Why did our political leaders bail out banks (who caused the GFC) rather than the public (who lost wealth and jobs as a result)? Why did governments spend trillions of dollars repairing a system that, in the well-known cycle of booms and busts, is destined to crash once again? Why are they bandaiding problems caught up in a powerbroker system that is visibly failing, rather than following the advice of economists like Joseph Stiglitz, who suggest seizing the opportunity for reform? Why do our political leaders seem to support “Shareholder Capitalism” rather than investigating the process of moving toward a “Socialised Capitalism” that might be more constructive?
As the Occupy Wall St movement spreads across the world, people are questioning a number of aspects of our system that they previously left unexamined. One of those is the assumption that Capitalism as we know it today is the only version of Capitalism that is possible. While economists recognize the varieties of Capitalism that exist throughout the world, the varieties can be less visible to the average human eye.
The thing is, the Global Capitalist model as we know it today, that emphasizes neo-liberal policy, provides little regulation to banks and financial industries, and disconnects shareholder profit and public loss, is by no means a fixed and final version of the Capitalist model. In fact, it is clear that such a form of Capitalism is destined for ongoing collapse. In short, it’s time for reform.
What does a shift from “shareholder capitalism” to “socialised capitalism” involve? The Australian School of Business article that inspired this blog entry suggests this shift would involve a move from short-term speculation to long-term investments, from huge corporations to family-owned companies. ‘The differentiating factor lies in the allocation of resources‘. [1]
“Make no mistake,” Andrew Kakabadse explains, “both ideas are market-driven… which is either in short-term deals driven by cash flow to cater to the few or in infrastructure and highly innovative family businesses that deliver long-term wealth to society as a whole. Nobody takes notice of this second model, which has by far the greatest wealth creation potential in the world, despite everything that is happening”.[1]
Hang on a second, which creates the most wealth? What’s more appealing then, shareholder capitalism or socialised capitalism??? Isn’t it in our favour to create more wealth, not less?
I don’t know the pragmatic details of how such a shift could be actualized. How could you stop short-term speculation (derivatives, hedge bets etc) deals going down? How could governments encourage a move from corporation to family-owned companies? How can resources be reallocated to promote a more people-friendly system? It is too late at night, and I’m too tired from recent adventures in Chicago, DC and car accidents (which I’ll blog about soon), for me to contemplate such answers. I will therefore conclude with my take-away message from this article, that some kind of “socialised capitalism” is an appealing direction to be heading… do you agree?
[1] “Off the Record: Spilling the Bilderberg Secrets” Published: October 11, 2011 in Knowledge@Australian School of Business. http://knowledge.asb.unsw.edu.au/article.cfm?articleId=1489
