Question

How does variation in forms of capitalism develop?

Answer 1

variation in forms of capitalism develop :

• Sustainable development prospects are not substantially visible in the comparative analysis of models of capitalism. The concept of sustainable development does not appear in the initial theoretical framework of the “variety of capitalism” approach or in the “diversity of capitalism” approach.
• This article aims to contribute to current thinking about the interaction between the diversity of capitalism and sustainable development, based on the concepts of institutional complementarity and hierarchy, and to question the dynamics of various forms of capitalism in this perspective.
• The example of economic policies aimed at tackling global warming shows how each form of capitalism adopts measures that are compatible with its own unique configuration of complementary institutions, helping to make it “greener.” However, this trend fits into a dynamic of “limited sustainability” that does not challenge the finance-dominated institutional hierarchy or the current growth regime. The non-viability of our production/consumption model on a global scale calls for a more radical change in capitalism, combined with a shift in the institutional hierarchy.

FIVE MODELS OF CAPITALISM :

• Although these classifications differ because they use different criteria, they eventually present significant similarities. The classification I have been defending for some time is also similar, but, like Esping-Andersen's classification and unlike those of Hall and Soskice, and Boyer, and Schneider which emphasize differences at the production level and therefore between business enterprises, I use a political criterion to distinguish the models of capitalism in rich countries, namely, the historical decisions they made on the nature and degree of state intervention. Besides, I classify developing countries that have already undergone their capitalist revolutions into two models of "developing" capitalism: the developmental model and the liberal-dependent model. By adopting the state as the key criterion for the classification of the models of capitalism, I am, in the first place, stressing the fundamental significance of institutions. After all, the state embodies the constitutional and legal system and the organization that guarantees it. It is, therefore, the major institution in capitalist societies.
• By asserting that the nature of this state is a "decision" of the society, I am stressing the political nature of the criterion I adopt. The state, even a non-democratic one, is always a political construction. As long as democracy improves its quality, or as long as there is democratization, the deliberate aspect of this construction becomes stronger. The political decision of the citizens in democratic societies on the size of the state, on how large social expenditures should be, determines whether the state and its associated capitalism will be social (a welfare state) or merely liberal. In addition, the degree of regulation the state should exercise over social and economic life determines the definition of the model of capitalism.
• Therefore, I do not use as classification criteria the internal structure of business enterprises or the types of capital-labor relationship that exist in them, as does Hall and Soskice's theory of the varieties of capitalism. I do not recognize significant structural differences among business enterprises; and differences in the capital-labor relationship, which are indeed significant, are regulated by the state.
• Using as primary criteria the size of the state and the degree of regulation aimed at promoting economic development and at protecting work and reducing economic inequality, I identify three models of capitalist society in modern developed countries: the "liberal democratic model" that characterizes Anglo-Saxon countries, the "social model" or "welfare model" that characterizes the most developed European countries, and the "endogenous social integration model" or "Japanese model" of which Japan is the canonical representative. But it no longer makes sense to limit ourselves to the rich countries.
• Among developing countries, there are, as well as poor countries, middle-income countries that have already completed their capitalist revolutions and must be considered. Among these fully capitalist countries, I draw a distinction between the "developmental model" that characterizes China, India and other dynamic Asian countries that are growing very fast, and the "liberal-dependent model" that characterizes the other middle-income countries such as Argentina, Brazil, Turkey, Mexico and South Africa, whose average GDP growth rates tend to be substantially lower. Yet, in the 2000s, the failure of the dependent-liberal model in promoting growth, financial stability, and reduction of inequality led countries like the first three countries to move towards the developmental model of capitalism.
• It is evidently possible to make a classification of capitalism in many other ways. Among European countries, for instance, I make no distinction between the "social democratic model" and the "corporatist model", as Esping-Andersen did, since although I recognize differences between the two I do not consider these differences to be sufficiently great.
• Thus, a large social state exists not only in Scandinavia; it is present also in several other developed European countries. On the other hand, models that are essentially the same may be given different names: Boyer, for instance, calls the Asian model "meso-corporatist" whereas I prefer to call it the "Japanese model" or the model "of endogenous social integration", since corporatism exists also in European countries; and what I define as endogenous social integration - the construction of a system of solidarity within households and within business enterprises, without the state's direction - is exclusive to Japan and other Asiatic countries.
• In the liberal democratic model, state intervention is as limited as possible. And it is always minimized in terms of discourse - the neoliberal discourse. The state has a limited role in education, in health care and social care, and in social protection or welfare. "Labor" protection - that is, labor protection laws whose cost falls on business enterprises and not on the state - is minimal.
