because they ignored the other three ethical dimensions in play, family, firms and an emerging global order.

              • Stuart Munro

                It rather depends upon which state one is describing – certainly the states that attempted full-blown communism discovered an ethical shortfall. A curiosity is that in the short to medium term structures like the kibbutz managed to negotiate that pitfall. The preRogergnomic civil service was a curious beast – relatively straight within Kipling's limits at the lower levels I was in at least:

                “I have taken plank and rope and nail, without the King his leave,

                After the custom of Portesmouth, but I will not suffer a thief.

                Nay, never lift up thy hand at me—there’s no clean hands in the trade.

                Steal in measure,” quo’ Brygandyne. “There’s measure in all things made!”

                An active state, I agree, but the fitness of the market to operate functions varies with several considerations, including but not limited to the functional capacity of the private sector, the possibility of alternative providers, and the ethical median of the particular private sector.

                NZ is a relatively restricted market, and since Brierley exampled the release of stagnating capital as a means of self enrichment the integrity of our markets has been in decline. The lack of a CGT attracts non-productive speculative capital, the so-called hot money that Asian state policy increasingly eschews as being deleterious in the medium to long term. Small investors avoid the NZ share market as being untrustworthy, and typically prefer the real estate investment that has been driving our housing affordability crisis. The sector is ripe for reform, and Key of course did nothing to improve it.

                I'm curious as to what Collier proposes as a remedy – I've a feeling that a light-footed mittelstand would suit NZ better than monolithic entities like Fonterra. I'd also like to see a degree of developmentalist state activism – small local markets like the ones we have in NZ can struggle to sustain new enterprises through all their necessary evolutions.

                (Kipling from https://www.bartleby.com/364/377.html)

                • RedLogix

                  It rather depends upon which state one is describing – certainly the states that attempted full-blown communism discovered an ethical shortfall.

                  But even the social democratic states were not immune to a similar shortfall, if less spectacular. Collier's intriguing suggestion, one that I haven't encountered before is:

                  Social democracy worked from 1945 until the 1970s because it lived off a huge, invisible and unquantifiable asset that had been accumulated during the Second World War: a shared identity forged through a supreme and successful national effort. As that asset eroded, the power wielded by the paternalistic state became increasingly resented.

                  Collier, Paul. The Future of Capitalism (p. 15).

                  In other words the successful state led social democracies we grew up with were largely a creature of their time and the Roman sandal, long socks and shorts wearing civil servant who could be depended on to operate the mechanism selflessly, vanished and is not coming back soon.

                  (And for clarity, Collier is just as scathing of the right’s economically rational man, selfish, greedy and lazy in principle. He points to research that show students of economics tend to become ethically aberrant as a result of their exposure to this idea.)

                  As for Collier's remedy … the flavour of it that I have read so far appeals to me.

                • RedLogix

                  Another shameless cut and paste; but a good page:

                  We started with the moral deficit facing modern capitalism: (that) a society can do without morality because self-interest will get us to the nirvana of mass prosperity. ‘Greed is good’ because the stronger the appetite, the harder will people work, and so the more prosperous we will all become. We have come a long way from that proposition. We are social beings, neither economic man, nor altruistic saints.

                  We crave esteem and belonging, and these underpin our moral values. Around the world we hold six such values in common, none of which is generated by reason. Care and liberty may be evolutionarily primitive. Loyalty and sanctity may have evolved as norms that supported the group; members would have followed them as norms, and internalized them as values because they were rewarded with belonging. Similarly, norms of fairness and hierarchy may have evolved to keep order in the group, being rewarded with esteem.

                  Collier, Paul. The Future of Capitalism (pp. 42-43).

                  • Stuart Munro

                    Damn it – I'm going to have to read him now 😉

                  • gsays

                    Hey RL, great conversation.

                    What sticks out, like the dogs proverbial, is the meshing of the: "self-interest will get us to the nirvana of mass prosperity. ‘"

                    It sounds like a new millennium trickle down.

                  • Blazer

                    Eisenhower was the last U.S President to understand the impact of what he called the 'warfare' state.

                    His objective was to balance the budget and rein in obscene military spending funded by deficits.

                    Despite fierce resistence he largely succeeded.

