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Capitalism, Alone: The Future of the System That Rules the World
A provocative account of capitalism's rise to global dominance and, as different models of capitalism vie for world leadership, a look into what the future may hold.
We are all capitalists now. For the first time in human history, the globe is dominated by one economic system. In Capitalism, Alone, leading economist Branko Milanovic explains the reasons for this decisive historical shift since the days of feudalism and, later, communism. Surveying the varieties of capitalism, he asks: What are the prospects for a fairer world now that capitalism is the only game in town? His conclusions are sobering, but not fatalistic. Capitalism gets much wrong, but also much right--and it is not going anywhere. Our task is to improve it.
Milanovic argues that capitalism has triumphed because it works. It delivers prosperity and gratifies human desires for autonomy. But it comes with a moral price, pushing us to treat material success as the ultimate goal. And it offers no guarantee of stability. In the West, liberal capitalism creaks under the strains of inequality and capitalist excess. That model now fights for hearts and minds with political capitalism, exemplified by China, which many claim is more efficient, but which is more vulnerable to corruption and, when growth is slow, social unrest. As for the economic problems of the Global South, Milanovic offers a creative, if controversial, plan for large-scale migration. Looking to the future, he dismisses prophets who proclaim some single outcome to be inevitable, whether worldwide prosperity or robot-driven mass unemployment. Capitalism is a risky system. But it is a human system. Our choices, and how clearly we see them, will determine how it serves us.
We are all capitalists now. For the first time in human history, the globe is dominated by one economic system. In Capitalism, Alone, leading economist Branko Milanovic explains the reasons for this decisive historical shift since the days of feudalism and, later, communism. Surveying the varieties of capitalism, he asks: What are the prospects for a fairer world now that capitalism is the only game in town? His conclusions are sobering, but not fatalistic. Capitalism gets much wrong, but also much right--and it is not going anywhere. Our task is to improve it.
Milanovic argues that capitalism has triumphed because it works. It delivers prosperity and gratifies human desires for autonomy. But it comes with a moral price, pushing us to treat material success as the ultimate goal. And it offers no guarantee of stability. In the West, liberal capitalism creaks under the strains of inequality and capitalist excess. That model now fights for hearts and minds with political capitalism, exemplified by China, which many claim is more efficient, but which is more vulnerable to corruption and, when growth is slow, social unrest. As for the economic problems of the Global South, Milanovic offers a creative, if controversial, plan for large-scale migration. Looking to the future, he dismisses prophets who proclaim some single outcome to be inevitable, whether worldwide prosperity or robot-driven mass unemployment. Capitalism is a risky system. But it is a human system. Our choices, and how clearly we see them, will determine how it serves us.
304 pages, Hardcover
First published September 24, 2019
About the author
Branko Milanović
33 books212 followersBranko Milanović (Serbian Cyrillic: Бранко Милановић, IPA: [brǎːŋko mǐlanoʋitɕ; milǎːn-]) is a Serbian-American economist. He is most known for his work on income distribution and inequality. Since January 2014, he is a visiting presidential professor at the Graduate Center of the City University of New York and an affiliated senior scholar at the Luxembourg Income Study (LIS). He also teaches at the London School of Economics and the Barcelona Institute for International Studies. In 2019 he has been appointed the honorary Maddison Chair at the University of Groningen.
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Displaying 1 - 30 of 96 reviews
January 17, 2020
I’m a firm believer that if you want to understand government and politics, study economics. This book really gave me a fresh perspective on both the political system and the money that’s its engine. Milanović comes from a background at the World Bank, so he knows a thing or two about the real world of money and power.
After hundreds of years of trial and error on different economics models, the world has finally picked a clear winner - capitalism. From China to Russia to the US, it’s the universal way the world runs now, but the world has fragmented into two primary types of capitalism:
1) Liberal Meritocratic Capitalism - examples: the US, Western Europe
2) Political Capitalism - examples: China, Singapore, Vietnam
Each of these systems has inherent qualities and Milanović lays out the characteristics, opportunities and problems in each. It’s a very thorough evaluation of the pluses and minuses, touching on versatility, corruption, wealth inequality, grow potential, upward mobility, class structure, political intrigue, and bunches more stuff that makes each system good and bad.
For example, political capitalism in China has three main characteristics:
Efficient bureaucracy - stuff gets done quickly and efficiently
Absence of the rule of law - really bad for corruption and citizens’ rights
Autonomy of the state - politicians run things and make businesses toe the line
Milanović equates political capitalism to a sort of mafia where general rules must be followed but the bosses are firmly in control. Those at the top (communist party officials) brutally punish rule breakers and do as they please.
The upside is that important stuff gets done quickly. There are no public hearings or lawyers when a new freeway needs to go through the center of town. Politicians just clear a path, trampling property rights and personal freedoms. A few people suffer, but most everyone else is glad the new freeway got built so quickly and at so little cost.
Corruption is endemic in political capitalism. The only way that the masses will tolerate their leaders enriching themselves with kickbacks and bribes is if the average person sees his or her life demonstratively improving. And Chinese leaders are keeping their end of the bargain, delivering amazing growth year after year. So the populace looks the other way and allows the corruption. The elite skate along a fine line. They understand that skimming from the till is permitted as long as the growth continues unabated. Once that stops, things get very messy with torches, pitchforks and very inconvenient revolutions - mistakes made during the reigns of soon-to-be-headless guys like Louis the 16th of France and Czar Nicholas of Russia.
Milanović breaks out many more characteristics of both Political Capitalism and Liberal Meritocratic Capitalism, providing fascinating insights into the detailed characteristics of each. For example:
Education Under Liberal Meritocratic Capitalism
In the US, the rich maintain a stranglehold on higher education. It’s usually the wealthy who get their kids into the best schools. They cleverly make it very expensive and hard to qualify to get in. Once a student is in school, most of them can graduate without too much trouble. By placing the hurdle on admissions, it assures the wealthy can screen out smart, but poor and badly connected kids. This assures Ivy Leaguers get the best paying jobs. Ever wonder why Harvard is sitting on a mountain of endowment cash but has only one small campus? It assures that the school keeps churning out presidents and Wall Street titans.
Inheritance Under Liberal Meritocratic Capitalism
Keeping estate taxes low is important because it assures the wealthy stay rich and in power. Unearned money can trickle down generation after generation. This assures the social order stays rigid and keeps talented intruders away from capital, thus keeping them out of the upper classes and assuring a smooth transfer of power.
Elections Under Liberal Meritocratic Capitalism
The political process must erect large financial tolls on those seeking influence with government. Only rich people can afford to give politicians money. Middle and lower class people cannot. Supreme Court decisions like Citizens United assure that politicians are beholden to rich donors who feed the masses deviously clever advertising that gets them to inadvertently vote against their own best interests. The political process becomes an echo chamber that perpetuates the ruling class.
Milanović provides a pragmatic but Machiavellian perspective on the tactics of each of the political systems, then gives his best guesses on how each will fare in our increasingly globally connected world.
It’s hard to read but I left convinced. As much as it breaks my heart, the question isn’t whether the elite or the average citizen will run nations. That question has been clearly decided and the elite are firmly in control. The question is whether you want political bosses, oligarchs or powerful corporations running your nation. The job of all these powerbrokers is to convince the masses that the elites are working with the average person’s best interest at heart, all the while keeping the money and power firmly in the hands of the elite.
