The USA economic system is NO longer based on pure capitalism. The system is considered a mixed economy. As time goes on, the system will evolve to adopt measures that will control the stock market and the banking industry.
--- In [email protected], "jpgillam" <jpgil...@...> wrote: > > A while back, someone posted a prediction by Maharishi that capitalism was on > its way out. Seeing as we live in a world of continual change, it's not hard > to predict that things will be different in the future than at present. But > how? > > The topic came to mind over breakfast this morning when I read this short > book review in The Economist: > > http://www.economist.com/node/16536988?story_id=16536988 > > New capitalism > Magic by numbers > Looking at the past and predicting the future > Jul 8th 2010 > > > Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis. By > Anatole Kaletsky. PublicAffairs; 396 pages; $28.95. Bloomsbury; £15. Buy from > Amazon.com, Amazon.co.uk > > BY NOW it is hard for authors to stand out in the growing library of books on > the causes and consequences of the financial crisis. Anatole Kaletsky manages > to do so, thanks largely to the breathtaking ambition of "Capitalism 4.0", > and partly to the unusual optimism that infuses it. > > As the book's subtitle suggests, Mr Kaletsky, an editor at the Times who > worked at The Economist in the 1970s, argues that the financial crisis marks > a transformation in modern capitalism, one from which a new, improved version > will evolve. He regards it as a turning point equivalent to the Napoleonic > wars, which augured the beginning of the classical era of laissez-faire (or > Capitalism 1.0); the Depression (which spawned the government-heavy era of > Capitalism 2.0); and the stagflationary 1970s (from which rose the > free-market Capitalism 3.0). > > Like the changes that have gone before, capitalism's latest transformation > will alter the relationship between markets and governments and between > politics and economics. It is the ability to adapt that secures capitalism's > survival. Version 4.0 will be as different from the recent free-market > fundamentalism as Reaganomics was from the New Deal. > > In a potted history that is admirably broad in its reach but annoyingly corny > in its nomenclature, Mr Kaletsky describes capitalism's evolution over the > past 200 years, particularly the changing role of government. The managed > economies of Capitalism 2.0 were based on a fundamental faith in governments' > ability to solve economic problems. Version 3.0, after the 1970s, > romanticised markets and distrusted government. Within each of these broad > categories, Mr Kaletsky describes the mini-shifts, Capitalism 2.1, 2.2, etc. > > This history, together with the software analogy, is relatively > uncontroversial. This changes when Mr Kaletsky analyses the financial crisis. > The recent bust was not, he argues, only or even mainly the inevitable > consequence of bankers' greed or credit excesses. Much of the build-up in > debt that is now widely disparaged as a cause of the crisis was > "fundamentally justified and irreversible" thanks to broad structural shifts > in the world economy, such as globalisation and the dampening of inflation. > Only in the last year or two before the crisis did the boom spin out of > control, and even then by not nearly enough to fell the global economy by > itself. > > The reason a run-of-the-mill financial bust became a catastrophe, Mr Kaletsky > claims, was due largely to the stunning failures of one man: Henry Paulson, > George Bush's treasury secretary. In a passionate ad hominem attack, called > "The Economic Consequences of Mr Paulson" (after Keynes's 1925 pamphlet "The > Economic Consequences of Mr Churchill", a devastating critique of Sir > Winston's defence of the gold standard), Mr Kaletsky excoriates Mr Paulson, > particularly his decision to allow the investment bank Lehman Brothers to > fail. The hyperbole is spectacular. Mr Paulson, the book claims, came "closer > to destroying capitalism than Marx, Lenin, Stalin and Mao Zedong combined." > > Destruction was averted. The last section of the book describes what > Capitalism 4.0 might look like. Oddly, given his contempt for policymakers' > decisions during the crash, Mr Kaletsky is full of optimism about what they > can now achieve. Provided that governments are willing to use the tools at > their disposalsuch as zero interest rates and fiscal stimulushe expects a > rapid and robust recovery. > > Skating breezily across swathes of economic policy, his theme is that new > capitalism will be defined by experimentation. Governments will become far > more involved in some areas of the economy, such as macroeconomic management > and financial regulation. But they will retreat from others, such as > education and health. > > Pedants will find plenty to quibble about in Mr Kaletsky's analysis of the > past, let alone his predictions. His tirade against Mr Paulson is unseemly as > well as unconvincing. But his book is full of clever insights. For sheer > intellectual chutzpah and creativity, it is well worth reading. > > > http://www.economist.com/node/16536988?story_id=16536988 >
