Monday, October 12, 2015

Which Flavor Of Capitalism Do You Want?

Robert Reich argues that it is foolish to discuss alternatives to capitalism.  Some form of capitalism exists in every major nation.  The real debate is about the government rules that determine the flavor of capitalism in every nation.  It is possible to have a form of capitalism in which the rules provide most of the benefits to an elite; its also possible to have a capitalist system that distributes the benefits of the system more equally.  He argues that the rules that shape capitalism in the US have been modified to favor an economic elite.  The political decisions that increased inequality in the US could be reversed if the political environment were changed.  Populism is on the rise in both political parties.  The status quo is under attack from the right and from the left.  The attack from the right is basically anti- democratic, while populists on the left advocate a more democratic form of capitalism. Reich, of course, favors capitalism with a more democratic flavor.  In a sense, he argues for a return to the rules that existed in the US between the end of WW ll and 1980 when the counter-revolution was initiated by ultra conservative forces.

I believe that Reich is essentially correct.  The real issue is about the flavor of capitalism that will shape our future.  I have a sense, however, that the forces of globalization have changed the game.  Most of our large corporations participate in a global market.  It has become more difficult for any nation to determine the exact flavor of capitalism in their own country.  Tax policies provide a good example of the tension that exists between nation states and corporations without a national identity.  It is impossible for any nation, acting alone, to prevent multinational corporations from taking advantage of tax havens which reduce their share of the tax burden in nation states.  OECD is working on a system to make it more difficult for corporations to use tax havens.  International cooperation on rules that affect multinational corporations is a form of social organization that is still in its infancy.

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