Saturday, September 30, 2017

Toby Helm — Is capitalism at a crossroads?

"The rent is too damn high."

The problem with capitalism is rent extraction owing to market power resulting from effects of social, political and economic asymmetry.

Neoclassical economics models capitalism (economic liberalism) in terms of perfect competition. This is not only an ideal, but also it is an unreachable ideal owing to institutional arrangements, on one hand, and asymmetry resulting from history and culture. In addition, government is inextricably bound up in the economy through both policy and the law.

The basic  conclusion of the article, which includes short analyses by influential figures, is that the rules are not working to produce the results for individuals and society that capitalism advertises as an economic system. 

Politicians that ignore this obvious fact, which the voting public is telling them loud and clear, will find themselves turned out.

The problem is that the syndrome is simpler to diagnose than treat. Effective treatment requires getting the etiology correct and then applying effective remedial measures. 

Easier said than done when the problem is largely due to rent extraction and rent extraction results from social, political, and economic power. It is never a simple task to dislodge an elite once in power.

Although it addresses specifically British issues, it is not Anglocentric. Virtually all capitalist economies are faced with this even though there are varieties of capitalism and some capitalist economies are more affected than others.

The Guardian
Is capitalism at a crossroads?
Toby Helm

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