This is a fascinating, but dense book with very insightful observations. I learned a lot.
After hundreds of years of trial and error on different economics models, the world has finally picked a clear winner - capitalism. From China to Russia to the US, it’s the universal way the world runs now, but the world has fragmented into two primary types of capitalism:
1) Liberal Meritocratic Capitalism - examples: the US, Western Europe
2) Political Capitalism - examples: China, Singapore, Vietnam
Each of these systems has inherent qualities and Milanović lays out the characteristics, opportunities and problems in each. It’s a very thorough evaluation of the pluses and minuses, touching on versatility, corruption, wealth inequality, grow potential, upward mobility, class structure, political intrigue, and bunches more stuff that makes each system good and bad.
For example, political capitalism in China has three main characteristics:
Efficient bureaucracy - stuff gets done quickly and efficiently
Absence of the rule of law - really bad for corruption and citizens’ rights
Autonomy of the state - politicians run things and make businesses toe the line
Milanović equates political capitalism to a sort of mafia where general rules must be followed but the bosses are firmly in control. Those at the top (communist party officials) brutally punish rule breakers and do as they please.
The upside is that important stuff gets done quickly. There are no public hearings or lawyers when a new freeway needs to go through the center of town. Politicians just clear a path, trampling property rights and personal freedoms. A few people suffer, but most everyone else is glad the new freeway got built so quickly and at so little cost.
Corruption is endemic in political capitalism. The only way that the masses will tolerate their leaders enriching themselves with kickbacks and bribes is if the average person sees his or her life demonstratively improving. And Chinese leaders are keeping their end of the bargain, delivering amazing growth year after year. So the populace looks the other way and allows the corruption. The elite skate along a fine line. They understand that skimming from the till is permitted as long as the growth continues unabated. Once that stops, things get very messy with torches, pitchforks and very inconvenient revolutions - mistakes made during the reigns of soon-to-be-headless guys like Louis the 16th of France and Czar Nicholas of Russia.
Milanović breaks out many more characteristics of both Political Capitalism and Liberal Meritocratic Capitalism, providing fascinating insights into the detailed characteristics of each. For example:
Education Under Liberal Meritocratic Capitalism
In the US, the rich maintain a stranglehold on higher education. It’s usually the wealthy who get their kids into the best schools. They cleverly make it very expensive and hard to qualify to get in. Once a student is in school, most of them can graduate without too much trouble. By placing the hurdle on admissions, it assures the wealthy can screen out smart, but poor and badly connected kids. This assures Ivy Leaguers get the best paying jobs. Ever wonder why Harvard is sitting on a mountain of endowment cash but has only one small campus? It assures that the school keeps churning out presidents and Wall Street titans.
Inheritance Under Liberal Meritocratic Capitalism
Keeping estate taxes low is important because it assures the wealthy stay rich and in power. Unearned money can trickle down generation after generation. This assures the social order stays rigid and keeps talented intruders away from capital, thus keeping them out of the upper classes and assuring a smooth transfer of power.
Elections Under Liberal Meritocratic Capitalism
The political process must erect large financial tolls on those seeking influence with government. Only rich people can afford to give politicians money. Middle and lower class people cannot. Supreme Court decisions like Citizens United assure that politicians are beholden to rich donors who feed the masses deviously clever advertising that gets them to inadvertently vote against their own best interests. The political process becomes an echo chamber that perpetuates the ruling class.
Milanović provides a pragmatic but Machiavellian perspective on the tactics of each of the political systems, then gives his best guesses on how each will fare in our increasingly globally connected world.
It’s hard to read but I left convinced. As much as it breaks my heart, the question isn’t whether the elite or the average citizen will run nations. That question has been clearly decided and the elite are firmly in control. The question is whether you want political bosses, oligarchs or powerful corporations running your nation. The job of all these powerbrokers is to convince the masses that the elites are working with the average person’s best interest at heart, all the while keeping the money and power firmly in the hands of the elite.
This is a fascinating, but dense book with very insightful observations. I learned a lot.
December 7, 2019
Review of Branko Milanovic, CAPITALISM, ALONE
When politicians, pundits, and academics speak of a rising competition, or even a New Cold War, between the U.S. and China, one thing that is rarely explicitly asked is what exactly is being competed for. Likewise, when we speak of an “American” or “Western” model, in contrast to a “Chinese” one, it is worth asking what or who exactly is being modeled, and to what end. One of the virtues of Branko Milanovic’s new book, Capitalism, Alone is that it addresses these questions head-on and with useful insights and results. The answer, in short, is that the competition is to win the hearts and minds of the leaders of what used to be called the Third or developing world, and which is now generally referred to as the Global South.
A completion between economic models for the hearts and minds of the Global South is of course, hardly knew. That competition was, of course, at the heart of the Cold War — would the countries newly emerging from the yoke of colonialism choose to follow the “free enterprise” market proposed by the newly emergent capitalist hegemon in the United States, or would they instead choose to follow the Communist model proposed by the Soviet Union. Billions of dollars in foreign aid were distributed, vast propaganda efforts pursued, and numerous hot wars and insurgencies across Asia, Africa, and Latin America were fought from the late 1940s through the 1980s to determine which of these models would prove more attractive countries trying to figure out the best way to improve their economic conditions. See from this angle, the Cold War was above all an ideological competition over which would prove the superior model of “development” — communism or capitalism, and within each of those categories, which flavor — Soviet centralist or Maoist, autarkic-welfarist or neoliberal, and so on. As late as the early 1980s, it was not at all clear which of these models would prove most ultimately attractive.
By the late 1980s, however, the fog of ideological war seemed to lift, so much so, that Francis Fukuyama in January 1989 was able to declare with supreme confidence, that the war for the hearts and minds of not just the Global South, but the world over, had been won. It was clear, Fukuyama declared, that the one best system for promoting prosperity and freedom, was an export-oriented market based economy coupled to a more or less democratic political system. While obviously there were still other systems still in place across the globe, the ideological debate was over, Fukuyama declared. The End of History had arrived, embodied in the form of democratic capitalism shared in some broad sense by North Atlantic democracies. These systems had clearly demonstrated their superior capacity to deliver rising standards of living and peaceful, inclusive politics to such a degree that no right thinking political leader anywhere could possibly hope for anything else. The collapse of Eastern European communism that same Fall, the rapid embrace of capitalist “shock therapy” across the Soviet bloc, as well the a “third wave” of democratization across Latin America in the late 1980s and 1990s, made Fukuyama seem a prophet.
Of course, darker forces might have been detectable in that same moment. On June 4th, 1989, the Communist regime in Beijing signaled in the strongest possible terms that it was not about to embrace parliamentary democracy and liberalism as part of its economic “opening up” policy. The slaughter in Tienanmen Square that night indicated the Deng regime’s commitment to continued authoritarian rule no matter what. That same night, June 4th, 1989, the Ayatollah Ruhollah Khomenei died in Tehran. But his.long-anticipated passing, unlike that of General Francisco Franco in Spain a decade and a half earlier, did not herald a new liberal regime. Rather, the Iranian mullahocracy’s ability to move past their original charismatic leader’s death, signaled the successful institutionalization of an anti-liberal form of political practice.
Even with these two cases, the case for Fukuyama’s End of History thesis for a long time remained strong. What leader in the Global South, after all, looked in the 1990s to either China or Iran as a credible alternative developmental model to capitalism, liberal or otherwise? Certainly up to the Global Financial Crisis in 2008, the Western model of liberal, democratic, and allegedly meritocratic capitalism seemed virtually unchallenged.
