Sunday, September 02, 2012

Whither Capitalism?

Steven Pearlstein examines capitalism's raison d'etre in today's Washington Post.  The article is a good review and commentary on current thought about what a capitalist economy should be and to.  It's a good discussion, worth reading in toto.  Pearlstein articulates my economic values very well:
A pure market economy is an ideological fantasy; even the freest markets operate in a framework of laws, infrastructure, institutions and informal norms of behavior in which government is heavily implicated.
In the current, cramped model of American capitalism, with its focus on output growth and shareholder value, there are requirements for financial capital, human capital and physical capital, but no consideration of what Stiglitz calls “social capital,” Zingales calls “civic capital” and Martin calls the “civil foundation.” It is this trust in one another that gives us the comfort to conduct business, to lend and borrow, to make long-term investments and to accept the inevitable dislocations of the economy’s creative destruction.
Whatever you call it, societies do not thrive, and economies do not prosper, without it.
This erosion is most visible in the weakening of the restraints that once moderated the most selfish impulses of economic actors and provided an ethical basis for modern capitalism. A capitalism in which Wall Street bankers and traders think it is just “part of the game” to peddle dangerous loans or worthless securities to unsuspecting customers, a capitalism in which top executives have convinced themselves that it is economically necessary that they earn 350 times what their front-line workers do, a capitalism that puts the right to pass on unlimited amounts of money to undeserving heirs above the right to basic, life-saving health care — that is a capitalism whose trust deficit is every bit as corrosive and dangerous as its budget and trade deficits.



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