Tagesarchiv: März 7, 2009

Capitalism formerly known as the German Model and its Re-Formation. Part II

Wolfgang Streeck (MPIfG), a scholar of political economy, studies the relations between markets, states and institutions, the dynamics of their development, their interrelatedness and historical changes. His new book “Re-forming capitalism” (Oxford University Press 2009) is devoted to institutional changes in capitalism formerly known as the German Model and its social consequences. An important book, particularly to those who refuse to give up on liberalism. Back to Part I

Why capitalism?

“Why capitalism? If the gradual disorganization and liberalization of “postwar market economy” like Germany is to be explained, as I believe it must, as a secular historical process driven by endogeneous dialectical force, conceptions of “the economy” as a system in, ore on the way to, static equilibrium, however defined, are not really of use. Speaking of capitalism instead has the advantage that it conceptualizes the economy as inherently dynamic – as a historical social formation defined by a specific, characteristic dynamism, and as an evolving social reality in real time. Speaking of capitalism, in other words avoids the fallacies of misplaced abstractness that plague mainstream economics as well as rational choice social science and prevent them from engaging the world as it happens to be. Specifically, the concept of capitalism draws our attention to a core concept of market expansion and accumulation that, it suggests, makes up the substance and defines the identity of what is now the hegemonic and indeed the only form of economic organization in the modern world. Moreover, it also (…) moves into the center of analysis the fundamental issue of the compatibility of expanding markets with the basic requirements of social integration, thereby providing a coherent analytical framework in which to consider the manifold social conflicts associated with the ‘capitalist constant’ (Sewell 2008) of progressive commodification. ” (Streeck 2009, p. 230)

A society that consumes its institutions?

Streeck makes a strong argument insofar as the transformation of political-economic institutions he describes with the terms of ‘disorganization’, ‘flexibilization’ and ‘economization’ is severe in its consequences in terms of solidarity and social justice. Of course, all institutions are in transformation. So are the social economic institutions of capitalism: collective bargaining, intermediary organizations, social policy and the welfare state, and, of course, corporate governance. As Streeck shows convincingly, this process also involves public financing. But as the state extensively goes after its own interests, e.g. in rising incomes tax for the wealthier parts of the population, rising taxes on goods, inventing new fees for just about everything, lowering the standard of welfare, and hiding the true level of unemployment, this does not leave social solidarity in Germany untouched. Streeck puts this in the term “capitalism” meaning a social order rather than about an abstract “economy” meaning a functional subsystem or the market in a model of the word. But both terms leave that open tough competition, power struggle, inequality and unfairness occur. Slowly but continuously, without major disruptions, capitalism formerly known as the German model has been undermined in complex interplay of systemic, institutional and endogeneous change, not just as a result of external factors such as ‘globalization’ and ‘technology’, but rather because institutions were struggling with specific problems of systemic and social integration. The logic of flexibilization and disorganization is driven by characteristic dispositions of actors, the relationship of rule-making and rule-taking. Weiterlesen