                    His warnings about the danger of the military/industrial complex went unheeded.

                    From Nixon (who took the $ off the gold standard)on, it has been all downhill as successive administrations fell captive to corporate Friedman economics,and deficits became quite irrelevant.

                    Capital is the life blood of Capitalism and how that is allocated and to whom ,along with interest rates and exchange rates has the biggest impact on the society that has developed today.

                    Funnily enough Trump appears to understand(to a degree)how futile wars burn money that can be better utilised.

                    Capitalism comes dressed in many clothes but always gets the credit for any positives in society while Socialism has become a catchword for…failure.

              • John Clover

                Self interest needs to be both for self and one's community to work properly. Idealistic yes but that is where I am having had success and hold backs in my carear.

                But my question is "how do we educate all to hold those views?" Is it possible?

    • AB 5.3

      "I think your source mischaracterises the drivers of the Left, and probably from mischievous motives."

      Thanks for saying that Stuart. The vulgarity of the mischaracterisation is quite shocking. And I'm not taking the bait.

  6. R.P Mcmurphy 6

    Capitalism is going to roll on till the natural resources of this planet are exhausted or uneconomic to extract. The end of capitalism will not be becuase of some defunct social theory.

    • Siobhan 6.1

      "Capitalism is going to roll on till the natural resources of this planet are exhausted"..brilliant, so, any plan B. for what, in your mind, is a clearly defined day?

      and boy, aren't those homeless families at the local park a terrible drag…I'm hoping Man Made Global warming will force them back into the forests..they can set up little shanties with the empty cardboard boxes from this years new wide screen TV..

      • RedLogix 6.1.1

        It would be better if we actually read Ad's OP.

        To achieve the promise [of prosperity], our sense of mutual regard has to be rebuilt .

        He looks at four areas where we can do this: the global level, the nation-state, the company, and the family.

        I've been the lone voice here speaking to the global level for years, and largely ignored for my efforts. Yet as Ad points out, a rules based global order is essential for all small nations like NZ. The hard truth is that for all the anti-Americanism the left likes to indulge in, without the US enforced global peace since the end of WW2, we would simply not be here to have this conversation. And now the US is pulling back from being the world's policeman, we should urgently concern ourselves as to exactly what we want to replace it. Yet it's a conversation no-one wants to have.

        Ad goes on to elaborate on the other three layers of the model, making fine points at each. Yet as your throw away comment above illustrates, so many on the left, otherwise capable and intelligent people, consistently resort to stirring up feelings rather than thought. It's one of the reasons why we keep losing.

    • Alan Matt 6.2

      In that case capitalism will role on for a long time yet

      The asteroid belt has millions of times Earth's resources

      And it's just technological problems to solve to get it

  7. Craig H 7

    Keynes reckoned Capitalism had about 450 years in it, so by his calculations, would expire around 2030. Would be interesting to see if he still held to that if he were here today.

    • RedLogix 7.1

      On the face of it I'd agree, the form of capitalism we are familiar with, and the one Keynes was talking about, absolutely cannot persist forever. Keynes was a very smart fellow so I'd be genuinely interested in a link to that quote to understand the context of his thinking, and his reasons for placing such a specific timeline on it.

    • Ad 7.2

      Keynes showed that capitalism really can be altered, and for the good.

      • Nic the NZer 7.2.1

        You can describe some Keynesian policies which were retained across the 1980s?

        • Ad 7.2.1.1

          Much of Scandinavia.

          A fair number of strong-state instruments in Australia, Scotland, France, Singapore, etc.

          But I'm guessing you meant New Zealand. Since you need help with the answer, thankfully people have done work in this area. For the full history of how Kensianism affected New Zealand government decision making and policy, see: Jim McAloon's "Judgements of All Kinds".

          • Nic the NZer 7.2.1.1.1

            Yes, I was suggesting from a NZ point of view. The document your referring to covers the period 1945-1984. That should probably suggest how much influence Keynesian thinking has today.

            In particular its worth highlighting the Keynesian idea of full employment was openly described as a Labour party policy goal during the 1984 election campaign. Since then economic policy has applied monetary policy primarily to achieve a reserve bank dual mandate of some form. The idea that monetary policy could and would in itself be sufficient to generate full employment was the argument Keynes overcame (his main intellectual opponent being Pigou). You should have no doubt that this form of economic policy is one of the main drivers of the low wage economy and inequality in NZ.

