Too Much Capitalism? Or Too Little?

Has America placed too much faith in the market and too little in government? Is the alleged decline in community in some sense a product of capitalism itself? Are poverty, inequality, crime, and the Wall Street collapse inevitable by-products of a “selfish, greedy” market? Even some conservatives are concerned:

“What I’m concerned about is the idolatry of the market,” says conservative intellectual William Bennett, a former education secretary and author of The Book of Virtues. He worries particularly that the market for popular music and movies with sexual or violent content has a corrosive effect. “Unbridled capitalism . . . may not be a problem for production and for expansion of the economic pie, but it’s a problem for human beings. It’s a problem for . . . the realm of values and human relationships.”144

The dilemma, in brief, was expressed by a 20-year-old Cuban student and communist organizer: “Capitalism is more efficient . . . But it is not more fair.”145 Can robust capitalism be sustained if it produces not just efficiency and growth but also extreme income and wealth gaps, corruption, and injustice? Can we tolerate capitalism’s collapses and injustices? Can we improve the market through judicious regulation? Or must we look for new answers?

A “Remix” Needed?

Clearly, we have had at least a free market detour in the United States. The government has stepped in to bail out a failing economy. Does that shift to the left signal the sharp decline of markets? Almost certainly not. According to a 2013 nationwide Marist Poll, 55 percent of Americans favor free enterprise and fear expanded government regulation of business.146 Perhaps some form of “re-mix” is needed. Journalist Anatole Kaletsky reminds us that capitalism is adaptive, reinventing itself through crises.147 Scholar Robert Skidelsky, in reviewing Kaletsky’s 2010 book, Capitalism 4.0: The Birth of a New Economy,148 summarized Kaletsky’s view of the evolution of capitalism:

Laissez-faire Capitalism 1.0, inspired by Adam Smith, lasted from the Napoleonic wars to the First World War, the Russian Revolution and the mass unemployment of the 1930s. Then came the Capitalism 2.0 of John Maynard Keynes, Franklin D. Roosevelt’s New Deal and the welfare state, which eventually provoked Capitalism 3.0 in the 1970s in reaction to rising inflation. Capitalism 3.0, a modified return to laissez-faire, has just self-destructed, leaving the door open to Capitalism 4.0.149

Kaletsky thinks his Capitalism 4.0 should involve smaller, smarter governments, less reliance on theory, and greater recognition of the need for pragmatic change.

A New World Consensus?

Notwithstanding Kaletsky’s hope for a more rational market–government balance, other thinkers say the world is already reshaping itself into two conflicting forms of capitalism. In his book The End of the Free Market,150 political scientist Ian Bremmer says capitalism may have established its claim as the best economic system, but the world is still in conflict over whether Western capitalism is the best political-social-economic system. As New York Times columnist David Brooks explained in reviewing Bremmer’s work, the world now seems to be divided into a pair of general camps. Democratic capitalism in the United States, Japan, Denmark, and other nations favors business to create wealth and government to regulate as needed. State capitalism in countries such as China, Russia, and Saudi Arabia employ the market to build wealth, which, in turn, is controlled and distributed by the state for its political purposes. As we saw in our discussion above of China and Russia, state capitalism varies in its practices across nations, but private enterprise, state-owned corporations, and sovereign wealth funds (huge aggregations of capital controlled by the government for investment purposes) all may play a role. The two systems trade with each other for mutual advantage but are economic and political rivals.151

We do not know what comes next, of course, but Oxford University professor Timothy Garton Ash sees the likelihood, in the short term at least, of a fractured, somewhat conflicted world:

The result? Not a uni-polar world, converging on a single model of liberal democratic capitalism, but a no-polar world, diverging toward many different national versions of often illiberal capitalism. Not a new world order but a new world disorder. . . .152

Questions—Part Five

1. As you see it, is Western democratic capitalism or state capitalism more likely to prevail over the long term? Explain.

2. Roger Cohen, writing in The New York Times, made the interesting point that India, as of 2010, had more cell phones than toilets; 563.7 million people connected to modern communication, but only 366 million had access to modern sanitation. He says this imbalance could be seen as “skewed development” favoring private goods over public necessities. In India and in America, he sees a kind of schizophrenia where we are increasingly autonomous, wanting to be left alone; our technology connecting us, allowing us to feel no need for government until a crisis, like the recent meltdown, arrives. Then many desperately plead for the government to save us.153

a. Are we giving too much attention to private needs and too little, via government and taxes, to public goods? Explain.

b. Can we have an autonomous, free market culture, substantially contemptuous of government, and still maintain a stable, healthy, and fair national and global community? Explain.

3.

a. Is America deliberately seeking to convert the balance of the globe to American, free market, democratic values?

b. Would all nations be well served if they adopted American, free market, democratic values? Explain. 4. In what ways might American culture be viewed as offensive and threatening to Muslims and others around the globe?

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