Is capitalism inherently faulty? Lessons from the Euro crisis

Is capitalism in a marketing crisis? Is the product inherently faulty? Read Max Weber, I propose.

Is capitalism in a marketing crisis? Yes. IMO the so called Euro crisis shows that Capitalism is not only not absorbed by the rest of the world, but also a major part of the West - Europe.

Is the product inherently faulty? Weather Capitalism, as a model or (intellectual) "product", is, inherently or not, faulty is a complex discussion. But in any case, it seems to warrant a major rethink, especially re "credit capitalism". Capitalism in its present form neither works nor is it popular in most of the world. Not that communism is a solution, of course. Communism has failed, bigger than capitalism, in spite its revenge (China).

Read Max Weber, I propose. 100 years ago, he identified the roots or DNA of Capitalism, thus shedding light into its root philosophy. And think of the 2010s Euro crisis.

Is YOUR capitalism working? Is American capitalism working? The German? The British? The French? The Japanese? The Greek? The Spanish? The Italian? The Dutch?

German capitalism may or not be working in/for Germany but it is certainly destroying the Eurozone and potentially the EU. That is one of the lessons from the Euro crisis, for those of course who are looking for real lessons from the Euro crisis instead of stereotypes, opportunities for mud throwing or scapegoating the Greeks.

Capitalism is in trouble because ...

Capitalism is in trouble because it relies on 2 unnatural (thus inherently flawed) premises: a) Trust b) certainty or the quantification of risk

Living with Uncertainty - the Lords of Chaos!

Those who feel at home in chaos are equipped for success and happiness at least in this era, probably all eras!

a) Stability is not the way of Nature, only a human thing
b) I propose it is selectively valued/defined eg by financiers





What were are seeing nowadays is the inability of a system based on a certain religion (see Max Weber and The Protestant Ethic and the Spirit of Capitalism in Wikipedia) deal with globalisation and other systemics and dynamics of the era. This system's inability to be adopted or approved by the world, even parts of Europe - the EU.

World Dynamics: Mind the B Scenario!

Those who are banking on China (now a communist capitalist system) becoming a democracy via its economic dominance should also mind scenario B: EU & US become communist instead.

As for the EU, forcing EU (Eurozone) member states to rely on Chinese investment is critical undermining of the future of Europe not only the EU/Eurozone. Europe solve your problems (yet today's ECB decisions do not look promising to that end).

Is it a plane, a UFO or the EU (finally) moving forward?

Is it a plane? Is it a UFO? Is it a mirage? No, it is the EU (finally) moving forward, albeit in a clumsy (and confusing) fashion!

In effect, part of what is happening at the moment in the EU is a move to break away from the UK's "union-blocking"! In the midst of quite complicated systemics and dynamics that do contribute to the difficulty and confusion, but also make ever closer ie deeper union in Europe even more of a must.

More specifically, as I tweeted last Friday, there is an urgent need for a sovereign EU in:

a) energy

b) defense

c) economics (internal market)

d) foods, especially staple ones

etc

yet open to the world (eg with a more "open" policy re immigration, be it of asylum seekers or the so called "economic immigrants")

Part of the world systemics and dynamics are:

1) In recent years the US has left a gap that can best be filled by the EU rather than China, provided the EU evolves into a US of E or a Fed Rep of Europe.

Eg the US was a beacon and a magnet for all people who were suffocating in their natives parts of the planet and who wanted to strive for a better future in an environment where it mattered more where you wanted to go and become and less your background or class or birth rights. IMO after the closing of Ellis Island, that US started to wane. And has become immigrant hostile in recent years. Many more examples of the gap, but not to be discussed in this analysis.

So, a fully united, independent and sovereign EU would be a positive factor in world affairs instead of the current situation (see rise of xenophobia, nationalism, grand standing by France, Germany or the UK, a stance that the American diplomat whose cable was leaked eloquently described (referring to the UK, France and Germany) as Europe's dwarves (see "Manipulating the Political Dwarves of Europe" by Gregor Peter Schmitz in Spiegel International 12/10/2010)

etc)

2) China's 2001 WTO entry and its policies have caused major systemic quakes in US & EU, as I tweeted on Saturday.