            It seems most of the references to Keynes are shallow marketing rather than well reasoned economic ideas of a Keynesian bent.

            (I do note the Green party recent rejection of the budget stupidity rules made a reasonable reference to full employment as a political policy, otherwise this idea appears to be banished from the political lexicon).

            • Ad 7.2.1.1.1.1

              Keynes showed that capitalism really can be altered, and for good.

              His thinking was influential for a long period here and elsewhere.

              Nowhere in the above have I suggested rolling out Keynsian ideas again unaltered.

              Whether current government settings are Keynsian or not now, well, others can evaluate that.

              Collins would be very hard to describe as a Keynsian.

              • Ad

                I think previous Minister of Finance Dr Michael Cullen has Keynsian tendencies. That doesn't mean following the exact policies Keynes had rolled out. But. Big state spending and big state involvement in aggregate spending is where his remaining legacy is now.

                In the 3 terms to get to Dr Cullen's reign, the big elements still around of a state corralling whole classes of spending were in Pharmac, ACC, the health system generally, and a few other areas that survived Ruth and Bolger.

                After that, Dr Cullen and team instigated Kiwibank, brought in NZSuperfund, brought in Kiwisaver, brought back Air New Zealand and Kiwirail, and bunches of other stuff like that. Also Working for Families, to prop up aggregate spending in the economy.

                Since then, government has both by accident and design figured out how to be a much stronger presence in the economy. Through the Canterbury and North Canterbury earthquakes it has increasingly used it capacity to develop whole cities and landscapes.

                Guaranteeing savings straight after the GFC – with the notorious SCF case in there as well – shadow of Keynes all through that. Bailing out AMI was a Keynsean move.

                Its ability to alter the whole housing market has got stronger through a revived Housing New Zealand, through the formation of urban development agencies, and coming up in legislation how local governments fund infrastructure.

                IMHO Robertson is not particularly strong in any policy area and is largely spending the headroom bequeathed by English.

                But.

                I'd view the Provincial Growth Fund as a Keynsean initiative.

                Also the big increases in minimum wage both recently an to $20 by 2021. Sure, it's not Sutch commanding Pye televisions out of Waihi, but it's a really active state enabling bigger aggregate spending.

                Also the new reaggregation of road and rail funding within the GPS and NLTF I'd class as a Keynsian move, because the state is corralling the direction of all transport capital funding and much operational funding through one common set of mechanisms.

                The move to shift the Port of Auckland – when the government is not a seaport price regulator nor a seaport owner there – that felt Keynsean.

                Most recently the government leaned on the Reserve Bank to require banks to hold much larger reserves to ensure that they (and our savings) better withstand another GFC-sized event. I'm sure Keynes would approve.

                All of the above are in keeping with the primary Keynsean legacy: that governments can and should and should have the capacity to get the country through an economic crisis. As the Nobel laureate Robert Lucas, an opponent of Keynes, admitted in 2008: “I guess everyone is a Keynesian in a foxhole.”

                • Incognito

                  There are times when State intervention and massive investment are required and expected and that is in times of crises be it caused by (global) financial or natural disasters. You mentioned the earthquakes and I believe I saw a reference to WWII and the economic boom started in the immediate post-war period somewhere too (ok, the Marshall Plan played a major role). But once some level of stability has been restored, the State tends to step back and hand over/back affairs. Only the State has the power and only the State has the legal means to use it, e.g. by calling a state of emergency and call for emergency laws. Perhaps this is the accepted natural state and avoids the risk of accusation of abuse of power and too much political interference but it is interesting to speculate if the populace is generally that averse to State influence. I suspect it is a perception coming from and created by the neoliberal right.

                  • pat

                    depends upon which populace you speak…..the entrepreneurial class are certainly averse but they are not the majority…as conditions deteriorate it would be reasonable to expect a shifting of preference to government intervention among the general population just as you would expect the opposite in times of economic stability….. unfortunately after 4 decades of privatisation and reduced government most western governments lack the capability/capacity to implement it

                    • Incognito

                      I meant the populace as a whole.