• The number of government-owned companies is minimal. The regulation of business enterprises is limited. Individualism, technological innovation and competition prevail over cooperation and social solidarity.
• In the social democratic model, the power of the professional class, especially the public bureaucracy, is greater than it is in the Anglo-Saxon model. State intervention takes place at the production or industrial-policy level, in labor protection, and in the free or almost free provision of collectively used social services.
• Although, among the European countries in this group, some are more social than others because they guarantee social rights more extensively and effectively, I prefer, on the aggregate level with which I am dealing, not to differentiate Rhineland capitalism from the Scandinavian variety: they are both social democratic; and they seek to integrate and to build solidarity through state regulation. This model moved toward the Anglo-Saxon model in the neoliberal years, but it remains very different. After the 2008 global financial crisis, any movement is in another direction, since this crisis was basically a crisis of neoliberalism.
• Yet in the Japanese model of capitalism the state leaves social protection to households and business enterprises, and therefore to the traditions or to the spirit of solidarity they share.
• This model of capitalism is characterized by a greater economic equality than exists in Europe, but it does not rely on the institutions of the social state: individual security is left to households and business enterprises. This model also moved in several aspects toward the liberal model.
• For example, lifetime job security in business enterprises, which is perhaps the most specific characteristic of this model, is disappearing. But the type of capitalism that exists in Japan continues to be very different both from the liberal model and from the social or European model. I will not discuss this model here because it is very distant from those in the West. In Japan, the public bureaucracy and large private bureaucracies within the big corporations play a key role. This model faced a crisis in 1990, since when it has been unable to restore economic growth.
• Among the developing countries, the developmental model is characterized by the informal existence of a national development strategy - a system of laws, public policies, agreements and understandings that create lucrative investment opportunities for entrepreneurs - implemented by strong state intervention in the economy so as to make this strategy operational, and by a low level of labor protection. This model is obviously inspired by the Japanese model.
• Finally, the liberal-dependent model is characterized by the dependent nature of its elites in varying degrees, and by the absence of a national development strategy. From the standpoint of the social structure, this model is characterized by a political alliance between an incipient industrial bourgeoisie and an equally incipient public and private bureaucracy.
• In the first stage, the state, apart from being a promoter of economic development, is a producer, because it is responsible for forced savings and for investments that require vast amounts of capital and are slow to provide a return. At this stage, the professional or technobureaucratic nature of capitalism is very clear. In the second stage, after a powerful entrepreneurial system is established, the state reduces its investments, but continues to play a significant role as a promoter.
• And, in a few cases, such as the Brazilian one, it is characterized by a high degree of inequality, and develops, as a trade-off, an extensive social protection system. Yet the dynamic Asian countries that do not display such inequality keep the state away from the social area. Some countries, such as Brazil, pursued a developmentalist strategy between 1950 and 1980 and achieved impressive growth; but, after going through a huge crisis in the 1980s, they submitted to the reforms and macroeconomic policies that originated in Washington and New York. The list of countries that conform to the liberal-dependent model of capitalism is naturally changeable. Since the early 2000s Brazil and Argentina have been making efforts to regain national autonomy and to define a national development strategy.
• Why does capitalism display a range of models? The differentiation between the three models of rich countries and the two models of middle-income countries reflects, on the one hand, the backward nature of the middle-income countries and the imperialist relationship between them and rich countries; on the other hand, it reflects the advantage that middle-income countries have over rich ones in global competition because of their cheap labor and the possibility of absorbing technology already developed by the rich countries. As for the differences between the three models of capitalism in the rich countries, these result from the key role the state plays in the coordination of modern societies. The state defines the model of capitalism. Evidently, this occurs in a dialectic way, because no constitutional or legal system survives unless it enjoys social legitimacy. But why do we have the social state in the European model and the liberal state in the Anglo-Saxon model? Probably because socialist or social democratic parties in the European model had and still have a greater influence in the building of their corresponding states than in the Anglo-Saxon model countries: in other words, because the political center of the European model countries is further left than the political center of the Anglo-Saxon model countries. In the United States, whether because capitalism was hugely successful since the beginning of its history or because socialism there was violently repressed, so far no party there may be considered as social democratic.

DEVELOPMENT:

There is perhaps no social objective that can find as nearly unanimous acceptance today as that of economic development. I doubt that there has been a single government anywhere in the last 30 years that has not asserted it was pursuing this objective, at least for its own country. Everywhere in the world today, what divides left and right, however defined, is not whether or not to develop, but which policies are presumed to offer most hope that this objective will be achieved.

