Reforming capitalism

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By a new Conservative PM?!

Theresa May, the revolutionary! 

The new British PM is causing a stir:

Sometimes it’s useful to put symbolic dates on when a different era begins. The end of Thatcherism, it could be argued, came on July 10 in the then PM-candidate speech by Theresa May. It was perhaps appropriate that another woman, a Tory Prime Minister, would be credited with the ending of Thatcherism. The key words, which immediately attracted attention (see also Philip Stevens in today’s “Financial Times”) were not those about  inequality (which has become a common place these  days) but about the changes in the internal structure of capitalism: reintroduction of workers’ and consumers’ representatives on management boards, limits on the executive pay, reduction of job insecurity for the young people and much greater access to top jobs for those coming from less privileged backgrounds.

For the first time since the late 1970s (at the top level of policy-making), we are back to the issues of reforms in the way capitalism functions rather than discussing the ways in which the external environment would be made more market friendly. In essence, this is a confession that “civilizing” capitalism cannot be done only “externally” by relying on the “harmony of private interests” but that the state has a bigger role that goes beyond ensuring the protection of property rights, taxation and redistribution.

globalinequality: The forthcoming changes in capitalism?

We think she's onto something, why?

1. The past four decades have shown wages are stagnating and greatly lagging productivity growth and most of the gains have gone to a small top (the 0.01%)
2. The reasons have less to do with trade, and more to do with the internal workings of capitalism (for instance, the sole pursuit of shareholder value), as May is now acknowledging, a pretty brave stance for a Conservative politician
3. It is important not to throw the baby with the bathwater and to engage in a dispassionate approach, looking at the facts and the results of different institutional settings around the world how capitalism can work better for more people.

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Rewriting the Rules of the American Economy builds on the Roosevelt Institute’s report, which was released earlier this year. It has influenced and changed the political and economic debate in the country with Sen. Elizabeth Warren calling it “groundbreaking” and The Washington Post describing it as “a new manifesto for fighting inequality.” Stiglitz argues that inequality is not inevitable, but is caused by choices our political leaders have made about the rules that govern our economy. These rules have been written to favor large corporations and the wealthy and well connected at the expense of hard-working Americans and the rest of society.

Book: Rewriting the Rules of the American Economy - Roosevelt Institute

Reich’s new work is the best statement since Karl Polanyi’s 1944 masterwork, The Great Transformation, of how markets are creatures of government and politics rather than a default state of nature. As Reich writes, “Government doesn’t ‘intrude’ on the ‘free market.’ It creates the market.” (Polanyi likewise wrote, in a famous oxymoron, “Laissez-faire was planned.”) Reich’s latest book is a compendium of all the ways that political power by economic elites rigs the rules of how markets work—in favor not of efficiency, but of the rich and the powerful—increasing both inefficiency and inequality. With increased market power comes increased concentration of wealth, and still more concentration of both political and economic power.

The New Inequality Debate

Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality.

Why Stephen Hawking is more afraid of capitalism than robots - Vox

The reason is quite simple. As inequality gets more pronounced, a larger fraction of the population faces more stringent budget constraints, and the spectrum of possible economic interactions open to them narrows. Fewer people have the wherewithal to engage in economic activity. This mathematical economy actually demonstrates a sharp transition, akin to the abrupt freezing of a liquid, as the level of inequality exceeds a certain threshold. Worryingly, the wealth distribution in the U.S. over the past few decades has been moving ever closer to this critical edge.

The chilling math of inequality - Yahoo Finance

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American exceptionalism has been propelled by exceptionally free markets, so it’s tempting to think the United States has a freer economy than Western European countries — particularly those soft-socialist Scandinavian social democracies with punishing tax burdens and lavish, even coddling, welfare states. As late as 2000, the American economy was indeed the freest in the West. But something strange has happened since: Economic freedom in the United States has dropped at an alarming rate. Meanwhile, a number of big-government welfare states have become at least as robustly capitalist as the United States, and maybe more so. Why? Because big welfare states needed to become better capitalists to afford their socialism. This counterintuitive, even paradoxical dynamic suggests a tantalizing hypothesis: America’s shabby, unpopular safety net is at least partly responsible for capitalism’s flagging fortunes in the Land of the Free. Could it be that Americans aren’t socialist enough to want capitalism to work? It makes more sense than you might think.

The freedom lover's case for the welfare state - Vox

The ideas that Hillary Clinton has offered in her campaign respond to people’s needs but not to their anger. Americans are angry because they see the game of life as rigged, full of rules they never agreed to and that never favor them. They don’t just want to be helped—in fact, many do not seek help at all. They want justice and fairness: rules that will give them their due, protect their freedoms, and let them help themselves. Here are six initiatives, consistent with other Clinton commitments, that advance fairness. They should become part of her plan.

Six Ways to Rewrite America’s Rules

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Figures released last week show that as few as 7% of local authorities in England and Wales have homes that can be bought for less than five times workers’ earnings and are therefore deemed “affordable”. In 1997 the figure was 88%.

Can this ‘ethical capitalist’ solve the UK’s social housing crisis?