                      Expertise and knowledge among State operatives has slowly eroded and been transferred/outsourced to the private sector and consultants. I think this is partly because of increasing complexity that seems to require super-specialists and niche operators. Problem is that the some (?) who sign the contracts and supposedly oversee projects lack the required expertise to do so effectively. Things fall literally in-between the cracks. Ad may have different views on this.

                      I think governments are more capable than they and we believe. Admittedly, they usually start off haphazardly and have to learn quickly. Inevitably, they make mistakes but as long as they put the people and people’s safety first, much will be forgiven, at least initially.

                  • pat

                    your reply describes the surface of the problem and you admit that the government (central and local) lacks the ability to assess and oversee (even the smallest) of projects then make the mistake of thinking that those skills can be learned in a short period of time leading into said project…they do not and expertise takes years if not decades to acquire (and pass on)…the inevitable mistakes are not forgiven (and are exceedingly costly, not just in monetary terms)….just ask anyone trapped with a valueless leaky building.

                    Think of the absurd situation of the reports on the moving of the Port of Auckland where private consultants advice depends on who has commissioned the study (often contradictory, even from the same company) and the government dosnt have the in house capacity to assess the reports…even the quality of Treasury's work has been slammed by the RBNZ.

                    We will be required to make major infrastructure decisions impacting this country for generations in the very near future (and probably with borrowed money that wont be able to re borrowed if those projects go wrong) and those resources will have to very wisely apportioned …. and the capability isnt there to assess them let alone oversee them.

                • pat

                  If you want insight into Cullen's thought processes I suggest the attached….you may be surprised

                  https://treasury.govt.nz/sites/default/files/2016-07/tgls-cullen-notes.pdf

                  • Ad

                    Holy mackerel that's dense.

                    I'll print that out and have a go over the holidays.

                    Good find.

                    • Nic the NZer

                      Its worth keeping in mind that there are at least two schools of economic thought using the term Keynesian influencing that document. The new-Keynesian reflects the mainstream thinking derived from John Hicks attempt to integrate 'the General Theory' with neo-classical economics. The other tradition runs through the work of Galbraith other institutionalists, post-Keynesians and including MMT.

                      The important difference is how finance is incorporated into the theory. The new-Keynesian (and it appears Cullen) treats this as a further market setting another interest rate between savers and borrowers (including ultimately the govt). In contrast post-Keynesians have treated money in some way as an accounting entry of the institutions which manage it, e.g not of limited supply.

                      Among other implication differences this effects the tradeoffs in fiscal policy vs monetary policy in response to a recession. The new-Keynesians probably are happy with "that governments can and should have the capacity to get the country through an economic crisis" and so must also watch their finances to maintain that ability. I believe Keynes held that govt always have the capacity to use fiscal policy in response to involuntary unemployment (e.g what happens during a recession) and don't face a sound finance constraint.

                      The outcome is we are fed a position and argument of Keynes intellectual opponents in the name of being Keynes and defining some left wing border to economic sense.

                  • Nic the NZer

                    Thanks for that link.

  8. Incognito 8

    Now I’ve actually read the post I can say it is a mighty fine one!

    To me that pretty much rules out party-based politics as an answer to bridging any of the big divides, because they exist for intense non-cooperative competition.

    I’ve long thought that party politics create more problems than they solve and are more hindrance than help. Never thought I’d see a similar thought expressed here.

    • RedLogix 8.1

      I did once many years ago … and got a thorough spanking for my temerity.devil

      I firmly believe that parties have pretty much outlived their purpose. Indeed in some cases it's already plain they've been rendered irrelevant. More than a few have for example pointed out that Trump is in fact a natural Democrat, and Clinton would have been much more at home with the Republicans. Their respective parties just got towed along helplessly in their wake.

      But in the meantime parties remain the dominant framework for our political thinking, so I put up with them for the sake of convenience.

      • Ad 8.1.1

        I'm open to systems of redistribution that allow full expression of the public voice and protection of public rights that don't involve parties.

        There'd be no shortage of contest and fight – it's just they would probably look like political life before the Labour Party existed – which was pretty damn ugly.

