Once, capitalism was an unknown ideal. Today, it is a downright confusing one. With its basic tenets having been modified sometimes beyond recognition to suit local conditions, there are now almost as many models of capitalism as the number of countries which profess to follow the system. Thus, you have Europes institutional capitalism, the US consumerist capitalism, Japans collaborative capitalism, Southeast Asias infamous crony capitalism ... the list goes on and on.
This diversity could soon become a thing of the past if recent developments are any indication. The present-day US economy has been described as the strongest the world has ever known and never mind carping about jobless growth. A deathly hush has descended upon leaders who once spoke of an alternative Asian model. Japan is tottering on the brink of a financial abyss. Sweden, the embodiment of the welfare state, has discovered the joys of the free market.
The German model, characterised by highly-skilled and paid labour and a relatively egalitarian structure, briefly held out hope for liberals. But the German juggernaut too is faltering, unable to cope with the economic burden of unification at a time when world markets for premium Teutonic products are drying up.
Will the contradictions within capitalism be replaced by convergence? Will the different models fade away, giving way to a ubiquitous American model with its individualism and attendant insecurity? It is these questions that the book sets out to address. In a sense, the book is already dated, since it fails to mention either the East Asian meltdown or the WTO pact on financial services.
The editors seem to favour diversity, and not just within capitalism. Seven different authors devote one chapter each to specific countries Japan, Germany, Sweden, France, Italy, the UK and the US and come up with widely differing conclusions. One example: sociologist Wolfgang Streeck mournfully concludes that European monetary union will probably sound the death-knell for the German model. One chapter later, political economist Jonas Pontusson recommends that Sweden adopt the German model!
Ultimately, the argument between the two men boils down to one question: how strong was the impact of German unification? If you believe it was the chief cause of Germanys present-day problems, then youll side with Pontusson, since the problems of unification wont trouble Sweden. But Streeck appears to be closer to the truth when he says the real villain was globalisation, which made Germanys rigid labour and capital markets untenable. Besides, German products have long since ceased to be price-competitive, and rely overwhelmingly on technological superiority. But in recent times, Germany has lost its technological lead.
All the country-specific chapters discuss the future of their respective models, with one exception. Economist Andrew Graham devotes an entire chapter to criticising the myth of the success of Conservative capitalism, without offering an alternative. Graham is hardly the most unbiased of observers he was advisor to the Labour Party leadership from 1966 to 1994, making him part of the old guard excluded by Tony Blair. Still, his piece makes interesting reading, if only for his denunciation of the concept of the utterly rational homo economicus so dear to economists.
The last four chapters provide a global perspective. Economist Jean-Paul Fitoussi makes the very valid point that capitalism does not exist in its pure form anywhere. Even in the US, it has been contaminated by regulation, limited state intervention and a concern for social justice. Hence, fears of the unilateral imposition of a single, rigid model on different cultures are groundless. Cultural expert Philippe dIribane makes much the same point, but far less articulately, in the only chapter that can be safely ignored.
Political economist Philip G Cerny examines the increasing globalisation of finance and the consequent erosion of national autonomy. And fittingly, the last word is provided by Susan Strange, professor of international political economy at Warwick University, who asserts that the convergence of capitalist models is a fait accompli. For her, the real issue is the growing dependence of governments on debt, which threatens to drown the entire capitalist system in a sea of red. But that is another story and, no doubt, another book. Hopefully, one that wont exclude East Asia, India and China.