It is now quite clear that the critical watershed in the legitimacy of the currently dominant model of capitalism in the West was the 2008 GFC and the Consequent Great Recession. This had three signal effects. First, the crisis inflicted a great of Economic hardship and financial trauma on vast swaths of the population, as millions of homes were foreclosed, unemployment spiked, and (especially in Europe) austerity was imposed. Second, whether fairly or not, the widespread view was that those responsible for the GFC, both in government and in the financial markets, were not held accountable, nor were serious reforms undertaken. Those who had enriched themselves during the bubble were allowed to walk away with fortunes largely intact. Third, while the lack of fiscal stimulus in Europe and North America led to something approximating a lost decade, with economic growth rates averaging barely half what they had in the decades before the crisis, China continued to grow at an enormous rate. [show chart of size of total economy in EU-25, USA, China since 2000.] If the proof of the economic pudding was in the eating, China certainly seemed to have been using a better cookbook over the last decade.
[transition sentences]
Part of the backlash in the West against China comes from the much-belated recognition that the Chinese were never planning on adopting Western ways. Despite the fact that the Chinese Communist Party had never been anything other than clear and direct that it would never brook any challenge to its political authority, many westerners continue to find evidence to maintain their fantasies, whether it was the New York Times reporting on game shows demonstrating pent up demand for democracy, [https://www.nytimes.com/2005/09/04/we...], or the Carlyle Group’s David Rubinstein claiming in 2012 that continued liberalization was “inevitable” [https://www.theatlantic.com/internati...] or various scholars who claimed As late as 2013 that China’s only choice was to “democratize or die.” [https://www.foreignaffairs.com/articl...] Even if the process was slow, many westerners found ways to convince themselves that at least the trends were “in the right direction” toward eventually Chinese political liberalization and convergence on the liberal democratic capitalism of the West. The old master narrative of modernization-as-convergence convinced many in the West that time was on their side.
Historians in the future will debate where the turning point was in the West’s attitude toward China. There will be an inevitable tendency to credit (or blame) President Trump, but in my view the decisive turning point was one that occurred almost simultaneous with Trump’s inauguration, namely China’s announcement in 2017 that it was abolishing term limits for the President of the Republic (which had previously been limited to two terms, a convention both Presidents Hu Jintao and Jiang Zemin had respected. This declaration effectively made President Xi Jingpeng president for life.
This announcement reverberated through the foreign policy establishment of Washington, DC to a degree that is hard to exaggerate. While internal Chinese factional politics have always been opaque to outsiders, here was a clear, simply marker that China was not only not moving (however slowly) towards democracy and generalized convergence with the Western model, but if anything was moving the opposite direction. Although the evidence had been there since the start of Xi’s presidency for anyone paying close attention, this significance of this announcement was comprehensible to even people with little or no knowledge of China. What the Chinese almost certainly regarded as a matter of internal politics and governance, as such of no great relevance or interested to foreigners, in fact was an earthquake in Washington, as it blew a waterline hole in any effort to maintain the narrative of slow if inexorable Chinese progress towards democracy and generalized convergence with the West.
Trump’s Sinophobic rhetoric, in other words, caught a fundamental shift in the Zeitgeist in Washington that had little if anything to do with his own uninformed assessment of the situation in China (which was more a matter of longstanding prejudice than any careful assessment). Indeed, one of the few topics on which there has been almost complete bipartisan consensus in Washington during the Trump years has been toward taking a harder line on a China which now everyone recognizes has no intention (and indeed, never did) of trying to democratize or otherwise emulate the American or Western political system. This bipartisan shift may have coincided with Trump’s arrival but the very fact that it is bipartisan demonstrates that it was not Trump who created it. Like a rooster at dawn, his crowing simply called forth the inevitably rising sun.
What Americans of both parties have belatedly and angrily realized is that we find ourselves locked in a profound struggle not with some communist power slowly democratizing, but rather with a rival brand of authoritarian capitalism, firm in its own vision of politics.
***
Capitalism, Alone begins from this point of departure: Capitalism has conquered the world, operating everywhere, as Milanovic puts it, “according to the same economic principles: production organized for profit using legally free wage labor and mostly privately owned capital, with decentralized coordination” (2). And yet, it turns out that this conquest has not ended geopolitical competition for the hearts and minds of the global south about the proper developmental model! While Communism may have receded as a credible alternative to capitalism, Milanovic documents how there have now emerged two (broadly stylized) ideological alternatives within capitalism, which he refers to the “Liberal Meritocratic Capitalism” (an abstracted version of contemporary American capitalism) and “Political Capitalism” (whose primary exemplar today is China).
[what is liberal meritocratic capitalism] Liberal meritocratic capitalism’s primary selling points are the respect for role of law, and the concept of fair play — the idea that everyone has an equal chance at success, based on their god-given talent and hard work. As Milanovic points out, perhaps the greatest threat to liberal meritocratic capitalism comes not from any direct challenge from political capitalism, but from the sense that many feel that the liberal meritocratic order has betrayed its promises. Widening inequality in the West, and the willingness and ability of the elite to game the system to benefit their friends and offspring, have led many to feel that the meritocracy is sham.
If liberal meritocratic capitalism was the world that Fukuyama suggested lay at the end of History, political capitalism is a form of market economy in which the government as opposed to civil society retains ultimate authority over major economic decision-making. While Milanovic names a variety of countries that fit his definition of political capitalism, even he concedes that China represents the “paradigmatic” case of political capitalism. According to Milanovic, there are three defining features of political capitalism. First, “a highly efficient and technocratically savvy bureaucracy“ (91)is put in charge of the system, with a mandate to realize high economic growth. Second, while capitalists and entrepreneurs may make huge amounts of money under political capitalism, “capitalists’ interests are never allowed to reign supreme, and the state retains significant autonomy to follow national-interests politics.” (92) Third, the way that the state retains ultimate control over the capitalists is because the “rule of law” as such is absent. While the system is meritocratic in that the bureaucrats are appointed and promoted based on objective criteria, the political echelon retains final and arbitrary power.
If liberal meritocratic capitalism has legitimation problems, so does political capitalism, albeit of very different sorts. On the one hand, there is an inherent tension (what Marxists would call a contradiction) between the need for technocratic, skilled elites, and the fact that this elite finds itself forced to “operate under conditions of selective application of the rule of law” (93). On the other hand, corruption tends to be endemic in such systems, in that the ultimately arbitrary power of the political elite provides innumerable opportunities for self-dealing. And this corruption is obviously corrosive to the legitimacy of the system, no matter how meritocratically the political leaders may have achieved the positions that enable them to enrich themselves and their family members. As Milanovic glosses it:
“[Under political capitalism] the elite should not be seen simply as bureaucracy, because the lines between where bureaucracy ends and business begins are blurred: individuals may move between these roles, or the different roles may be maintained by different individuals with the same ‘organization’ that has its ‘representatives’ dispersed, some in business, others in politics. Using a pejorative term, one could say that such organizations are not too dissimilar from mafias.” (94)
This description of how political capitalism operates in practice recalls the famous “hypothetical” offered by former CIA Directors James Woolsey in testimony in 1999 to the House Committee on Banking:
“If you should chance to strike up a conversation with an articulate, English-speaking Russian in, say, the restaurant of one of the luxury hotels along Lake Geneva, and he is wearing a $3,000 suit and a pair Gucci loafers, and he tells you that he is an executive in a Russian trading company and wants to talk to you about a joint venture, there are four possibilities. He may be what he says he is. Or he may be a Russian intelligence officer working under commercial cover. Or he may be a senior member of a Russian organized crime group. But the really interesting possibility is that he may well be all three -- and that none of the three institutions he works for has any problem with that arrangement.”