        • RedLogix 8.1.1.1

          Take a quick look at the first few minutes of this:

          https://www.youtube.com/watch?v=wBW3Z4efuZM

          Please overlook the rest of weirdness, it's not relevant to the point around network types and how they map onto political systems. In essence you propose the last of the four types, the fully distributed model. It has it's merits, but in reality as you scale it up, the sheer number of connections (or dyads) becomes exponentially unmanageable. And there is nothing to prevent uncontrolled, excessive change, rendering the system prone to runaway instability. More or less as you have implied.

          I've argued in the past that the democratic systems we have are poorly coupled from one layer to the next. Democracy, sans parties, works best at a very small scale; intimate enough that we might have a personal sense of the people we are voting for. (The French do this in their rural communities, many extremely small localities some as small as a few dozen people.)

          If we started at this very local direct democratic level, and then these bodies indirectly elected individuals to a nation state body, and then again to a global level … each layer would have a direct administrative links, and each could be constitutionally protected with it's own specific rights and scope of responsibilities. But capable of functioning as a single, democratically accountable whole at a global scale.

          IIRC you have previously posted in a similar vein around the opportunity to integrate local and nation level govt into a more cohesive system. And note that parties simply get in the way of such a transformation.

          • Wayne 8.1.1.1.1

            Absolutely a terrible idea. I want to be able to vote directly on the big choices facing the nation, which are usually decided at the national level.

            In any event there is no need to worry, such a "reform" of our democracy will never get public consent.

            • RedLogix 8.1.1.1.1.1

              As a natural conservative Wayne I'd be very surprised if you reacted to my suggestion with anything other than rejection. smiley After all this is what parties do, like Dumbledore's Sorting Hat, they roughly aggregate broad categories of interest and for much of our recent history have served a noble purpose. Your moral value system places a much higher value on loyalty to what you know works, than anything new and untried. I get that and accept it.

              Yet there is no rule that states that Parties are an innate and essential feature of a democratic system. Indeed there a myriad examples of organisations that have members vote on crucial issues, yet there are no parties involved, sometimes not even informal factions.

              No I don't expect public acceptance anytime soon, but we were talking about how politics might work sans parties, and what the advantages might be.

            • Ad 8.1.1.1.1.2

              In case it needs saying, I really appreciate a longstanding ex-Cabinet Minister with a PhD in international law engaging here.

              So far as I can tell none of the ex-Labour ones would dare contaminate themselves with the unwashed here.

              Thanks for engaging Wayne.

              • Anne

                The main reason is probably because they are still involved in situations where a non partisan stance is a prerequisite to that involvement.

                • Ad

                  Your defensiveness knows no bounds.

                  Of all the hundreds ex-Labour MP's, all are involved in such delicate matters that even a comment in public would rule them out of all future public engagement. Amazing how they lose their capacity to speak upon stepping out of elected life.

                  • Anne

                    Oh come on. It was a bit tongue in cheek mate. I was thinking of Geoffrey Palmer in the main.

                    And why should they indulge once they leave politics anyway? Most probably want a quiet life sans politics and that includes ex-pollies from both sides of the political establishment.

                    Wayne in an exception. He enjoys an argument and we are happy to oblige.

                    • Anne

                      Wayne is an exception…

                    • Ad

                      They have risen through Labour to leadership positions. No one's obliged to.

                      A brittle government like this one needs a growing base of intelligent discourse from the left to support it. There are few alternatives to MSM status quo.

                    • Anne

                      So, what are you inferring Ad? That I – and no doubt others you choose to erroneously judge – am/are not capable of intelligent discourse?

                      My beef with you is your constant attacks on Labour and Labour ministers. Oh yes, you occasionally throw an accolade or two but they are usually followed by more attacks.

                      This government is brittle? Assuming you include the Greens and NZ First…that's media generated poppycock. They are no more brittle than any previous NZ government.

                      And this from someone who purports to be an ardent supporter of the party.

              • Incognito

                Thanks for engaging Wayne.

                I second that.

                We have no idea why people decide to comment here (or not). Many seem to prefer the depths of Twitter and Facebook, possibly because they have more control and without annoying Moderators spoiling their fun.

              • lprent

                We have no idea why people decide to comment here (or not). 

