Decent Capitalism: A Blueprint for Reforming our Economies
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The recent crisis, created by finance capitalism, has brought us to the economic abyss. The excessive freedom of international markets has rapidly transformed into international panic, with states struggling to rescue and bail out a globalised financial sector. Reform is promised by our leaders, but in governments dominated by financial interests there is little hope of meaningful change.
Decent Capitalism argues for a response that addresses capitalism’s systemic tendency towards crisis, a tendency which is completely absent from the mainstream debate. The authors develop a concept of a moderated capitalism that keeps its core strengths intact while reducing its inherent destructive political force in our societies. This book argues that reforming the capitalist system will have to be far more radical than the current political discourse suggests.
Decent Capitalism is a concept and a slogan that will inspire political activists, trade unionists and policy makers to get behind a package of reforms that finally allows the majority to master capitalism.
substantial criticism or, of course, approval of the debates that tend to be concentrated in the narrow professional world of the Financial Times, the Economist or the Wall Street Journal. So, let’s start with subprime. Subprime and the triple-A crisis The subprime crisis, which broke in the United States in 2007, expanded into a systemic financial market crisis and has led to the deepest crisis in the real economy since the Second World War, can be understood only in connection with the
similar fate. Because they expected a prosperous development in these countries international investors granted these countries practically unlimited credit before the subprime crisis. The building sector and domestic consumption boomed, while the external balance sheet slid ever deeper into the red and there was a continuous rise in credit demand, which foreign countries were happy to meet. Such processes are always under threat of rapid reversal in the opposite direction. If investors come to
usually serviced in foreign currency, while company sales, workers’ wages, tax revenues and so on are paid in the national currency. If the national currency now devalues, the burden of debt can rapidly become overwhelming and insolvency becomes inevitable. This process is also described as a ‘twin crisis’, in which devaluation destroys the domestic financial system, confidence in the economy declines further and capital flight leads to further devaluation.7 Twin crises happened not only during
on education, from crèches to universities (see Figure 7.1). Public investment in education, measured as a percentage of GDP, is around 6 per cent in Sweden and France, as it is in the United States and the United Kingdom which are considered more marketoriented countries. Governments in Germany and Japan spend only 4 per cent of GDP on education. Brazil also spends about 4 per cent of GDP, while China spends less. However, the last two countries have lower government expenditures as a percentage
sphere, the naïve view took hold that flexible exchange rates were a suitable way of allowing each country an autonomous economic policy, even with liberalised goods and capital movements. It was also believed that flexible exchange rates would lead to balanced current accounts.1 If a different economic policy had been adopted, particularly on the part of the United States, and if reform had been undertaken – for example, retaining certain regulations on capital movements that could have