When politicians, pundits, and academics speak of a rising competition, or even a New Cold War, between the U.S. and China, one thing that is rarely explicitly asked is what exactly is being competed for. Likewise, when we speak of an “American” or “Western” model, in contrast to a “Chinese” one, it is worth asking what or who exactly is being modeled, and to what end. One of the virtues of Branko Milanovic’s new book, Capitalism, Alone is that it addresses these questions head-on and with useful insights and results. The answer, in short, is that the competition is to win the hearts and minds of the leaders of what used to be called the Third or developing world, and which is now generally referred to as the Global South.
A completion between economic models for the hearts and minds of the Global South is of course, hardly knew. That competition was, of course, at the heart of the Cold War — would the countries newly emerging from the yoke of colonialism choose to follow the “free enterprise” market proposed by the newly emergent capitalist hegemon in the United States, or would they instead choose to follow the Communist model proposed by the Soviet Union. Billions of dollars in foreign aid were distributed, vast propaganda efforts pursued, and numerous hot wars and insurgencies across Asia, Africa, and Latin America were fought from the late 1940s through the 1980s to determine which of these models would prove more attractive countries trying to figure out the best way to improve their economic conditions. See from this angle, the Cold War was above all an ideological competition over which would prove the superior model of “development” — communism or capitalism, and within each of those categories, which flavor — Soviet centralist or Maoist, autarkic-welfarist or neoliberal, and so on. As late as the early 1980s, it was not at all clear which of these models would prove most ultimately attractive.
By the late 1980s, however, the fog of ideological war seemed to lift, so much so, that Francis Fukuyama in January 1989 was able to declare with supreme confidence, that the war for the hearts and minds of not just the Global South, but the world over, had been won. It was clear, Fukuyama declared, that the one best system for promoting prosperity and freedom, was an export-oriented market based economy coupled to a more or less democratic political system. While obviously there were still other systems still in place across the globe, the ideological debate was over, Fukuyama declared. The End of History had arrived, embodied in the form of democratic capitalism shared in some broad sense by North Atlantic democracies. These systems had clearly demonstrated their superior capacity to deliver rising standards of living and peaceful, inclusive politics to such a degree that no right thinking political leader anywhere could possibly hope for anything else. The collapse of Eastern European communism that same Fall, the rapid embrace of capitalist “shock therapy” across the Soviet bloc, as well the a “third wave” of democratization across Latin America in the late 1980s and 1990s, made Fukuyama seem a prophet.
Of course, darker forces might have been detectable in that same moment. On June 4th, 1989, the Communist regime in Beijing signaled in the strongest possible terms that it was not about to embrace parliamentary democracy and liberalism as part of its economic “opening up” policy. The slaughter in Tienanmen Square that night indicated the Deng regime’s commitment to continued authoritarian rule no matter what. That same night, June 4th, 1989, the Ayatollah Ruhollah Khomenei died in Tehran. But his.long-anticipated passing, unlike that of General Francisco Franco in Spain a decade and a half earlier, did not herald a new liberal regime. Rather, the Iranian mullahocracy’s ability to move past their original charismatic leader’s death, signaled the successful institutionalization of an anti-liberal form of political practice.
Even with these two cases, the case for Fukuyama’s End of History thesis for a long time remained strong. What leader in the Global South, after all, looked in the 1990s to either China or Iran as a credible alternative developmental model to capitalism, liberal or otherwise? Certainly up to the Global Financial Crisis in 2008, the Western model of liberal, democratic, and allegedly meritocratic capitalism seemed virtually unchallenged.
It is now quite clear that the critical watershed in the legitimacy of the currently dominant model of capitalism in the West was the 2008 GFC and the Consequent Great Recession. This had three signal effects. First, the crisis inflicted a great of Economic hardship and financial trauma on vast swaths of the population, as millions of homes were foreclosed, unemployment spiked, and (especially in Europe) austerity was imposed. Second, whether fairly or not, the widespread view was that those responsible for the GFC, both in government and in the financial markets, were not held accountable, nor were serious reforms undertaken. Those who had enriched themselves during the bubble were allowed to walk away with fortunes largely intact. Third, while the lack of fiscal stimulus in Europe and North America led to something approximating a lost decade, with economic growth rates averaging barely half what they had in the decades before the crisis, China continued to grow at an enormous rate. [show chart of size of total economy in EU-25, USA, China since 2000.] If the proof of the economic pudding was in the eating, China certainly seemed to have been using a better cookbook over the last decade.
[transition sentences]
Part of the backlash in the West against China comes from the much-belated recognition that the Chinese were never planning on adopting Western ways. Despite the fact that the Chinese Communist Party had never been anything other than clear and direct that it would never brook any challenge to its political authority, many westerners continue to find evidence to maintain their fantasies, whether it was the New York Times reporting on game shows demonstrating pent up demand for democracy, [https://www.nytimes.com/2005/09/04/we...], or the Carlyle Group’s David Rubinstein claiming in 2012 that continued liberalization was “inevitable” [https://www.theatlantic.com/internati...] or various scholars who claimed As late as 2013 that China’s only choice was to “democratize or die.” [https://www.foreignaffairs.com/articl...] Even if the process was slow, many westerners found ways to convince themselves that at least the trends were “in the right direction” toward eventually Chinese political liberalization and convergence on the liberal democratic capitalism of the West. The old master narrative of modernization-as-convergence convinced many in the West that time was on their side.
Historians in the future will debate where the turning point was in the West’s attitude toward China. There will be an inevitable tendency to credit (or blame) President Trump, but in my view the decisive turning point was one that occurred almost simultaneous with Trump’s inauguration, namely China’s announcement in 2017 that it was abolishing term limits for the President of the Republic (which had previously been limited to two terms, a convention both Presidents Hu Jintao and Jiang Zemin had respected. This declaration effectively made President Xi Jingpeng president for life.
This announcement reverberated through the foreign policy establishment of Washington, DC to a degree that is hard to exaggerate. While internal Chinese factional politics have always been opaque to outsiders, here was a clear, simply marker that China was not only not moving (however slowly) towards democracy and generalized convergence with the Western model, but if anything was moving the opposite direction. Although the evidence had been there since the start of Xi’s presidency for anyone paying close attention, this significance of this announcement was comprehensible to even people with little or no knowledge of China. What the Chinese almost certainly regarded as a matter of internal politics and governance, as such of no great relevance or interested to foreigners, in fact was an earthquake in Washington, as it blew a waterline hole in any effort to maintain the narrative of slow if inexorable Chinese progress towards democracy and generalized convergence with the West.
Trump’s Sinophobic rhetoric, in other words, caught a fundamental shift in the Zeitgeist in Washington that had little if anything to do with his own uninformed assessment of the situation in China (which was more a matter of longstanding prejudice than any careful assessment). Indeed, one of the few topics on which there has been almost complete bipartisan consensus in Washington during the Trump years has been toward taking a harder line on a China which now everyone recognizes has no intention (and indeed, never did) of trying to democratize or otherwise emulate the American or Western political system. This bipartisan shift may have coincided with Trump’s arrival but the very fact that it is bipartisan demonstrates that it was not Trump who created it. Like a rooster at dawn, his crowing simply called forth the inevitably rising sun.