                Darien Fenton comments under her own name. So have various other current and ex-Labour MPs at various times.

                But while I insist that current MPs comment under their own name when I detect it, we encourage pseudonyms to make sure of a wider more open debate (within site rules). That includes ex-MPs.

                I wouldn't bother trying to track them unless they start claiming authoritative knowledge without stating how they aquired it. But that is the case for everyone.

      • Incognito 8.1.2

        Crikey! It’s starting to feel like an echo chamber here 😉

        Must have been before my time on this site. Anyway, a spanking is better than a bollocking.

        The problem I cannot get my head around is how to manage the flow of accountability, for example, from grassroots level to effective policymaking and implementation (execution) and back. Earlier this month I raised this conundrum using the analogy of cells, neurons, and ‘leader neurons’ in an integrated organism. The organism, in turn, survives and thrives (functions efficiently and effectively) in an ecosystem, et cetera. I mused that Nature is providing us with a blueprint on how to arrange our affairs differently. Suffice to say, my ramblings did not even result in a spanking.

  9. R.P Mcmurphy 9

    when the shit hits the fan it will be every man for himself

  10. sumsuch 10

    Capitalism is no more sustainable than it was in 1939. Galbraith's cynicism about it began then when he ran the American economy with his little finger during that war. Climate change means demo-cracy and socialism. Why the denial among the countries controlled by the strong.

  11. Dennis Frank 11

    Top capitalist Bill Gates reviews the book: https://www.gatesnotes.com/Books/The-Future-of-Capitalism

    "What should we do about it? I found myself agreeing with a lot of what Collier has to say. I was especially struck by the central idea of his book, that we need to strengthen the reciprocal obligations we have to each other. This won’t directly address the divides, but it will create the atmosphere where we can talk more about pragmatic solutions to them. “As we recognize new obligations to others,” Collier writes, “we build societies better able to flourish; as we neglect them we do the opposite…. To achieve the promise [of prosperity], our sense of mutual regard has to be rebuilt.”"

    Mutual respect is an ethos alien to many leftists, who seem to think that demonising rightists is the only way to live. I don't respect either tribe as a class – respect must be earned (in my antiquated opinion) – but when I see or hear intelligent thoughts from some members of each tribe I respect them for that. Goodwill is even more important than intelligence (deriving from the feeling-driven mammalian brain, I presume). That's because it makes folks feel at ease even with people they disagree with. It dissolves the us/them conceptual divide.

    Wouldn't surprise me if capitalism is evolving away from traditional exploitation. Very slowly. Can human agency speed up the process? Only via like-mindedness. Consensus politics. Requires leftists to flush the syndrome `I'm right, everyone else is wrong' out of their heads…

    • Drowsy M. Kram 11.1

      "Mutual respect is an ethos alien to many leftists, who seem to think that demonising rightists is the only way to live."

      "Requires [many/some/a few?] leftists to flush the syndrome `I'm right, everyone else is wrong' out of their heads…"

      These are intriguing opinions – mutual respect is, of course, a two-way street. Fortunately, many in the current centre-left coalition government seem to be pursuing a messaging approach that is more positive and (possibly) more respectful than that of the main rightist opposition party.

      Only time will tell if this approach can carry the day against 'dancing Cossacks campaigning', and other more recent examples of political demonisation by rightists.

      Respect!

      https://nzhistory.govt.nz/media/video/dancing-cossacks

      Ridiculing [demonising?] the above rightist political ad – quite funny.

      https://www.youtube.com/watch?v=1EduWoPXoT4

  12. Dennis Frank 12

    More from Bill Gates: "I would also take Collier’s world/nation/company/family argument one step further. I would add a fifth category: community. We need to re-connect at the local level, where we’re physically close enough to help each other out in times of need. Churches can serve this purpose. So can community groups. Digital tools have also helped people connect with their neighbors, though I think there’s still more that could be done there." https://www.gatesnotes.com/Books/The-Future-of-Capitalism

    "I think the U.S. government needs more revenue to meet its commitments, and that means raising taxes on the wealthiest." Of course, Marxist theory suggests that people are politically motivated by their class, so any Marxist reader will know that Bill cannot possibly have written this statement on his website. Must have been a staffer pretending to be Bill. One with subversive intent. 🙄