They have even been a factor in the Euro's probs, IMO.

2 of the interesting articles/analysis that have appeared in recent days are:

"Nine EU countries set out post-crisis growth plan" reported on Friday, March 18, Andrew Rettman in the EUOberver.

"Prepare for a Euro Zone Divided in Two" is the title of an interesting opinion article by Irwin Stelzer, director of economic policy studies at the Hudson Institute in Washington, in the WSJ (March 21).

They both merit reading as valuable food for thought.

Regarding the topic in Irwin Stelzer's analysis, IMO of the 10 non-Eurozone EU members, 3 of the old EU15, the UK. Denmark and Sweden have willingly chosen to be marginalised by staying out of the Euro. The other 7 are still relatively new EU members (5 since 2004 and 2 since 2007) thus have more "excuses" for not having joined the Euro yet (of course at least 1, the Czech Rep., especially under its current President, seems unlikely to want to join, for ideological (libertarian?) reasons).

But the rapid EU enlargement from 15 to 25 then 27 was not meant to be at the expense of deepening, although it did, but the delay has been long enough that a dynamic even somewhat "clumsy" move forward, had become overdue. Not that the delay was a fault of the new members that after all were "owed" EU membership for the suffering they endured by communism (and for what happened back in Yalta and Potsdam). It gave others the excuse to slow the EU's deepening down. But no more, especially after Cameron's UK Sovereignty Bill. As the governor of the Bank of England reportedly told the Americans (according to the famous leaks), the Euro crisis was bound to accelerate the move towards federal Europe. After all, IMO as well as others', the current Euro crisis is caused by the fact that Monetary Union was not preceded or at least accompanied by not only Economic but Political (federal) union as well (as I said, causality in our times is very complex and not open to simple analyses, so bear with me)

So if Sweden and Denmark find themselves left out of key meetings of EU interest as The Economist notes, according to Irwin Stelzer (in effect the Eurogroup meetings that take place 1 day before each ECOFIN Council of Ministers of Finance and the recent first ever Eurozone Summit), they should recall that the Euro was not decided in 1991/92 (Maastricht) as an optional (buffet) feature of the EU, but as the vehicle for a) making the EU common then single market (by 1/1/1993) more effective and b) moving the EU forward!

And I agree with the view expressed by many that non-Euro membership of an EU country/economy, gives that economy an unfair trade advantage inside the Single Market of the EU. Of course, with life on Earth systemics nowadays being complex and in any case not uni-variable, the insistence of Eurozone monetary policy to focus on inflation only (with the dogmatic 2% target) that has led to many periods of expensive Euro vis-a-vis not only the Yuan and the USD but also the Pound etc, has also contributed to the current Euro crisis (and other factors as well).

But given the systemics and the dynamics not only inside the EU and the Eurozone, but the world (Earth) as a whole, what is happening now is probably the most feasible (but maybe not the best) way for Europe to move forward!

As for the 4 proposals of growth after the crisis put forward by 9 EU member states, allegedly with Cameron's leadership, they seem to make worthwhile reading.

They are the proposals of 9 governments of EU member states, not the 9 states. 3 are Eurozone members (NL, Finland, Estonia). The 9 are basically most of the members of the forum UK-Nordics-Baltics Cameron organised a few weeks ago plus the NL. I should also note that at Davos this year there was an attempt to present and market a Nordic Capitalism model as a model for others, in Europe and the world, to "follow"/copy/be inspired by.

So while the 4 points of the 9 sound in principle good, IMO the Tories must realise that

a) regulation driven burden to SMEs comes from national & local regulations too, not just EU ones! And one could argue that national and local ones are more of a burden than the EU ones (ie the regulations and the directives transposed into national laws).

b) that SMEs need EU-wide uniform regulations, rules, etc, which affects the Sovereignty Tories say that they care so much for!

c) Doha completion within 2011 IMO highly unlikely. Inter alia, Obama has no "fast track".