What Americans of both parties have belatedly and angrily realized is that we find ourselves locked in a profound struggle not with some communist power slowly democratizing, but rather with a rival brand of authoritarian capitalism, firm in its own vision of politics.
***
Capitalism, Alone begins from this point of departure: Capitalism has conquered the world, operating everywhere, as Milanovic puts it, “according to the same economic principles: production organized for profit using legally free wage labor and mostly privately owned capital, with decentralized coordination” (2). And yet, it turns out that this conquest has not ended geopolitical competition for the hearts and minds of the global south about the proper developmental model! While Communism may have receded as a credible alternative to capitalism, Milanovic documents how there have now emerged two (broadly stylized) ideological alternatives within capitalism, which he refers to the “Liberal Meritocratic Capitalism” (an abstracted version of contemporary American capitalism) and “Political Capitalism” (whose primary exemplar today is China).
[what is liberal meritocratic capitalism] Liberal meritocratic capitalism’s primary selling points are the respect for role of law, and the concept of fair play — the idea that everyone has an equal chance at success, based on their god-given talent and hard work. As Milanovic points out, perhaps the greatest threat to liberal meritocratic capitalism comes not from any direct challenge from political capitalism, but from the sense that many feel that the liberal meritocratic order has betrayed its promises. Widening inequality in the West, and the willingness and ability of the elite to game the system to benefit their friends and offspring, have led many to feel that the meritocracy is sham.
If liberal meritocratic capitalism was the world that Fukuyama suggested lay at the end of History, political capitalism is a form of market economy in which the government as opposed to civil society retains ultimate authority over major economic decision-making. While Milanovic names a variety of countries that fit his definition of political capitalism, even he concedes that China represents the “paradigmatic” case of political capitalism. According to Milanovic, there are three defining features of political capitalism. First, “a highly efficient and technocratically savvy bureaucracy“ (91)is put in charge of the system, with a mandate to realize high economic growth. Second, while capitalists and entrepreneurs may make huge amounts of money under political capitalism, “capitalists’ interests are never allowed to reign supreme, and the state retains significant autonomy to follow national-interests politics.” (92) Third, the way that the state retains ultimate control over the capitalists is because the “rule of law” as such is absent. While the system is meritocratic in that the bureaucrats are appointed and promoted based on objective criteria, the political echelon retains final and arbitrary power.
If liberal meritocratic capitalism has legitimation problems, so does political capitalism, albeit of very different sorts. On the one hand, there is an inherent tension (what Marxists would call a contradiction) between the need for technocratic, skilled elites, and the fact that this elite finds itself forced to “operate under conditions of selective application of the rule of law” (93). On the other hand, corruption tends to be endemic in such systems, in that the ultimately arbitrary power of the political elite provides innumerable opportunities for self-dealing. And this corruption is obviously corrosive to the legitimacy of the system, no matter how meritocratically the political leaders may have achieved the positions that enable them to enrich themselves and their family members. As Milanovic glosses it:
“[Under political capitalism] the elite should not be seen simply as bureaucracy, because the lines between where bureaucracy ends and business begins are blurred: individuals may move between these roles, or the different roles may be maintained by different individuals with the same ‘organization’ that has its ‘representatives’ dispersed, some in business, others in politics. Using a pejorative term, one could say that such organizations are not too dissimilar from mafias.” (94)
This description of how political capitalism operates in practice recalls the famous “hypothetical” offered by former CIA Directors James Woolsey in testimony in 1999 to the House Committee on Banking:
“If you should chance to strike up a conversation with an articulate, English-speaking Russian in, say, the restaurant of one of the luxury hotels along Lake Geneva, and he is wearing a $3,000 suit and a pair Gucci loafers, and he tells you that he is an executive in a Russian trading company and wants to talk to you about a joint venture, there are four possibilities. He may be what he says he is. Or he may be a Russian intelligence officer working under commercial cover. Or he may be a senior member of a Russian organized crime group. But the really interesting possibility is that he may well be all three -- and that none of the three institutions he works for has any problem with that arrangement.”
May 31, 2022
There is only one world order.
Milanovic offers a fairly balanced analysis of the rise and then fragmenting of capitalism into several systems that currently control how the world operates. The author asserts that is now beyond doubt that previous economic models such as communism aren't only dead but are not what their proponents believed it would be: a stepping stone from capitalism into utopia. Communism as a world order is dead. That's hard to refute. And it almost seems that communism is actually a stepping stone to globalized capitalism. But it's not like this was all inevitable. The U.S. shrewdly (as in, understanding its own interests) waged a moral and physical war against communism, both directly and covertly, and emerged extremely successful. Now, none of this was really morally justified and the U.S. committed grave war crimes, in my opinion, to achieve this but I suppose this is a 'the victor writes the history' situation. Many Americans endorse the nationalistic propaganda that America goes to war over objective principles over the reality that America is a pointillistic empire that acts only in self interest. All of this is demonstrably true, but I digress.
So for better or worse, we're stuck with globalized capitalism that has fractured into several different systems. The author argues that communism is de facto nationalism and that capitalism naturally expands. It's hard to argue with this but again, the victors design what may appear to be a 'natural system'. The tendency to seek out one's own self interest may just be a socialization of a capitalistic society, a point that the author doesn't really touch on. One clear benefit the author argues for communism or socialism is that homogenous societies tend to to better with social welfare because there is communal by-in if those like you are recipients of welfare. This is a particularly bleak if not accurate portrayal of the circumstances of how humans think.
Two of the capitalistic systems that the author focuses on are the America meritocratic liberal capitalism and the political, or state, capital system like China. American-style tends to be oligarcic, plutocratic and lends to an elite aristocracy because of frank corporate self-interest that enmeshes itself with the state. America clearly finds itself in these circumstances where state-corporate collusion rules the land. In 2016, the top 1% of the 1% contributed 40% to total American political funds. China on the other hand employs state capitalism, an efficient bureaucracy while giving regulated latitude to corporations. The law is used selectively by the state in an arbitrary use of power which naturally breeds corruption. There isn't really an elite class that vies for political power because it's not allowed. Rather you have state officials who use corruption as a feature and engender efficient markets because of direct control. And China has clearly been successful boasting to be the most economically successfully country in the last 50 years with broad social mobility.
In the end, it's all global for me. Capitalism clearly is the world order, of this there is no doubt. Globalization allows multi-nationals to dodge taxes, outsource labor, inflict mass dispossession, commoditize the carceral state, squeeze wages and concentrate wealth. The current state is a total mess in need of serious intervention with at least some return to public and labor ownership What the author misses for me is that corruption is endemic to all of capitalism when it is unregulated or when these is regulatory capture which happens literally everywhere.
This was a good read.
