David Kotz — Understanding Contemporary Capitalism, Part 1

How the US went from regulated capitalism to neoliberal capitalism beginning in the 1970s, intensifying in the 1980s, and imploding in the crisis of 2008.

Triple Crisis
Understanding Contemporary Capitalism, Part 1
David Kotz, professor of economics at the University of Massachusetts-Amherst and the author of The Rise and Fall of Neoliberal Capitalism (Harvard University Press, 2015). This is the first installment of a two-part series based on his book.

Billionaire says Americans have to "set their sights lower"

Jeff Greene is a guy who displays the typical arrogance of the rich. He's a billionaire speculator who lives in a $200 million mansion in Beverly Hills. He made his money shorting subprime back in the crash. (Now there’s a really useful occupation that adds a lot to society.)

He says that the real problem that Americans have is that their expectations are too high. They need to set their sights lower. (Not his of course.)

Too high? Set their sights lower?

Is this guy a pompous ass or what? There’s forty million people on food stamps and half of Americans who have no net worth at all and people need to set their sights lower?

He goes on. He says, while tech is a big job killer the real nemesis for prosperity-desiring Americans is the trend toward equalization of wages, globally. Apparently in his mind it’s all convergence to the bottom and not the other way around?

History would prove him wrong on both counts. Technological advances have always spurred massive creation. Did he ever hear of Henry Ford? Furthermore, wage trends always tended to converge from low to high, not other way around.

The reason we have declining or static wages has been due to policies specifically designed to make that happen. It’s called Neoliberalism and it’s been in place for the last 40 years. Deregulation, “free trade,” the elevation of markets, profits and capital over labor, the environment, common sense and everything else. That’s the reason  it’s happening. Policy has shut the door on prosperty for all but a few and only policy can reverse it. 

Greene departs from other, typically pompous rich brethren when he says that the rich should pay more taxes. However, I’m sure he says that knowing that he’ll never have to worry about that because his “kind” have bought the system and they’re not about to let that happen. So he can feign being a magnanimous good guy when he’s really just a pompous ass.

Resetting expectations lower is nothing more than accepting a form of imprisonment.

This guy is proof that Keynes was right when he said “Let’s euthanize the rentiers.”

Daniel Little — Thelen on the prospects for egalitarian capitalism

There is a version of economic historical thinking that we might label as "capitalist triumphalism" [aka market fundamentalism and economic liberalism] -- the idea that the institutions of a capitalist economy drive out all other economic forms, and that they tend towards an ever-more pure form of unconstrained market society. "Liberalization," deregulation, and reduction of social rights are seen as economically inevitable. On this view, the various ways in which some countries have tried to ameliorate the harsh consequences of unconstrained capitalism on the least well off in society are doomed -- the welfare state, social democracy, extensive labor rights, or universal basic income (link). Through a race to the bottom, any institutional reforms that impede the freedom and mobility of capital will be forced out by a combination of economic and political pressures.

The graphs above demonstrate the current structural differences among Denmark, Sweden, Germany, Netherlands, and USA when it comes to training and income support for the unemployed and underemployed. It is visible that the four European economies devote substantially greater resources to support for the unemployed than the United States. And on the triumphalist view, the states demonstrating more generous benefits for the less-well-off will inevitably converge towards the profile represented by the fifth panel, the United States.… 

Thelen's most recent book, Varieties of Liberalization and the New Politics of Social Solidarity addresses the question of capitalist triumphalism. (That isn't a term that she uses, but it seems descriptive.) She locates her analysis within the "varieties of capitalism" field of scholarship, which maintains that there is not a single pathway of development for capitalist systems. "Coordinated" capitalism and neoliberal capitalism represent two poles of the space considered by the VofC literature.

From the beginning, the VofC literature challenged the idea that contemporary market pressures would drive a convergence on a single best or most efficient model of capitalism. (kl 228)

Thelen is interested in assessing the prospects for what she calls "egalitarian" capitalism -- the variants of capitalist political economy that feature redistribution, social welfare, and significant policy support for the less-well-off. She focuses on several key institutions -- industrial relations, vocational education and training, and labor market institutions, and she argues that these are particularly central for the historical issue of the development of capitalism towards harsher or gentler versions.…

A key finding in Thelen's analysis is that "coordinated" capitalism and "egalitarian" capitalism are not the same. Coordinated capitalism corresponds to the models associated with social democracies of the 1950s and 1960s, the "Nordic" model. But Thelen holds that egalitarian capitalism can take more innovative and flexible forms and may be a more durable alternative to neoliberal capitalism. 

Understanding Society

Thelen on the prospects for egalitarian capitalism
Daniel Little | Chancellor of the University of Michigan-Dearborn, Professor of Philosophy at UM-Dearborn and Professor of Sociology at UM-Ann Arbor

Capitalism is commonly misunderstood as being an economic system. Rather, it is a complex web of institutional arrangements the foundations of which are legal, hence, political. Difference in institutional arrangements result in varieties of capitalism.

Power is the underlying factor and not "capital," whatever than is. Those who/ve been paying attention to the Piketty "capital controversy" know that the debate hinges on the meaning of capital. The controversy reveals there is sharp divergence of views over capital.

Irrespective of how capital is defined, there are varieties of socio-economic theory and ideology that underly different political systems as determined by their legal arrangements. These result in varieties of ownership, distribution, and other socio-economic categories and classes. The economics follows from the institutional arrangements and these are political choices that ayer determined by power relationships.