Now, some relatively harsh reminders for the mostly conservative or liberal governments of the other 8 that submitted the 4 points:

As I tweeted on Friday, the pro open-market govs of Denmark, Estonia, Latvia, Lithuania, Finland, Poland, the NL, Sweden (& the UK) must realise that "open market" means not only mobility of capital, goods - and services as they recommend (agreed) - but also workers/labor and humans in general. Because labor needs as much mobility as possible in order to "compete" in relative value to the other factor of production, Capital! Oh yes!

Those nations that wish to conserve their "national" (altho the UK is a mini-EU) "sovereignty" are to miss out on the benefits of EUropean sovereignty

Angela Merkel decided to abstain (along with Russia and China in the Security Council of the UN) from the UN vote on Libya. The issue is out of my areas of experience and activity so I will not comment. After all, from what I read the SPD and the Greens did not take a clear stand on the same matter either. The issue I feel competent (as an MBA and as a public policy analyst) to comment on is whether it is indeed electoral concerns in state (laender) elections (one more took place this weekend and 2 crucial ones next weekend) that affect to a large extent the German government's demands on the other 16 of the Euro (and especially the GIIPS (I refuse to use the PIIGS acronym)) in the "Competitiveness Pact". We know of the hardcore austerity hawkish POV of the FDP. But as far as I know, the SPD is not exactly austerity hawkish. So how would a less hawkish stance by Angela Merkel in the Pact cause her to lose votes to the SPD?

Ah, c'est l'Europe!

From a centrist point of view: Capitalism: Neither Love Nor Hatred

A few thoughts after watching Michael Moore's "Capitalism: A Love Story":

IMO corporate short termism imposed by the financial markets & credit based consumption the main system faults.

From my centrist POV:

It's not the job of the state to subsidize private-for-profit companies

It's not the job of private companies to do a state's job eg collect taxes, provide health insurance, run prisons, police or military "services", own or operate highways, etc.

How come no side foresaw the effect of the rise of the Fed interest rate by some 400 basis points on the retail i rates after the fixed rate period?

Who drove the demand for the vast expansion for subprime mortgage based investment instruments?

Michael Moore is right about the effect of students' debt on their career choices & priorities.

IMO the whole structure and the foundations of the "financial world" need a major rethink, way beyond the recent reforms in the US and in the EU, but Capitalism per se, in its original "release" is the best system available. But it needs a fundamental rethink. And a soul.

Does the EU (Brussels and member states) have the guts to lead to a new model of Capitalism?

A lot of financial, economic & other myths are crumbling this year in spite of the effort of some to divert the attention to other issues etc (some have been crumbling in the last 2-3 years but IMO this year it's a "quake" with "systemic" thrust).

Does the EU (Brussels (EC, EP, Council etc) + member states) have the guts to stand up to global finance & re-negotiate the role of finance in EU economy, society and life in general?

In other words does the EU have the guts to cause of an overhaul of the current model of capitalism model into a new better model or not?

Why?

Because IMO any open minded capitalist can see that the current model of capitalism is very faulty if not defunct! And world public opinion agrees. The US does not seem willing to do so.

The EU (Brussels and member states), does it have the will - guts?

The stakes are high not only for EU and Europeans but the whole world.

Capitalism is still the best available system, but the current model is not working and if not overhauled, it runs IMO the risk of destroying Capitalism as a system that is acceptable to people in Europe and around the world.

Can the EU assume that leadership, for its own sake and the world's (and Capitalism's)?

The German market plunge: An episode in Agorocracy vs. Democracy

The "plunge" in the German market after the short selling ban (see DW English news report) is IMO but a new episode in the "war" between Democracy and Agorocracy that I described in my guest article in the New Europe magazine ("May 7-13, 2010: A Game Changer week?") last Monday (written May 14).

Democracy vs Agorocracy

Which are these forces and systemics that are referenced by the generic term "financial markets"?

IMO, "financial markets" are a complex system that does not have a "spokesperson" and its actions, that are in effect the "cumulative effect" from various different actions in different directions, do not constitute a "directive" for the social, political, policy and non-financial economic and business aspects of this world.

