Capitalism 4.0

"The central argument is that capitalism has never been a static system that follows a fixed set of rules, characterized by a permanent division of responsibilities between private enterprise and governments. Contrary to the teachings of modern economic theory, no immutable laws govern the behavior of a capitalist economy. Instead capitalism is an adaptive social system that mutates and evolves in response to a changing environment. When capitalism is seriously threatened by a systemic crisis, a new version emerges that is better suited to the changing environment and replaces the previous dominant form.

   Once we recognize that capitalism is not a static set of institutions, but an evolutionary system that reinvents and reinvigorates itself through crisis, we can see the events of 2007 - 09 in another light; as the catalyst for the forth systemic transformation of capitalism, comparable to the transformations triggered by the crisis of the 1970's, the crisis of the 1930's, and the Napoleonic Wars of 1803-15.

   The concept of capitalism as an evolutionary system, whose economic rules and political institutions are subject to profound change, may seem controversial and even subversive from the standpoint of precrisis thinking. The Thatcher-Reagan revolution of the early 1980s was widely proclaimed as a rediscovery of true capitalism after the cryptosocialist heresies and deviations of the Keynesian period - and this worldview is still held by most conservative politicians and business leaders. ( "The End of History and The Last Man" - had finally arrived!*)..... In the great scheme of things, however, the dominance of free-market fundamentalism from 1980 until 2009 was just one thirty-year phase in the long history of modern capitalism's development since the late eighteenth century. Viewing recent events in this historical perspective reveals the crisis and its consequences in a new light."..... The End of History and The Last Man ~ is still a work in progress...

HAT Tip - Anatole Kaletsky, Capitalism 4.0

* Francis Fukuyama, The End of History and The Last Man

One condition must be satisfied to "turn up" new solutions, whether for stabilizing financial markets and managing the economy or for eliminating global pollutants and curing diseases: Capitalism and democracy must themselves survive. p

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