By Edward Luce, March 18, 2012 — Is capitalism in crisis? The question, posed earlier this year in a series of articles in the Financial Times, is suddenly commonplace. In the last week alone, this journalist has attended two august conferences entitled “capitalism in crisis”, one in New York, one in Washington. There is little consensus. But most agree that if capitalism is in crisis, it is localised: western capitalism is in trouble while communist China and its neighbours are free of philosophic angst.
For the time being, continental Europeans are filtering their woes through the prism of Europe, rather than the grander abstractions of capitalism. Only in the US, which for now is probably the least crisis-ridden portion of the western world (a scant consolation), is the question being addressed directly. Since the 2008 meltdown, America’s response has been divided into three schools, of which two are ascendant.
The first, which virtually monopolises the Republican party and which we might label “purgative”, says Americans are being punished for Washington’s gluttony. Only when government stops taxing and over-regulating the wealth creators will animal spirits return. At its extreme end comes Ron Paul, the libertarian candidate for the Republican presidential nomination. . . .
Its most effective exemplar is Grover Norquist, founder of Americans for Tax Reform, who has cajoled virtually every elected Republican to sign a pledge never to raise taxes. . . .
The second, encompassing the Obama administration and the mainstream economics profession, we might label “restorative”. Their goal is to rekindle demand by means fiscal and monetary until the economy has reached the point where it needs no further help. They concede that there was much wrong with the model before the 2008 meltdown, including poor regulation and an unfair distribution of wealth. But they stop short of querying the foundations of US capitalism. They remain in the intellectual – if not always the electoral – ascendant. . . .
That, at least, is the opinion of the third school, which we might describe as diffuse but which prefers to call itself “new foundation”. Its proponents include economists, such as Kenneth Rogoff and Nouriel Roubini, but also some business leaders and think tanks. Their view is that the US – and other developed economies – needs to renovate the building. American capitalism was already failing to cater to the majority before the 2008 crisis, they argue. . . .
See also Capitalism, Version 2012 (presenting a discussion about the varieties of capitalism)
See also Post-Global Financial Crisis: The Measure of a "Beijing Consensus" (presenting a discussion about the varieties of capitalism)
See also Economics by Mitt Romney – The “Zisi”-Effect (presenting a discussion about the varieties of capitalism)
See also The Republican Conundrum