Unless we agree that Democracy has given its place to a new system of governance, Agorocracy (meaning "rule of the markers") and more specifically "Chrimatagorocracy" (rule of the financial markets). I do not think that we can agree to that.

No matter how imperfect politics and Democracy can be, politics cannot surrender their role to non-political forces.

Capitalism Global version needed?

Does market economy capitalism have a 1) "flu" 2) "pneumonia" or a more serious problem?

Does "Anglo-American" capitalism need to incorporate cultural elements from other countries - parts of the world and become multi-culti?

More on a "rethink of capitalism": The purpose of a business and "profit maximisation"

In recent months due to The Crisis, many have called for a fundamental rethink of capitalism, the French (right of center) President of France, M. Nicolas Sarkozy, most recently at the Davos World Economic Forum.

This is part of my contribution to the (re)think:

The purpose of a business is to produce and/or market goods (tangible or intangible) and/or services that satisfy needs and wants of enough people (or organisations) at a price that and cost that makes the endevour worth it for the owners - shareholders. And IMO there is nothing wrong or faulty in that.

Plus, "Greed" per se and in general, although much discussed or used as an explanation for systemic socio-economic problems these days, is IMO not a factor. What is IMO/IME a factor, and a main causal one at that, is that most corporations have become so large and so impersonal - bureaucratic that they can only operate based on a single factor (mono-variable). And that factor becomes profit (or shareholder value) maximisation.

On the other hand, micro and small companies tend to remain small enough that they can operate based on a multi-variable set of goals, that includes no only profit but other factors as well that cause owner satisfaction (fame, personal ambitions and dreams, ideas, etc).

Corporations that have stocks publicly traded (ie in stock markets) have an additional source of monolithic (mono-variable) pressure ie one that focuses exclusively on profit - shareholder value maximisation: The financial market and its analyses.

What I mean by that? Most often, critiques of capitalism overlook that fact that there is no "capital" per se in large corporations at least, ie the capital-labor-knowhow triangle/model is too simplistic to describe the "system". Why? Because most operators in the financial markets are not the owners of the invested money themselves. They handle the money of clients, many clients, and, this is the key IMO, they have to compete with other operators for their business - clientele. This competition too is based on too narrow, IMO, factors: expected return (and at best, expected risk and their combo (see the "expected risk vs expected return trade-off and the max efficiency frontier). That is the best approximation of the "greed" many politicians and other "accuse", but It is not real greed, it is the competition between money managers for attracting and maintaining their clients based who will offer them the best return. It is that which, in cascade, causes the "profit maximisation" prime and single-directive on publicly quoted corporations.

So whereas in theory, other parameters could be introduced, eg social and/or environmental "responsibility", it is profit maximisation that is dominant.

That's my theory.

On a major rethink of capitalism, moral trade, Davos, G20 and global governance, etc!

Recent intellectual policy endevours:

1) Who elected the G20 to make policy and regulatory decisions that the whole world will then "have" to adhere to?

That is one of the tweets I made in the last few days (again). A question I began to pose ever since a few months ago, under US/Obama Presidency, the G7/G8 decided to pass the torch of global leadership if not governance to G20 (after the end of the Canadian presidency).

What prompted me to tweet it again? Some of the comments by the "philosopher king", in Plato's use of the term, Nicolas Sarkozy, probably the only major political leader who cares to brainstorm in public (and upsets the balance of some other leaders who are not used to that "kind of thing"). Especially one where he says that G20 may be the sign of things to come, a global governance. But whereas I would be for a democratic global government (see below), I do not consider G20 "representative" of the world or even the UN members world or even the WTO members world.

So here is what I can think of in terms of models of real global governance:

G20 may be "more" representative (of the world) than G8 but leaves out 100+ WTO and UN members.

IMO a World Commission, Council and Parliament a la EU (EU style) is one solution.

IMO again, an other solution would be for the world to be structured into regional blocs, EU or US style, and have bloc leaders and reps meet to decide world policies and laws. In other words, instead of G20, a global government group should consist of: reps of the EU, African U, China, India, USA, 2-3 American Unions, 2 Asian Unions, Russia ....

