In his most recent book, Branko Milanovic, delves into the study of different forms of capitalism present today, as he puts forward the notion that capitalism is pretty much the system that rules the world. He does not however, say this is the end of history. Very nicely done as he goes beyond income inequality.
Liberal Meritocratic Capitalism (LMC) is represented by the U.S. (Chapter 2) while Political Capitalism (PC) is, par excellence, represented by China (Chapter 3).
In chapter 2, the point is made that LMC is the current form of western capitalism stemming from Classical Capitalism (CC) represented by the United Kingdom before 1914 and Social Democratic Capitalism (SDC) represented by Western Europe & U.S. 1946 - 1980. There is of course a discussion regarding inequality. This includes high concentration of capital ownership, higher rates of return on the assets of the rich, and more marriages between people with the same income level.
Four pillars helped reduce inequality during SDC. These are 1) trade unions, 2) mass education, 3) high taxes and government transfers. Globalization makes it harder to use taxes and transfers to reduce inequality in the West and trade unions, for similar reasons have less power. Education is interesting to look at since the point is made that it is not just the number of years but the perceived or real quality of the education that matters.
In Chapter 3 PC is discussed. The point is made that in the third world, communist or quasi-communist regimes post colonialism helped pave the way to Political Capitalism. This is because, unlike in Eastern Europe, third world countries were underdeveloped and still feudal. China and Vietnam are the prime examples. It is interesting to note that Malaysia and Singapore are also included in a table of countries under political capitalism but of course the author does not claim that they had a communist regime but rather one party in power for a long time.
A characteristic of PC that is discussed is the systemic corruption. An interesting point is that globalization itself has made corruption more likely under PC as there are more opportunities for corruption's wealth to be kept overseas. But corruption is a tough nut to crack and has been around at least since Rome. According to Salluts, Jugurtha famously described Rome as "urbem venalem et mature perituram, si emptorem invenerit" ("a city for sale and doomed to quick destruction, if it should find a buyer," However, while he Republic would be lost, Imperial Rome would continue for quite a long time. The author delves into this at the end of chapter 4 as well.
At any rate, the question is will other countries seek to emulate China's Political Capitalism? How many countries can achieve the level of economic growth if they try to do so?
Chapter 4 looks at the interaction between capitalism and globalization. The author puts forth a proposal regarding immigration given the current prevailing mood against migration in the west. Essentially, the proposal would allow for migrants to come and work and pay taxes, but not to become citizens, vote, and stay permanently. The U.S. green card system is this already, but implied is that this would not lead to citizenship as it currently can. Historically, metics in Athens were foreign residents who did not have citizen rights but did share in the burden. The point is that this would allow migrants to earn money and would lessen the fear citizens have that migrants will have the same citizenship rights that they currently do. This reduce opposition to this type of limited immigration and reduce global inequality. While it might seem controversial, the proposal must be seen from the vantage point of what is possible and not what is some perfect truth.
In chapter 5, the author looks at the future of global capitalism. Most interesting is the likely convergence of incomes between Europe, North America, and Asia and what role China might play in Africa going forward.
What I enjoyed most was the author going beyond inequality in this book. An excellent book that builds on the author's previous works. I hope future books will continue to do so as well. Personally, I would enjoy more on Pareto and Schumpeter.
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Wyman
It explains the phenomena you experience everyday
Reviewed in Canada on December 4, 2022