Milanovic offers a fairly balanced analysis of the rise and then fragmenting of capitalism into several systems that currently control how the world operates. The author asserts that is now beyond doubt that previous economic models such as communism aren't only dead but are not what their proponents believed it would be: a stepping stone from capitalism into utopia. Communism as a world order is dead. That's hard to refute. And it almost seems that communism is actually a stepping stone to globalized capitalism. But it's not like this was all inevitable. The U.S. shrewdly (as in, understanding its own interests) waged a moral and physical war against communism, both directly and covertly, and emerged extremely successful. Now, none of this was really morally justified and the U.S. committed grave war crimes, in my opinion, to achieve this but I suppose this is a 'the victor writes the history' situation. Many Americans endorse the nationalistic propaganda that America goes to war over objective principles over the reality that America is a pointillistic empire that acts only in self interest. All of this is demonstrably true, but I digress.
So for better or worse, we're stuck with globalized capitalism that has fractured into several different systems. The author argues that communism is de facto nationalism and that capitalism naturally expands. It's hard to argue with this but again, the victors design what may appear to be a 'natural system'. The tendency to seek out one's own self interest may just be a socialization of a capitalistic society, a point that the author doesn't really touch on. One clear benefit the author argues for communism or socialism is that homogenous societies tend to to better with social welfare because there is communal by-in if those like you are recipients of welfare. This is a particularly bleak if not accurate portrayal of the circumstances of how humans think.
Two of the capitalistic systems that the author focuses on are the America meritocratic liberal capitalism and the political, or state, capital system like China. American-style tends to be oligarcic, plutocratic and lends to an elite aristocracy because of frank corporate self-interest that enmeshes itself with the state. America clearly finds itself in these circumstances where state-corporate collusion rules the land. In 2016, the top 1% of the 1% contributed 40% to total American political funds. China on the other hand employs state capitalism, an efficient bureaucracy while giving regulated latitude to corporations. The law is used selectively by the state in an arbitrary use of power which naturally breeds corruption. There isn't really an elite class that vies for political power because it's not allowed. Rather you have state officials who use corruption as a feature and engender efficient markets because of direct control. And China has clearly been successful boasting to be the most economically successfully country in the last 50 years with broad social mobility.
In the end, it's all global for me. Capitalism clearly is the world order, of this there is no doubt. Globalization allows multi-nationals to dodge taxes, outsource labor, inflict mass dispossession, commoditize the carceral state, squeeze wages and concentrate wealth. The current state is a total mess in need of serious intervention with at least some return to public and labor ownership What the author misses for me is that corruption is endemic to all of capitalism when it is unregulated or when these is regulatory capture which happens literally everywhere.
This was a good read.
November 8, 2020
É difícil exagerar a importância de um economista como o Branko — nascido e criado na ex-URSS — para o debate sobre economia global. Ao não compartilhar da fantasia moral que povoou a mente de muitos americanos em relação à guerra fria, Branko tem a capacidade de enxergar para além das obviedades e produzir insights verdadeiramente originais.
Esse livro argumenta que o capitalismo é único sistema econômico no mundo no século XXI, mas foi criado a partir de dois processos históricos diferentes. Em alguns países, as instituições que viabilizaram a mercantilização privada do capital e trabalho foram criadas a partir de revoluções burguesas (e.g., Europa Ocidental), enquanto em outros países essas instituições passaram a existir depois de revoluções comunistas (e.g., China). Embora os dois movimentos históricos tenham gerado um sistema econômico que é essencialmente capitalista, diferenças importantes permaneceram. O "capitalismo liberal", produzido pelas revoluções burguesas, é baseado no estado de direito e na democracia liberal. Já o "capitalismo político", produzido pelas revoluções comunistas, é caracterizado pelo autoritarismo e maior corrupção, mas elevadas taxas de crescimento.
Essa linha de argumentação — i.e., a ideia de que as revoluções comunistas são o equivalente funcional em economias atrasadas das revoluções burguesas — é o principal insight do livro na minha opinião. Aqui Branko de fato apresenta uma visão interessante do legado histórico do comunismo em economias atrasadas. Da forma como percebo, esse legado incluí:
1) Eliminação de elites extrativas tradicionais
2) Massificação da educação
3) Expansão de infraestrutura
4) Autoritarismo
5) Aumento da renda per capita
Além desses pontos, creio que deveriam ser considerados os aspectos como direitos de mulheres e minorias étnicas em países comunistas, além da relação da URSS com os movimentos de liberação nacional africanos e com a social democracia europeia. Esses pontos, porém, estão fora do escopo do livro.
Recomendo esse livro para quem quiser entender com mais clareza a classificação do Branko sobre tipos de capitalismo. O livro também tem uma parte que discute mobilidade global de trabalho e convergência de renda. Achei essa parte menos interessante, mas pode interessar outras pessoas. Por fim, o autor sugere formas de organização econômica que podem representar uma transcedência das opções atuais. Essa parte é legal também.
Em relação a dados, se você já leu o livro do Pikety e o livro do Branko sobre desigualdade global, vai encontrar pouca novidade neste livro.
Esse livro argumenta que o capitalismo é único sistema econômico no mundo no século XXI, mas foi criado a partir de dois processos históricos diferentes. Em alguns países, as instituições que viabilizaram a mercantilização privada do capital e trabalho foram criadas a partir de revoluções burguesas (e.g., Europa Ocidental), enquanto em outros países essas instituições passaram a existir depois de revoluções comunistas (e.g., China). Embora os dois movimentos históricos tenham gerado um sistema econômico que é essencialmente capitalista, diferenças importantes permaneceram. O "capitalismo liberal", produzido pelas revoluções burguesas, é baseado no estado de direito e na democracia liberal. Já o "capitalismo político", produzido pelas revoluções comunistas, é caracterizado pelo autoritarismo e maior corrupção, mas elevadas taxas de crescimento.
Essa linha de argumentação — i.e., a ideia de que as revoluções comunistas são o equivalente funcional em economias atrasadas das revoluções burguesas — é o principal insight do livro na minha opinião. Aqui Branko de fato apresenta uma visão interessante do legado histórico do comunismo em economias atrasadas. Da forma como percebo, esse legado incluí:
1) Eliminação de elites extrativas tradicionais
2) Massificação da educação
3) Expansão de infraestrutura
4) Autoritarismo
5) Aumento da renda per capita
Além desses pontos, creio que deveriam ser considerados os aspectos como direitos de mulheres e minorias étnicas em países comunistas, além da relação da URSS com os movimentos de liberação nacional africanos e com a social democracia europeia. Esses pontos, porém, estão fora do escopo do livro.
Recomendo esse livro para quem quiser entender com mais clareza a classificação do Branko sobre tipos de capitalismo. O livro também tem uma parte que discute mobilidade global de trabalho e convergência de renda. Achei essa parte menos interessante, mas pode interessar outras pessoas. Por fim, o autor sugere formas de organização econômica que podem representar uma transcedência das opções atuais. Essa parte é legal também.
Em relação a dados, se você já leu o livro do Pikety e o livro do Branko sobre desigualdade global, vai encontrar pouca novidade neste livro.
October 31, 2022
In describing Henry Sidgwick’s The Methods of Ethics, Derek Parfit writes: “There are some books that are greater achievements, such as Plato’s Republic and Aristotle’s Ethics. But Sidgwick’s book contains the largest number of true and important claims.” That’s how I feel about this book. It isn’t the most exciting reading, nor does it have any grand pronouncements, but it has a very large number of true and important claims.
Want to read
October 17, 2019Milanovic is one of the leading authorities when it comes to looking at inequality from a historical perspective. A must read if you are somewhat interested in the topic itself since digging deep and understanding historical roots of problems always proves to be very fruitful and eye-opening, forcing one to see things from a different angle.