I know that both models I sketch above are kinda radical thinking, but hey, a) that is my task as a policy thinker and b) that, fundamental (re)thinking seems to be the "in" thing these days, not only because of Nicolas Sarkozy.



2) One other major thing that Nicolas Sarkozy said in Davos at the World Economic Forum was his view of the need for a "fundamental rethink of capitalism".

Here are my comments (most were tweeted in the last 2 days)

* A fundamental rethink of capitalism? Of which capitalism (note: of all versions floating around these days)?

* A fundamental rethink of capitalism that N. Sarkozy proposes: Is that a task for economists, politicians, sociologists, philosophers, all?

* A capitalism that includes moving away from profit as the MAIN goal of business, ie give emphasis to micro and small companies instead of corporations. Via a new socio-economic model that includes among others much less regulation and simpler laws. Why? Because, IMO, in micro and SME based economies, profit maximisation is but one many goals, unlike large corporation based ones. Because micros and small firms are motivated by owners' ambitions, pride and other non-profit related goals, not maximising shareholder value per se.

* IMO it is not just capitalism that need a fundamental rethink: Most models and theories of past centuries still "in circulation" do!
In need of fundamental rethink: capitalism, marriage, sovereignty, national interest, "work", economy, trade, legal systems, finance, etc. But most of all, in need of fundamental rethink are: our ways of life especially in the "West" (Europe, USA, etc)


3) A "moral dimension" to "free" trade Nicolas Sarkozy is "searching" for!

IMO, that moral dimension would be "free" immigration among WTO member countries.


4) Other fundamental rethinks that IMO are in order:

a) In view of discussions re sovereignty and national interest (in the UK, US, etc), is there not a need for a 2010 relevant redefinition of them?
I find most recent discussions re sovereignty and national interest a tad "selective". Are trade, sovereign wealth fund and other investments, trade agreements, WTO, COP15 etc consistent with traditional definition of sovereignty? Why are then not included in the lists of those who think the EU is "violating" sovereignty of member states (IMO the Lisbon exit clause that allows/describes how a member state to/can leave the EU is an "ultimate" guarantee of the sovereignty of the member states)? Or are concerned about "foreigners" (see other posts in this blog re oxymora that I detect in the "foreign" discussions/rationales)?

b) Corporatism, in business, public sector, and other aspects of life is another candidate IMO for a major rethink in the way Nicolas Sarkozy proposes.


PS 1. New world economy order: China has approx. USD 2.4 trillion in foreign currency reserves and half of world output comes from developing countries these days!

Daring to ask!

It is said that Einstein was once asked the source of his abilities. It is also said that he replied that it was his tendency to ask/question "things" that usually only children "dare" ask/question!

Some peoples' strategy in life is to follow the traditional, the well paved, the flow route.

Others spend a lot of time questioning why things are the way they are and why they are not different. This "why" question is "constructively" motivated, not "destructively" (see "constructive" vs. "destructive" criticism).

Some markets, societies and systems are based on continuous quest for understanding the whys, on innovation, as a way of life and not out of necessity. It is those societies/markets and systems which become "clusters" for all like-minded people: Constructive Thinkers.

Are these societies, markets, systems "outperforming" the more "conservative" (go with the flow) 0nes? Depends on what criteria one employs to measure "performance".

Which country has the largest per capita number of "think tanks"?

Is the brain the new "engine" of growth, the evolution of the machines of the industrial revolution, is this era an era of the grey matter revolution and of intellectual products and "intellectual consumerism" (rather than "material consumerism")?

Are "intellectual" assets and capital more valuable today than financial and other types of assets and capitals? Are we moving towards an "Intellectual Capitalism" where people earn income out of "intellectual property rights" rather than lending money or buy stocks and bonds or rental income from real estate assets?

Old, Modern and Emerging Capitalisms!

Older, pre-industrial "capitalism", was based on land ownership and earning rent money from it (eg by leasing it to farmers, etc).

Modern capitalism was/is supposed to be based on investment - ownership of stocks and bonds. Supposed (look at the subprime crisis and the dynamics that led to it).

