Saturday, July 11, 2009



By Kevin Stoda , Europe

Reflections upon the end of the so-called Pure Market Antidote to political-economic-and socialized management of societies have been heavy since American home markets began tearing the stock and financial markets of the planet apart in 2006. In the title of this article of mine, I am asking what kind of modes of capitalism will come to dominate over the following decades.

According to Cordt Schnibben, in his LOB DER GIER (“In Praise of Greed” in English), his research among even the more extreme left wing parties in Germany, capitalism is still the only game in town. The German Link Party’s theorists, such as the Marxist Sahra Wagenknecht, is quoted as saying that the social market economic practices of Germany have something to offer to capitalism. Her party can contribute to this—but in the absence of a non-Chinese real-functioning communism, almost no one in Germany is suggesting that capitalism be thrown out with the dirty wash.

However, the world now faces essentially at least three flavors of capitalism to choose from. Schnibben claims there is, first, the relatively free and wide open form of capitalist market promoted by the American-British cartel. Next, over in Asia, Russia , Singapore , and China are offering strongly autocratic versions of capitalism, with heavy emphasis on central control—even state-security having a strong role in controlling major parts of the economy. In contrast, from France to Germany and throughout central and northern Europe a more social-market oriented capitalism still holds the sway today.

Those are the three models Cordt Schnibben sees dominating and simultaneously competing with one another in the decades ahead.

Our present world is suddenly filled with Keynsian-, social market-, and Asian Confucian capitalists--all with plans for how the state will control the market. This all has suddenly become extremely essential because the most recent super bubbles in the financial sectors have damaged free-market economic practices worldwide. Capitalism is now seen as a “highly complicated machine”, which can only be controlled with mechanisms that sovereign states—and state-like bodies, such as the European Union, the WTO, NAFTA, the World Bank and the IMF—have at their disposal.

The bottom-line for the now-out-of-favor Milton Freedman-style of economists (and national politicians) is that there will always be crises in capitalism, but how much state control and how to apply that state involvement is still the key question?

The reason that free-market economists will be out-of-favor for decades to come is that the emperors new clothes in this decade have demonstrated: Capitalism is characterized by an irrational world of behaviors and trends which can and do run amok when not properly under the thumb of watchful regimes and officials with power and sway. Run-amok stampedes and bubbles that explode and leave more than chewing gum on all our faces is a losing prescription for societies and investors who seek some sense of security in the short-, medium-, and long terms.

The sad-turn-around in economic theory and practice in the USA since 2007 has brought this famous phrase back to haunt so-called American Keynesians.: “AMERICAN SOCIALISM = CORPORATIONS SOCIALIZE THEIR LOSSES”.

This is certainly not traditionally, the kind of socialism that German Free Democrats or Social Democrats support when they talk about social market capitalism. On the other hand, the large coalition government in Germany under Angela Merkel has bailed out Germany ’s biggest banks as America did. However, the difference is that the Social Market capitalist approach is focusing on social and family stability, i.e. trying to keep as many jobs (often) as long as possible—and paying for education for the masses to get retrained and hone new skills in an ever changing global economy. For this reason, when it came to helping out large auto manufacturers, the German parliament and government have been very actively giving money away to keep productions up and jobs at home. The auto-recycling program has been a hit in Germany —even though it helps mostly only the middle-and wealthier classes and does next to nothing to help middle and small firms succeed. Now, with tax reductions aimed at allowing all (even the poor) to keep more money at home this year, the social market economy is prepared to promote both spending and savings.

In contrast, American firms, like General Motors—which has been no “worse-managed” than Citibank and other financial institutions over the past few decades—had to beg for help from the USA federal government. In short, production of goods and the keeping jobs in the USA is still not on the big-list of things-to-do for the Obama administration.

Worse still, I read recently that European bullet train producers from Spain to Germany are courting American government officials to buy their products and know-how, in order to help get America out of the gas-guzzling mess (and out of its dependency on Middle East Oil) it has been in for over half a century. The question is: Mr. Obama, why not assign General Motors and other firms to build up Americans fast railways instead of sending government moneys abroad? In short, the American-British Keynesian Capitalist model has not yet gotten back up to steam after the collapse of the free market faith state over the past three years. Meanwhile jobless rates continue to rise as Obama claims prosperity is just around the corner.

Meanwhile, China ’s official website has this to say about trends in capitalism and in America . “This is to say that the pragmatic people of the United States do not in fact adhere stubbornly to any particular ideology. President Obama’s reforms readily remind one of the words spoken by Deng Xiao-ping in the 1990’s: ‘the market is not the same as Capitalism, Capitalism also contains planning, and Socialism can also contain markets.’ Today, however, the actions of the United States also demonstrate that state-ownership is not the same as Socialism, and Capitalism can also accommodate state-ownership.”

Wong Chong, who translated this government statement, also added the following point (in apparent agreement with the Chinese regime), “The greatest reminder that U.S. socialist undertakings provide us with is this: there is nothing which exclusively belongs to Socialism, and there is nothing which exclusively belongs to Capitalism. Certain ideas belong to all of humanity, and certain values are shared in common by humanity. Just as Premier Wen Jia-bao said: ‘Democracy, rule of law, freedom, human rights, equality and universal love - these are not the exclusive possessions of capitalism. These are the products of civilization that have been jointly formed throughout the world over a long history, and are the values which humanity pursues in common.”

Interestingly, this summary article by Wong Chong is entitled: “In 2009, can China alone Save Capitalism?” Meanwhile, Schnibben notes that China ’s command capitalist economy is still growing at a rate of 7.5% (although the world has been used to double or triple those growth numbers over the past decade).

Interestingly, two Asian countries are taking on Germany’s dominance in the sustainable energy sector—i.e. a sector Germany has increasingly supported as a national policy since the 1990s after committing itself to leave the atomic energy production market. The two new upstarts are the South Korean and the Chinese governments who have seen fit to use this economic crisis to increase sustainable practices and alternative or clean energy production. South Korea and China , with their focus on energy savings and sustainability, are joining Japan , which had previously for decades invested too heavily primarily only in the atomic energy sector.

The explanatory model by Schnibben, in his LOB DER GIER, of essentially three brands of capitalism functioning simultaneously on planet earth as of 2009, however, breaks down at this point. This is because there are now converging activities between all three capital economic regimes in the area so fighting global warming and promoting sustainable energy practices—which, in turn, bring more security to all regimes involved. In short, both global warming and global economic crises still need more global, rather than regime specific responses.

This convergence appears true even though no breakthrough occurred in the July 2009 G-8 meetings discussions with China , India , Mexico , Brazil , and South Africa in an attempt to try and get these large developing states to committing themselves to halving their production of Green House Warming Gases by 2050. Why? Well, at that meeting, each of those five large developing (non-OECD) states agreed that they have played a role in global warming, especially over the past 12 years since the Kyoto Treaty was signed (i.e. in January 1998).

This anti-Global Warming regime will continue to involve a lot of nation states and regional regime management of the political economic economies in every corner of the planet. Meanwhile, because the United States under Barack Obama and most large corporations and banks in America are set to try, meet, and eventually exceed global warming gases reduction commitments for decades to come. This means that common goals in economic management can and will be coordinated worldwide in coming decades.

Perhaps, the world will indeed have a multiplicity of capitalistic models functioning over the next-half century, but with common core beliefs, education, research, and values in the system, (whether we are talking about energy, sustainable practices, or political economic development) the need for more universal agreement on some issues is certainly essential for man’s long-term survival on this planet.



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