We are told that socialism is the road to development We are told that laissez-faire is the road to development We are told that a break with tradition is the road to development. We are told that a revitalized tradition is the road to development We are told that industrialization is the road to development.

We think of economic development as a post-1945 concept. And it is certainly true that most of our current language, as used by politicians and intellectuals, is a product of the geopolitics of the post-1945 era in the worldsystem. And it is certainly also true that since 1945 the concept as doctrine has been applied more widely and with greater social legitimation than ever before. But of course the basic idea has much older roots. It seems in fact that its history is concurrent with the history of the capitalist world economy itself. Full-fledged intellectual debates about how countries might be developed were occurring at least as early as the seventeenth century. What else, after all, was at issue in the proposed policies we group together today under the heading of mercantilism? I should like therefore to review what we know of the history of this capitalist world-economy in order to address five questions:

1 Development is the development of what?

2 Who or what has in fact developed?

3 What is the demand behind the demand for development?

4 How can such development occur?

5 What are the political implications of the answers to the first four questions?

• Then, and only then, will I come to the question in my title: is development a lodestar or an illusion? Development is a word that has two different connotations. One is the reference to the processes of a biological organism. From little acorns do giant oaks grow. All organic phenomena have lives or natural histories. Somehow they begin; then they grow or develop; eventually they die. But, since they also reproduce, the death of a single organism is never the death of the species. The presumed socioeconomic analogy is clear.
• Nations or states or societies somehow (and somewhere) begin; then they grow or develop. The rest of the analogy, however, is rarely pursued. There are few discussions of the likelihood that these entities will eventually die, or that the species will survive via a process of reproduction.
• We might wonder why the analogy is not pursued to its fullest, and why all our attention is concentrated on whatare taken to be the normalities or abnormalities of the middle segment of the sequence, the presumed growth process. One reason may be that development has a second connotation, more arithmetic than biological. Development often means simply ‘more’.
• In this case, we are making an analogy not to an organic cycle but to a linear, or at least monotonic, projection. And of course linear projections go to infinity. Now, infinity is fair away. But it is there, and it is always possible to imagine more of something. This is clearly very encouraging as a social possibility. Whatever we now have some of, we might have more of tomorrow.
• Of course, infinity is also quite terrifying. Infinity is in a very real sense a void. Endlessness is not everyone’s cup of tea. There is an entire literature of clinical psychology about the ways in which human beings need to bound their universes, to create an environment of manageable scale, one which therefore offers a reasonable possibility that it is somewhat controllable. Durkheim’s discussion of anomie is another version of the same argument Here, however, we come immediately upon a social relativity. In a set of groups which are located on a scale in terms of quantity of possessions, and which are all seeking more, those groups at the top end of the scale have only the void before them, whereas groups who are at the bottom are bounded by groups above them. So while some may face the uncharted prospects of seeming endlessness, others are clearly facing primarily the more manageable project of ‘catching up’ those who already have more.
• There is a further element in the picture, as we all know. There are good times and there are bad times, periods of boom and periods of bust or at least of stagnation. The social interpretation of good and bad times tends to be quite straightforwardly relational. Good times are those moments in which we think we have more than previously. Bad times are those in which we think or fear we have less. If then we distinguish between groups at the high end of the scale of possessions and those at the low end, economic expansion and contraction present different pictures. Those at the high end to be sure have the comfort of being at the high end.
• They may however in times of expansion fear the void and in times of contraction fear that they will no longer be at the high end. Those at the low end start from the base knowledge of their relatively low level of material reward. Expansion then may open up the optimistic hope of immediate absolute improvement and relative middle-term catching up. Contraction offers on the other hand the gloom of decline from an already low level.

Development of capitalism in india:

• The latest international division of labour has set in motion a worldwide relocation of industries providing fillip to industrialisation in certain parts of the globe hitherto untouched by modern industry. Under the shadow of this broad sweep, will capitalist development in India result in a basic transformation in its state and society, and usher in the era of so-called 'modernisation'? This is the central question to which this paper addresses itself.
• Like the absolute ground-rent vis-a-vis capitalism in agriculture, the paper argues, the merchant's profit in a country such as India at its present stage of development acts as an obstacle to the growth of capitalism in industry. It further contends that the path of transition to full-fledged capitalism is blocked from both sides: above and below. Internally the structures is such that small capitalists find it difficult to move to higher levels; likewise, the landlords and capitalist farmers with investible resources are not sufficiently stimulated to transform themselves into industrial capitalists.
• On the other hand, large industrial capitalists are subject to competitive threat from world monopoly capital. The implications of such a class structure in respect of social evolution are briefly drawn at the end of the paper. Certain observations are also made on its bearing upon economic theory.