IMO, the emerging capitalism will be based on the residual value and rent income from intellectual products. That is why, in spite of the issues of piracy made more crucial in recent years due to the emergence of new electronic media, the US and to some extent the EU are placing emphasis on protection of copyright both domestically (eg the US Millenium Act) as well as in international agreements and negotiations (WTO or bilateral).

Analysing Greed: misplaced zest for life?

I propose that :
Greed is nothing but misplaced (mis-channeled) lust/zest for life!


Greed (I): Is "Greed" the driving force in the free market system?

Money makes the world go round?

Greed actually .. is all around us. But what is "greed", actually? Greed to "consume", to own, to save?

Is "greed" embedded in the capitalist system? Is there no "greed" in other systems?

"Excessive or insatiable desire for wealth or gain".

Does it apply to money and tangibles? Intangibles? Love?

Some could argue that an element of greed is required to drive the economy and thus produce added wealth to distribute to the less fortunate too.

What some people call "greed", could actually be called need or want, or desire. But not "excessive or insatiable desire".

What is maybe worth pondering on is a view "that greed is inherent in the capitalist system".

Is it?

Companies may be vehicles of earning money and greed satisfaction, but in a soviet type system, i.e. a system without private companies, greed still existed, andso does personal ambition!

A key difference could be that the greed is expressed without a vehicle, i.e. directly by persons (e.g. ascend to higher places in the party, perks, etc). But is that preferable?

After all, greed can apply to everything. Or not?

Taking away the money tool, does greed go away?

Not likely!

It just has to channel itself outside supply and demand market mechanisms!!!

It could be argued that through liberty and the market, greed is actually more "benign".

Something to think about?

Is the "enemy" within the capitalist system (a "resident evil") or simply a "squatter"? Can it be "evicted"?'


Greed (II): Greed vs. Passion for Life

Some say greed is the resident evil in today's society, or at least the economy.

Is "freedom" the answer or "protection" (in different forms of freedom and protection).

Freedom to do what?

What if there is nothing there? Vacuum!

Freedom to do nothing. When there is nothing there, the freedom to do nothing is, actually, no freedom. It is the opposite.

Maybe the core human instinct is passion for everything! Passion, in general.

Passion for life, maybe?

PASSION FOR LIFE.

Could it be that what we see as greed for something, is merely the overfocused passion for life, monopolised by one "habit", one object" of passion (tangible or intangible, e.g. chocolate, smoking, property, money, etc.)?

The concentration of passion for life into one object or area of objects or category: anything which can be achieved/acquired by money?

Ia then PLURALISM, i.e. the availability of many objects for a person to do what he/she can concentrate his/her passion for life on is then, I propose, the key to NOT IMPRISONING PASSION FOR LIFE INTO "oligopolistic" or "monopolistic" situations which turn it into greed.

The theory I propose is that greed is, in effect, imprisoned passion for life!
Release passion for life from its tangible and intangible "straits" or "market" constraints.
So, freedom is not the key notion. Freedom to choose, is.

Which means there need to be offerings (supply).

Supply, demand and competition are needed, all three, for pluralism to exist.

The entrepreneurship vs regulation oxymoron within the context of global socio-econ trends and dynamics

What oxymoron?

Well, if you have been reading this blog or following my tweets in the last few weeks, you should know what I mean:

a) Free market capitalism seems to be losing popular support, all around the world, even in the US.

b) Much of public opinion around the world again is in favour of more regulation on business.

So, while micro firms and SMEs are suffocating in over-regulation and red tape, world public opinion is asking for more business regulation.

Analyse this!

As I have pointed in numerous posts and tweets in recent months, many people (be they men in the streets or policy makers or media etc) when they think "business" they continue to be "tied" to states of the past (large industry, esp. international), whereas, at least in the US, EU and orher OECD at least countries/economies, 70-80% of the economy is Services and the companies ("business") is mostly SME (small and medium) or even micro (0-9 employees).

Hence: they could be talking of different business, but that is IMO lost in .....

