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
What do Jacobs and mazzucato state about the austerity state
I has not restored western economies to health
What is the problem with weak and unstable growth (Jacobs and mazzucato, 2016)
GDP fell in 34/37 advanced economies
Unemployment rose by 30 m
For modern capitalism instability has become a seemingly structural feature
Much of capitalism’s growth pre 2008 did not represent a sustainable expansion of productive capacity and national income but rather reflects an increasing in household and corporate debt
What are the issues with stagnant living and rising inequality
Even when growth is strong, there is no increases to household income
More increases in income for higher paid workers
Richest 1% account for 20% of national income
What are the problems with climate change and the environment
Modern capitalism has been storing up profound risks to its own future prosperity and security
What do Jacobs and mazzucato say about rethinking economic policy
Failings of capitalism are structural
Can systemic risks be eliminated?
Policy should seek to correct market failures
Interventions have to balance the goal of correcting market failures with the risk of generalising gov failure that outweighs them
It is investments in technological innovation which are the driving force behind economic growth and development
What does Paul mason say about capitalism
It’s like an organism, has a beginning a middle and an end
5th kondratiev wave of capitalism
- information goods destroy price formation mechanism
- supply of information goods is unlimited
Only reason they have a price is because of IP
What else does mason say
Capitalism as an economic system has become desperately dysfunctional
- inequality is growing
- climate change
Once capitalism can no longer adapt to technological change, postcapitalism becomes necessary
What implications does the technological revolution have on capitalism
IT has reduced the need for work
Information goods are corroding the markets ability to form prices correctly
People are collaborating in a manner that does not always make sense to traditional economists
What does mazzucato say about he risk taking state
Public sector funding does much more than fixing market failures, can in fact create new products and markets
Creative destruction is largely responsible for dynamism of industries and long run economic growth
What does Merkel say about financial capitalism
Turn to neoliberalism, deregulation and globalisation
Crisis of capitalism threatens to turn itself into a crisis of democracy
Shift from organisation equality and solidarity to free markets, productive inequality and individualism
The internal dynamics of capitalism are increasing but so is its instability
Capitalism has detached itself from social and regulatory frameworks but with this triumph becomes the danger of self destruction
What are the thesis’ merkel provides
Thesis 1) increasing socioeconomic inequality and poverty lead to asymmetric political participation
Thesis 2) in open embedded democracies elections are increasingly unable to halt growing socioeconomic inequalities
Thesis 3) during times of financialisation the state becomes more vulnerable
Thesis 4) economic and political globalisation increasingly move political decision making away from parliament
What are the 3 long term trends than struck identities as being prominent among crises
The prosistent decline in economic growth
Equally persistent rise in overall indebtness
Economic inequality of both income and wealth
All 3 are mutually reinforcing
What does streek identify as the problems of democracy
Pervasive sense that politics can no longer make a difference in people’s lives
Decades on inequality have cast doubt in the governments ability to intervene
What are the 5 systemic disorders of capitalism
Stagnation Oligarchic redistribution Plundering of public domain Corruption Global anarchy
What does Streek day about capitalism being on the brink
Facing its gotterdammering
Destroyed any agency that could limit it
Is capitalism killing itself?
Crises will emerge of every sort and the myriad of provisional fixes will collapse under daily disasters produces by economic disarray
What does Mason say about automation
Unless whole new industries based on new sources of economic demand grow, the purchasing power of the majority falls. There is only so much money that can be printed, so many asset bubbles stimulated until it comes to a full stop
What is institutional complementarity
All complement each other and depend
What do mazzucato and Jacobs identify about the government
Been lax in enforcing anti discrimination laws
When those at the bottom of the income distribution at at risk of not fulfilling their potential, the economy pays the price with a weaker demand economy
How do Jacobs and mazzucato say inequality can be reversed
Education support
Increasing minimum wage
Income earned tax credits
What do Jacobs and mazzucato say about financial liberalisation
Since this happened most countries have seen increases in financial crises
What does streek say about OCED capitalism
Been kept going by liberal injections of fiat money which cannot continue forever
What does Harvey (2011) day
Policy failures caused moral hazards in institutions deemed too big to fail
Problem for capitalism is to find a path to a minimum compound 3 percent growth
Any blockage will produce a crisis
Has the financial crisis been stabilised at the expense of creating a fiscal debt crisis on capitalist states
Compound growth forever is not possible
The necessity for a coherent anti capitalism revolutionary movement must be recognised