Book contains a great discussion of the evolution of global inequality, the decline of the labour share in income, etc...
Very non-convential take on adverse migrant selection (sorry for the econ jargon, but he uses it himself) that has yet to be proven empirically (states with large and inclusive welfare systems attract migrants that expect themselves to be rather on the lower end of the skill/ability distribution).
Also his take on the historical role of communism is not very "mainstream" (as we would expect from sharp and critical thinkers like him). In a nutshell he claims that socialism was the equivalent to the rise of the bourgeoisie in the west. See the discussion by the amazing Pseudoerasmus for more details: https://twitter.com/pseudoerasmus/sta... (one page version here: https://threadreaderapp.com/thread/11...)
Book contains a great discussion of the evolution of global inequality, the decline of the labour share in income, etc...
Very non-convential take on adverse migrant selection (sorry for the econ jargon, but he uses it himself) that has yet to be proven empirically (states with large and inclusive welfare systems attract migrants that expect themselves to be rather on the lower end of the skill/ability distribution).
Also his take on the historical role of communism is not very "mainstream" (as we would expect from sharp and critical thinkers like him). In a nutshell he claims that socialism was the equivalent to the rise of the bourgeoisie in the west. See the discussion by the amazing Pseudoerasmus for more details: https://twitter.com/pseudoerasmus/sta... (one page version here: https://threadreaderapp.com/thread/11...)
January 10, 2020
I had heard about Milanovic for his work on global inequality, which I will now get back to and read. He is an economist who worked at the World Bank and has held academic positions at schools in Europe and the US. He is also clearly open to a variety of economic perspectives. While the book does present charts and data, it is straightforward and relatively easy to follow.
This is a book about political economy in the current world order - one in which alternative economic systems to capitalism have a greatly reduced presence if any and in which capitalism in some form now is the system in which the vast majority of the world population lives. The book examines how capitalism as a political-economic system will develop in a world without any competitors. This is a trick premise, however, since capitalism itself comes in different variants that compete with each other. The US-Chinese relationship is the most recent example of this.
Milanovic’s book fits into a large literature that has been developing since Soviet Communism were out of business while China has prospered. Add in theoretical developments like the work of Piketty and the general confusion about the 2008 financial crisis and the ensuing Great Recession, and there is much to talk about regarding the future of capitalism.
I do not see the book as breaking new ground but Milanovic is smart about the ground that gets covered. For example, the idea of homo pleutia - economic actors that are high in both capital and labor value - is intriguing in its contributions to inequality. To take another example, the competition between political capitalism (for example China) and liberal meritocratic capitalism (for example the US) is well done and thoughtful. Even the discussion of universal basic income (UBI) proposals towards the end of the book is insightful. Once one is familiar with the political economy framework that Milanovic employs, a wide range of issues to be covered, compared, and contrasted so that the book packs good value into its relatively short length.
There are lots of good books in this area, but this one is definitely worth reading.
This is a book about political economy in the current world order - one in which alternative economic systems to capitalism have a greatly reduced presence if any and in which capitalism in some form now is the system in which the vast majority of the world population lives. The book examines how capitalism as a political-economic system will develop in a world without any competitors. This is a trick premise, however, since capitalism itself comes in different variants that compete with each other. The US-Chinese relationship is the most recent example of this.
Milanovic’s book fits into a large literature that has been developing since Soviet Communism were out of business while China has prospered. Add in theoretical developments like the work of Piketty and the general confusion about the 2008 financial crisis and the ensuing Great Recession, and there is much to talk about regarding the future of capitalism.
I do not see the book as breaking new ground but Milanovic is smart about the ground that gets covered. For example, the idea of homo pleutia - economic actors that are high in both capital and labor value - is intriguing in its contributions to inequality. To take another example, the competition between political capitalism (for example China) and liberal meritocratic capitalism (for example the US) is well done and thoughtful. Even the discussion of universal basic income (UBI) proposals towards the end of the book is insightful. Once one is familiar with the political economy framework that Milanovic employs, a wide range of issues to be covered, compared, and contrasted so that the book packs good value into its relatively short length.
There are lots of good books in this area, but this one is definitely worth reading.
June 13, 2020
I am a long-time fan of Branko's* blog, where he talks about all things macro-economics, but with a keen eye on history, politics, philosophy, and human behavior. I would go as far as to say that his epistemic pragmatism, albeit from a socialist perspective, may be the exception to how a lot of policy conversation unfolds on Twitter or, I daresay, academia.
In his new book, which features some material he has previously blogged about, he starts with the assertion that we are all capitalists now and have been so for a while (yes, even China), and perhaps, more damningly, it has seeped into our behavior patterns and preferences as well. Since answering the question of how we reached the present econo-historical moment is a quixotic quest, Branko analyzes the two kinds of capitalism -- liberal meritocratic and political -- that have come to dominate the world in the post WW-II era, judging them by their track record on delivering their stated promise of justice (per Rawls) and shared prosperity (per Marx via Mao) respectively. To that end he makes several key assumptions for contrasting the different types of capitalism: a) US and China may be used as ideal-type examples; b) macroeconomic parameters such as inequality, intergenerational mobility, and corruption are suitable tracers of its defining characteristics.
After introducing the main contents of either form of capitalism, Branko makes the case for why capitalism is the only game in town and its success is inextricably linked to globalization,* or as he frames it: the free movement of capital and labor across national borders. While the free movement of capital has been extensively discussed in the literature, migration, both voluntary and coerced, remains a thorny issue. To situate the conversation about migration in the existing language of welfare state and income redistribution, Branko invokes the notion of a citizenship premium (or rent) and penalty, where he theorizes that from a purely profit-maximizing point of view, there is a tendency for companies to avoid paying the citizenship rent by sourcing cheaper labor across national borders. Equivalently, there is a desire among citizens of poorer countries to avoid paying the penalty and move in search of better employment opportunities. If, as he defines it, citizenship is seen as a joint monopoly exercised by a group of people with similar legal or political characteristics that gives rise to a citizenship rent, we can explain much of the populist anti-immigrant hysteria bubbling in many Western democracies. With this in mind, he proposes a separate class of citizenship that accords similar job-related rights to both citizens and migrants, but no civic rights such as welfare and voting to the latter. I won’t even go into the details of how this violates all legal, political, and philosophical precedents, but it should definitely alert you to the dangers of shoddy, or more generously unidimensional, policy making — particularly ones that don’t even address the aging population of many developed countries. To Branko’s credit, he does address how the disadvantages of his proposal should be weighed against other unsuccessful attempts at convergence of incomes across countries such as aid or global governance.
The final chapter regarding the fundamental amorality at the heart of capitalism is something that I have been thinking independently for a while now. Since acquiring wealth (privately or through collaborative funding in academia) is seen as the only robust form of success in a capitalist world, any attempts to demean avarice (think Kardashians) is seen as an attempt at limiting personal freedom or a misplaced expression of aesthetic judgment. Moreover, the role previously played by religion in fostering an ethic of personal behavior, particularly in the wealthy, which held the social contract in place, is now fraying at the edges. The prognosis is even more disturbing if you consider the judiciary, one of the pillars of government in liberal meritocratic capitalism. Short of reorienting our moral constitutional values, it seems increasingly risky to rely on the good judgement of politically appointed judges for limiting exploitative behavior by the powerful. In fact, according to Branko, there is a tacit contract between the rich of the developed countries and the poor of developing countries, which adds another layer of complexity to any discussion of domestic reforms in wealthy economies.