Plus I ask you to consider this:

1) IMO globalization will gain popular support only when most micro and small companies can feel the global market + its niches as "theirs"/ Plus, IMO the EU will gain popular support only when most of its micro + small companies can feel the EU Single Market as their market.


2) Many young people are opting to start a business rather than become "corporate material": An "Entrepreneur or corporate manager" dilemma? Yet, corporate bureaucracy may be bad these days but the red tape a #micro company faces is not cool either.

3) Real capitalism vs. pseudo (fake) capitalism? Which of the two is prevalent in your part of the world? Many people cannot tell the difference!

4) IMO we need either more or less of "Europe" + either more or less globalisation, current levels of both EU and globalization make no sense (and do not work for the micro and small firm and the "man in the street").

Is free market capitalism fatally flawed?

(605 words)
While the OECD (The Organisation for Economic Co-operation and Development (OECD) is saying that major economies across the world are showing strong signs of recovery, 23% of 29000 people in 27 countries who participated in a BBC World Service poll feel free-market capitalism is fatally flawed.


Here are my observations and comments re the scope of the above analysis (OECD) and poll (BBC World Service):

1) The BBC World Service's poll is not global (covered 27 countries, WTO has 152 and UN over 190)
2) Neither do major economies constitute the "global economy"
3) Nor do the G20 constitute the global economy, even if they represent some 70-80% of its GDP

And here are my observations and comments re the essence:

I) The current (economic) system in the 27 countries surveyed may be either "fatally" or "very" flawed but has to consider: In how many of them is the system real "free market capitalism"?

Communism vs Capitalism (and people's memories from the former and experience with the latter): Aren't the good old times due to bad or selective memory? Plus, again, in how many countries do people experience a real - genuine "free market capitalism"?

II) What is equally if not more worrying IMO is that the BBC World Service poll in those 27 countries (as well as other surveys that have come to my attention recently) indicates there are majorities almost everywhere (in those 27 countries) that want government to be more active in regulating business!

More active in regulating business? Does that mean more regulation or better regulation, one may ponder?
Of what business? What do they respondents have in mind when they express or agree to that view? Large and small or micro business? In general or specific sectors (eg financial)? Domestic or foreign ?

The above are very crucial IMO, if one is to get any useful conclusions out of the popular view for regulation that seems to exist.

III. Thus, IMHO:

a) The economic system in many countries today is flawed but that system is not free market capitalism

b) A key factor leading to the flaws and resulting popular dissatisfaction with the current economic systems are major flaws in competition laws and related supervision of the markets.

c) the BBC World Service poll results show need for better functioning free markers and better welfare state, both!

d) The BBC World Service poll results show the need to secure peoples' basic needs and for giving people more freedom in pursuing wants and dreams in their work/economic or social or other aspects of their lives.

e) Neoliberalism and conservatism tend to underestimate the fundamental human "need" for basic needs including the security of social security

f) Most political parties and platforms miss the concept that some things are better done by the market, some better done by the public sector. Each sector has activities where it is stronger.

Instead we are flooded by ideologies that either theologise the markets and demonise the state and its public sector (eg most Libertarians) or, to an increasing again level, the opposite, ie theologise the state and its public sector and demonise the private sector.

Modern systemics and dynamics are complex and volatile thus they are difficult to grasp. Thus some resort to the aforementioned and other simplistic models that have IMO confused the public opinion.

What is the solution? Not simple, but a basic element of any model I have in mind is:

To have the state/Society guarantee all its members that rain or shine their basic needs will be covered and then let them go out to real free markets to pursue their wants.

some thoughts on HR, healthcare, entrepreneuship and the value of human capital

Here are some thoughts based on recent events in the US and Europe/EU:


Firstly, IMO the US needs a public NHS type universal health service as badly as Europe needs entrepreneurship!


Now, related to healthcare:
IMO the private sector can do most things better than the public sector, BUT healthcare + health insurance among them!

How can one make private sector offered health insurance mandatory? Defies policy and social logic IMO!!

Based on the evolution of BHO's health reform, the question is inevitable: Would Hillary as President have been more effective in real healthcare reform? IMO her proposals were fuller!


