Crisis Of Democratic Capitalism Flashcards
What is capitalism Hancke, 2010
An economic system of resource allocation embedded on a moral, political and social environment
What institutions are involved in the exchange of goods and what are some common system features
Markets ( financial and labour)
Firms
State (regulates,gives away land and property rights)
Common system features
- shareholder system
- labour market regulation
- competitive relations
- firms at the centre
- can’t happen without social order (state maintains)
Institutional complementarity- all complement each other and depend
What is democratic capitalism (streek, 2011)
A political economy ruled by two conflicting principles or regimes of resource allocation.
One operating according to marginal productivity and the other based on social need or entitlement as certified by the collective choices of democratic politics
What were some of the main causes of he financial crash including those outlined by the FCIC
Deregulation of financial markets
Sub prime mortgage crisis
Easy availability of credit Breakdowns in corporate governance Key policy makers unprepared Excessive borrowing Failures in financial regulation
What does David Harvey (2014) argue about capitalism
It is time to look beyond capitalism towards a new social order that would allow us to live within a system that could be responsible, just and humane
What does David Harvey argue the 5 key reasons for the financial crash
Human frailty (greed, delusion of investors) Institutional failure ( regulators asleep at the button) False theory (believed in the efficiency of markets) Cultural (ISA obsessed with home ownership) Policy failure (too much regulation)
What does David Harvey say about systemic risk
Systemic risk contradictions of capitalism
1970s execessive power of labour leads to offshoring
From 1970s wage repression and excessive power of finance due to borrowing
Demand comes from credit cards
Capitalism can’t abide limits, it turns them into barriers which it then circumvents
Capital never solves its crisis tendencies it simply moves them around
What do mazzucato and Jacobs argue
Orthodoxy in economics has given use inadequate resources to understand the multiple crises that capitalism faces and has contributed poorly designed policy to deal with these crises
Reasons for this are
Macro- most models didn’t include the financial sector
Micro- theoretical efficient market hypothesis and deregulation
What are the key discontents Jacobs and mazzucato identify
Weak and unstable growth
Stagnant living standards and rising inequality
Climate change
What are the 3 long term trends that are prominent among crises identified by streek?
Persistent decline in the rate of economic growth
Equally persistent rise in overall indebtness where financial obligations run high
Economic inequality of both income and wealth
All 3 are mutually reinforcing
What does Paul mason argue about capitalism
Capitalism as an economic system has become desperately dysfunctional
Inequality is growing climate change
Once capitalism can no longer adapt in technological change, postcapitalism becomes necessary
What are the 3 types of capitalism identified by merkel (2014) over time
Market liberal capitalism- state institutions largely refrained from interfering in markets
Organised and embedded capitalism- capitalism developed internal need for coordination and regulation
Neoliberal capitalism- self regulation and limit of state regulation
What are the compatibilities and incompatibilities of capitalism
Unequally distributes property rights on one side, equal civil rights on the other
Under capitalism, decisions and their implementation lead to a degree of economic and social inequality that is hardly acceptable in democracy
Capitalism and democracy can easily conflict if the the distribution and use of property rights leads to an accumulation of wealth large enough to hinder politics and if democracy decisions are taken to limit the use of property rights. If this is generally the case then rights and use of capital should be regulated if they threaten to overshadow and transform democratic decisions
Why does financial capitalism signify the breakup of coexistence
Turn to neoliberalism, deregulation and globalisation
Shift from organisation, equality and solidarity to free markets, productive inequality and individualism
Globalisation and neoliberalism went hand in hand
But th internal dynamics of capitalism are increasing but so are it’s instability
What are the challenges for democracy
Capitalism has detached itself from social and regulatory frameworks but with this triumph becomes the danger of self destruction
Increasing socioeconomic inequality and poverty lead to asymmetric political participation
In open embedded democracies elections are increasingly unable to halt growing socioeconomic inequalities
During times of financialisation the state becomes more vulnerable
Economic and political globalisation increasingly move political decision making away from parliament