Politicians who rail against socialism or capitalism always adopt a more moderate stance after they come into office. This column argues this is because we are still experiencing the consequences of the industrial revolution. The current state of that process involves a widely accepted compromise between aggregate prosperity and distributional equality.Read it at Vox.eu
The Age of Equality
Richard Pomfret | Professor of Economics at Adelaide University
Politicians who rail against socialism or the market always adopt a more moderate stance after they come into office – not because they are cowed by outside forces, but because this is what their electorates want. At any point in time, some voters will be animated by encroachments of the state or by market-generated excesses, but these cannot plausibly be seen as appeals for unfettered capitalism or central planning. The reality is of choices within a narrow band whose limits have been determined by a quarter millennium of economic history.
I suppose Pomfret's general thesis seems valid enough, but some of his arguments rest on very weak assertions of fact. For example, he opposes the German and Japanese models of industrialization with that of the Soviets, supposedly demonstrating the superiority of "markets" to central planning. The fact is, the German model of industrialization was highly centralized and was emulated by the Japanese. The Anglo-American industrial model was so threatened by the German/Japanese model that 2 world wars were fought with it. It could be said that the result of those wars is that the Anglo-American model became more state centralized itself. The Soviets problem, then, may well have more to do with their relative isolation from the Western system of capital than the centralization of their economy per se.
ReplyDeleteWell, he does say, "The reality is of choices within a narrow band whose limits have been determined by a quarter millennium of economic history."
ReplyDeleteHow wide that band may be is a matter of debate. But I think it has hit the general principle. There are limits on political systems without invoking repression.
We are testing those limits now with neoliberalism.
So neoliberalism is destined to fail.
ReplyDelete"So neoliberalism is destined to fail."
ReplyDeletePublics in various nations aren't going to put up with extreme capitalism, which leads to monopoly or oligopoly due to economies of scale and state capture, at least not without repression.
Private debt is designed as the stick of repression. But that will just lead to a debt-deflation.