On HR and the real value corporations attach to human capital:

IMO it's high time employers in the US + Europe abandon the carrot + the stick approach in employee motivation, it's so 1900s (or even, 1800s)!

IMO they got it right in sports, when the team is doing badly it's the manager that goes, not the players, in business, it's usually the opposite

Pre-economic crisis, there was loads of corporate lipservice - rhetoric on Human Resources Management and the value of Human Capital, then came the crisis and .....


And lastly:

Why is there so much work related stress in recent years France?

Retrospection: Are the American people more capitalist than ..... ?

In April 2008, while the US and world economy were only at the beginning of the current crisis, I wrote the following thoughts, following my participation to an international online discussion forum.

"In effect we are selling ourselves to other nations" wrote a participant from the US in a recent discussion I participated in.

This was my reply (I have added some parts, in blue):

It is not as simple as that. The Americans IMO did not "sell themselves" to other nations, not per se. Most nations have major investments from private or institutional investors. And no non-American can have control of private companies in key areas such as airlines.

The issue IMO is that most Americans are NOT capitalists in practice, although they live in a capitalist country, because most do not (at least directly) own stocks in US "multinationals" or even US companies with mostly US operations and listed in US stock markets. Plus they over-invested in land, which is old capitalism (pre-industrial age) IMO plus they consumer on credit rather than save.

Plus, the US multinationals that have been selling their products an services to other national markets, especially since the 1950s, were bound one day to become "multinational" in ownership too.

In capitalism, what goes around, comes around: The rest of the world learned how to play the capitalist game and now the competition is fierce and Americans are complaining. Like the British are complaining because call centers are being outsourced to India, a former colony whose citizens speak good English BECAUSE they are a former colony! The pendulum goes both ways now.

Now, in globalization, which was a US/UK "invention", letting "non market based" investors invest is not in many analysts' opinion such a good idea, because the investment comes with geopolitical "influence" attached to it. I am not going to mention cases, some very recent, not only in the US but in Europe too. All I am going to say is that the decision to let into the WTO "centrally planned economies" was not IMO such a good idea. It is "unfair" competition. Guess who pressured for that, though, back in 2001!

IMO, the US is suffering from an identity crisis and needs to decide on a model for economic, social etc for the 21st century. It has all the gurus, who even export their theories and philosophies via books and expensive conferences and seminars to many other countries (that is part of the 75% Services US economy). Are these ideas "for export purposes only" (like the "Bon pour l' Orient" French exports of times past)?

All Americans have to do to "buy back" "their" companies and the US bonds is simply come up the money to buy them back via the stock and bonds markets. As simple as ABC! Who has the money to put where his/her mouth is though, these days, though?

And my (somewhat provocative) syllogisms, 18 month ago, concluded with:

One of the key "drivers" that keep the US economy going is the "almost" "eternal confidence of the US consumer" and that is an "asset" not many economies have. Look at the German consumer, for example! That US confidence is worth "gold" and it must be protected/cared for.

Today, October 9, 2009, we can see how the German citizen, via his/her savings, contributed to the re-bounding of the German economy out of recession in Q2. And how the US economy is still struggling, under a new President, via stimulus plan with not so free trade "Buy American" clauses, car scrapping schemes with cash rebates to promote car sales (others have done that too), to get out of recession.

I insist: The US desperately needs a new socio-economic model for competitiveness, growth, employment and happiness. One that is based on real traditional American values but is suitable for the times!

Plus the provocative question, aiming at shocking or (shaking) the still waters in socio-economic thinking and modeling:

Who are more "capitalist" a) The American or b) the Chinese or c) other (specify nationality or region, eg Asia or EU, etc) people these days?

Tough questions, I know. For tough, complicated, volatile, too interesting times.

Reminder: "May you live in interesting times" was an Ancient Chinese curse, not a wish!

in a truly capitalist and free market world ....

Maybe John McCain was partly right: In a truly well functioning or proper capitalist and free market system/world, no bank or other market "actor" should be too big to fail and the market should "survive"/absorb, via its free functioning mechanisms, any failure. That no failure would be deemed as "systemic" or of systemic importance.