  13. Dennis Frank 13

    Foreign Affairs has this short appraisal: https://www.foreignaffairs.com/articles/2019-12-10/future-capitalism

    "Capitalism has been quite successful as a system of political economy. It emerged in the eighteenth century, took off in the nineteenth, and dominated the world in the twentieth. The Faustian bargain it offers—riches and freedoms, at the price of stability, tradition, and community—has proved so attractive that ever more societies keep making it. Now, having left its ideological competitors in the dust, the system is confronting its own flaws". I object to the inaccurate usage of `quite' – it ought to be replaced by `extremely'.

    "Two and a half centuries later, we’re still trying to figure out how to reap the upsides of markets while protecting ourselves from the downsides. The benefits outweigh the costs, so capitalism keeps moving forward. But the more the system seems to work only for those at the top, the more it will have trouble sustaining democratic legitimacy."

    Yes, but it will continue by default. People will only choose a better option when that actually manifests in the real world. Until then, bleating will persist.

    • pat 13.1

      the real problems begin when the bleating arms and activates itself……care to predicate how far off that event is?

      • Dennis Frank 13.1.1

        Not anytime soon. Individualism is now so anchored as a culture that organising to fight capitalist hegemony is almost universally viewed as too much of an effort by those who dislike the hegemon. People will just keep doing their own thing.

        • pat 13.1.1.1

          I hope you are right but looking around the world raises the question what makes us (in the west) think we any different or will react any differently under similar pressures

  14. Dennis Frank 14

    I've found an in-depth review well worth reading: "Collier has surprisingly little to say about the ethical world. His ethical world is a world largely closed to new migration, which Collier rejects on the grounds of cultural incompatibility between the migrants and the natives… It is slightly disconcerting that Collier, who has spent more than three decades working on Africa, has almost nothing to say about how Africa and African migration fit into this “ethical world.” There are only two ways in which he addresses migration: First, he argues, migrants or refugees should stay in countries that are geographically close to their source countries: Venezuelans in Colombia, Syrians in Lebanon and Turkey, Afghanis in Pakistan, and so on. Why should the burden of migrants be exclusively borne by countries that are often quite poor is never explained. Surely, an ethical world would require much more from the rich." https://promarket.org/the-future-of-capitalism-and-the-utopia-that-never-was/

    • RedLogix 14.1

      The new White Man's Burden?

      Today the White Man’s Burden has been inverted—it is not the West’s duty to colonise but to welcome any and all migrants beseeching the white man (and woman) to provide what their own rulers will not: sufficient food, adequate housing, jobs, education, healthcare, and so on—the foundations of a happy and prosperous life.

      • Dennis Frank 14.1.1

        Duty?? Last time I can recall westerners being dutiful, it was the 1960s. Then again, looking at my recent haircut in the mirror the other day, I realised it hadn't been that short since my final college year – 1967. Maybe duty is getting contagious again?

        Interesting stuff in your linked article: "a Gallup opinion poll conducted in December 2018 showed that 750 million people worldwide want to migrate permanently to another country—that’s 10 percent of the global population." Jeez, that looks like pressure, eh?! An irresistable force coming up against the immovable walls of the global elites. People must live in national boxes, so they can be controlled by elected wannabe elitists…

        • lprent 14.1.1.1

          Could just be that as males get older, the natural disintegration of hair follicles and thinning makes the stringy hair quite apparent.

          Personally that is the main reason that I think my hair is shorter, whilst my beard (which shows less of a follicle destruction) is getting more persistent.

          Ah vanity…

  15. Dennis Frank 15

    Branko talks about his time in the World Bank: https://oxfamblogs.org/fp2p/inequality-and-the-future-of-capitalism-in-conversation-with-branko-milanovic/

    "What do you mean by ‘The Global Victory of Capitalism’? It’s a victory in 3 different senses.

    1. A victory over alternative modes of production – feudalism; communism/socialism.

    2. Geographical: the spread of capitalism to the four corners of the world, including China, Eastern Europe and Russia.

    3. The ability of capitalism to create new markets, that we had never thought of. We are being commodified in our daily activities – I find it extraordinary.

