Crisis Of Democratic Capitalism

Question 1

What is capitalism Hancke, 2010

Answer 1

An economic system of resource allocation embedded on a moral, political and social environment

Question 2

What institutions are involved in the exchange of goods and what are some common system features

Answer 2

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

Question 3

What is democratic capitalism (streek, 2011)

Answer 3

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

Question 4

What were some of the main causes of he financial crash including those outlined by the FCIC

Answer 4

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

Question 5

What does David Harvey (2014) argue about capitalism

Answer 5

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

Question 6

What does David Harvey argue the 5 key reasons for the financial crash

Answer 6

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)

Question 7

What does David Harvey say about systemic risk

Answer 7

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

Question 8

What do mazzucato and Jacobs argue

Answer 8

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

Question 9

What are the key discontents Jacobs and mazzucato identify

Answer 9

Weak and unstable growth
Stagnant living standards and rising inequality
Climate change

Question 10

What are the 3 long term trends that are prominent among crises identified by streek?

Answer 10

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

Question 11

What does Paul mason argue about capitalism

Answer 11

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

Question 12

What are the 3 types of capitalism identified by merkel (2014) over time

Answer 12

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

Question 13

What are the compatibilities and incompatibilities of capitalism

Answer 13

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

Question 14

Why does financial capitalism signify the breakup of coexistence

Answer 14

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

Question 15

What are the challenges for democracy

Answer 15

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

Question 16

What do Jacobs and mazzucato state about the austerity state

Answer 16

I has not restored western economies to health

Question 17

What is the problem with weak and unstable growth (Jacobs and mazzucato, 2016)

Answer 17

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

Question 18

What are the issues with stagnant living and rising inequality

Answer 18

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

Question 19

What are the problems with climate change and the environment

Answer 19

Modern capitalism has been storing up profound risks to its own future prosperity and security

Question 20

What do Jacobs and mazzucato say about rethinking economic policy

Answer 20

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

Question 21

What does Paul mason say about capitalism

Answer 21

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

Question 22

What else does mason say

Answer 22

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

Question 23

What implications does the technological revolution have on capitalism

Answer 23

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

Question 24

What does mazzucato say about he risk taking state

Answer 24

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

Question 25

What does Merkel say about financial capitalism

Answer 25

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

Question 26

What are the thesis’ merkel provides

Answer 26

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

Question 27

What are the 3 long term trends than struck identities as being prominent among crises

Answer 27

The prosistent decline in economic growth
Equally persistent rise in overall indebtness
Economic inequality of both income and wealth

All 3 are mutually reinforcing

Question 28

What does streek identify as the problems of democracy

Answer 28

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

Question 29

What are the 5 systemic disorders of capitalism

Answer 29

Stagnation 
Oligarchic redistribution 
Plundering of public domain 
Corruption 
Global anarchy

Question 30

What does Streek day about capitalism being on the brink

Answer 30

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

Question 31

What does Mason say about automation

Answer 31

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

Question 32

What is institutional complementarity

Answer 32

All complement each other and depend

Question 33

What do mazzucato and Jacobs identify about the government

Answer 33

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

Question 34

How do Jacobs and mazzucato say inequality can be reversed

Answer 34

Education support
Increasing minimum wage
Income earned tax credits

Question 35

What do Jacobs and mazzucato say about financial liberalisation

Answer 35

Since this happened most countries have seen increases in financial crises

Question 36

What does streek say about OCED capitalism

Answer 36

Been kept going by liberal injections of fiat money which cannot continue forever

Question 37

What does Harvey (2011) day

Answer 37

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