    Could you explain the distinction between Liberal and Political Capitalism?: Liberal Capitalism was born in the West through bourgeois revolutions. Chinese capitalism is different – it was born out of communism, which abolished the feudal institutions. Gradually, China and Vietnam have developed indigenous forms of capitalism."

    "In Liberal Capitalism, economic power dominates and leads to political influence – the problem of plutocracy. In Political Capitalism, it’s the other way around – you leverage political power in order to get wealth."

    "I wanted to distinguish myself from those people who think we will end up with one world with Liberal Capitalism, with a middle class – Acemoglu and Robinson; Fukuyama. It’s a very special reading of history, that sees the terminus of history as having arrived on 9th November 1989, with the fall of the Berlin Wall. It was wrong then, and it’s wrong now. You can have various possibilities, e.g. both could converge on plutocracies, as the Western and Chinese systems are currently doing. [DG: Echoes of a nice joke, via Ha-Joon Chang: ‘under Capitalism, man exploits man; under Communism, it’s the other way around’]"

  16. sumsuch 16

    This is the end of capitalism, just like 1939 was a suspension. KRISIS. A socialist govt is required. Why isn't it in existence? There is no one to smack 84 neoliberalism and 80s individualism in the face. Apart, of course, from doom. We are very good in dealing with rapids and god-awful with waterfalls.

    So we go down by forms. I just don't look forward to killing myself.

  17. millsy 17

    Any serious challenge to the current system was snuffed out on 13 December at 11am (NZ time). What happens now, I have absolutely no idea.

  18. R.P Mcmurphy 18

    modern day industrial capitalism is underpinned by the energy released by burning fossil fuels. when it becomes uneconomic to extract oil then new forms of psychological assault on the unfortunate will be initiated.

    when the opium trade was terminated with China then millions of Indians who produced the stuff were left to starve so a few billion wont go astray when the next major convulsion occurs.

  19. Dennis Frank 19

    Klaus Schwab (Founder and Executive Chairman, World Economic Forum): "The global system we are part of seems to be spinning out of control… developments we see today in individual countries and societies are part of an interconnected network of cause and effect. The entire global system is under stress. We must ensure it rebalances. I believe this is possible, and I will outline below how I think this rebalancing can be achieved."

    When one occupies the apex of one of the global elites, heroic endeavour applied to the control system seems feasible. Good luck with that! https://www.weforum.org/agenda/2019/02/how-to-rebalance-our-global-system/

    "Globalization 4.0. What would the norms for global system change look like? I propose the following seven. [edited to summarise]

    First, a collaborative approach of global governance that is respectful of multipolarity and diversity. A new global system should be based on common interests.

    Second, the new global system should be more stakeholder-based. Countries have achieved the greatest progress when they have considered all their stakeholders: civil society, business, government, and individual citizens and groups.

    Third, our system should be more sustainable. According to one estimate, in the last three decades, our global ecosystem has lost up to a quarter of the value it could potentially provide. We cannot let it degrade further.

    Fourth, our system should be more inclusive. Individuals may be able to garner more wealth by blindly pursuing their own interests. But in the interest of society, we must make sure that no one gets left behind. In many societies, that may well mean a renewed focus on redistributive policies and taxation.

    Fifth, our system should be more gender-balanced. For too long, we have lived in a world that has granted all kinds of privileges based on gender.

    Sixth, it should be more human-centric. When we evolve our global system, we must make sure that the primacy of people and their needs, as well as all species, take precedence over machines.

    Lastly, our future global system should be more ethically based. It needs to stamp out distortions including corruption and various excesses. Elites need to be more trustworthy role models. In short, we need a re-moralization of globalization.

    I'm encouraged that a global elitist at an apex can identify solutions with such clarity. Let's hope his vision is highly contagious, sufficient to mobilise key players to collaborate on this basis. yes

  20. sumsuch 20

    Jebus, our grandparents were right but the means is decimated by the atomisation of individualism. Divide and rule by rightful individualisation.Look at our ridiculous children. Entertained beyond … on rainy days in my primary we played marbles in the classroom sink for entee-tainment. I had politics by Intermediate, these fools( or my nephews and nieces) believe it's all laid on. Complacency grown by good times for many.

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