Probably the most important insight in this book is how with its increased mobility in a technological world, labor is on similar footing as capital in the purely economic sense. However, the asymmetric political and social power associated with capital can only be moderated by enhancing the bargaining power of labor. Of course, the values governing labor organization must be broadened to include anti-racist, feminist principles, and shouldn’t be an exercise in a Marx reading group circle jerk, i.e.: pining for the canonical socialist revolution is foolhardy, the future is yet to be written.
*I consider myself to be on a first-name basis with writers whose views and opinions I vigorously agree with, or alternatively those who have shaped my views on a certain topic; the latter often resulting in the former.
*Note: I am writing this on June 10th, 2020, during the day-long strike to reflect on various ways in which I can advocate and agitate for change in academia and beyond. It’s becoming clearer to me that in the post-medieval world, globalization in various forms — exploration, imperialism, slave trade, colonization — has touched all our lives, although people of color, but especially black folx have borne the brunt of its most atrocious tendencies.
In his new book, which features some material he has previously blogged about, he starts with the assertion that we are all capitalists now and have been so for a while (yes, even China), and perhaps, more damningly, it has seeped into our behavior patterns and preferences as well. Since answering the question of how we reached the present econo-historical moment is a quixotic quest, Branko analyzes the two kinds of capitalism -- liberal meritocratic and political -- that have come to dominate the world in the post WW-II era, judging them by their track record on delivering their stated promise of justice (per Rawls) and shared prosperity (per Marx via Mao) respectively. To that end he makes several key assumptions for contrasting the different types of capitalism: a) US and China may be used as ideal-type examples; b) macroeconomic parameters such as inequality, intergenerational mobility, and corruption are suitable tracers of its defining characteristics.
After introducing the main contents of either form of capitalism, Branko makes the case for why capitalism is the only game in town and its success is inextricably linked to globalization,* or as he frames it: the free movement of capital and labor across national borders. While the free movement of capital has been extensively discussed in the literature, migration, both voluntary and coerced, remains a thorny issue. To situate the conversation about migration in the existing language of welfare state and income redistribution, Branko invokes the notion of a citizenship premium (or rent) and penalty, where he theorizes that from a purely profit-maximizing point of view, there is a tendency for companies to avoid paying the citizenship rent by sourcing cheaper labor across national borders. Equivalently, there is a desire among citizens of poorer countries to avoid paying the penalty and move in search of better employment opportunities. If, as he defines it, citizenship is seen as a joint monopoly exercised by a group of people with similar legal or political characteristics that gives rise to a citizenship rent, we can explain much of the populist anti-immigrant hysteria bubbling in many Western democracies. With this in mind, he proposes a separate class of citizenship that accords similar job-related rights to both citizens and migrants, but no civic rights such as welfare and voting to the latter. I won’t even go into the details of how this violates all legal, political, and philosophical precedents, but it should definitely alert you to the dangers of shoddy, or more generously unidimensional, policy making — particularly ones that don’t even address the aging population of many developed countries. To Branko’s credit, he does address how the disadvantages of his proposal should be weighed against other unsuccessful attempts at convergence of incomes across countries such as aid or global governance.
The final chapter regarding the fundamental amorality at the heart of capitalism is something that I have been thinking independently for a while now. Since acquiring wealth (privately or through collaborative funding in academia) is seen as the only robust form of success in a capitalist world, any attempts to demean avarice (think Kardashians) is seen as an attempt at limiting personal freedom or a misplaced expression of aesthetic judgment. Moreover, the role previously played by religion in fostering an ethic of personal behavior, particularly in the wealthy, which held the social contract in place, is now fraying at the edges. The prognosis is even more disturbing if you consider the judiciary, one of the pillars of government in liberal meritocratic capitalism. Short of reorienting our moral constitutional values, it seems increasingly risky to rely on the good judgement of politically appointed judges for limiting exploitative behavior by the powerful. In fact, according to Branko, there is a tacit contract between the rich of the developed countries and the poor of developing countries, which adds another layer of complexity to any discussion of domestic reforms in wealthy economies.
Probably the most important insight in this book is how with its increased mobility in a technological world, labor is on similar footing as capital in the purely economic sense. However, the asymmetric political and social power associated with capital can only be moderated by enhancing the bargaining power of labor. Of course, the values governing labor organization must be broadened to include anti-racist, feminist principles, and shouldn’t be an exercise in a Marx reading group circle jerk, i.e.: pining for the canonical socialist revolution is foolhardy, the future is yet to be written.
*I consider myself to be on a first-name basis with writers whose views and opinions I vigorously agree with, or alternatively those who have shaped my views on a certain topic; the latter often resulting in the former.
*Note: I am writing this on June 10th, 2020, during the day-long strike to reflect on various ways in which I can advocate and agitate for change in academia and beyond. It’s becoming clearer to me that in the post-medieval world, globalization in various forms — exploration, imperialism, slave trade, colonization — has touched all our lives, although people of color, but especially black folx have borne the brunt of its most atrocious tendencies.
Read
January 3, 2020Some strongly asserted, challenging, thought-provoking, provocative, even controversial, conclusions about capitalism from the previous lead economist of the World Bank. This book is quite thought-provoking and non-coddling, and make for necessary reading, but I feel like a problem with this book, some of whose conclusions may be not widely shared, is that it should amass strong back-up from mountains of data and study, instead of paragraphs of reasoning which may be faulty, and partial to bias that could be revealed with a little bit of research. for example, the author unreservedly praises China's political capitalism and Belt-and-Road-initiative of providing funding and intervention in African and Asian nations, ignoring concerns that China actually set these countries up in a debt trap where China's payback is political and resource control of indebted countries.
Some exemplary quotes that give the thrust and flavor of this book:
1.""Large welfare states face 2 types of adverse selection... polarization between the poor and rich encourage the private provision of social services and leads the rich to opt-out of government-provided services. This leaves in the system only those whose premiums may be unaffordably high, and many of them leave the system altogether. [Second], adverse selection works by bringing in low-skilled migrants-- a process that leads to the opting out of the native-born.
"There is no easy solution... 2 major initiatives, however, would make a significant difference:
a) The pursuit of policies that would lead toward equalization of endowments, sp taxation of current income could be reduced and the size of the welfare state brought down
"b) a fundamental change in the nature of migration, so that it is more akin to the temporary movement of labor that does not come with automatic access to citizenship and the gamut of welfare benefits"
"2. Bill Clinton and Barack Obama, and Margaret Thatcher and John Major, all came from modest backgrounds but quite effectively supported the interests of the top 1 percent. Where does the influence of the rich come from? It is quite clear: the funding of political parties and electoral campaigns."
3."The ruling class controls most of the financial capital of the country;
"The ruling class is highly educated
"The elite invest heavily in their progeny and in political control
"the objective of the investment in political control is done not only to improve the contemporaneous economic power of the ruling class, but ensure its domination over time
"members of the ruling class are hardworking and have an amoral outlook on life"
"4. Communism is a social system that enabled backward and colonized societies to abolish feudalism, regain economic and political independence, and build indigenous capitalism""
Some exemplary quotes that give the thrust and flavor of this book:
1.""Large welfare states face 2 types of adverse selection... polarization between the poor and rich encourage the private provision of social services and leads the rich to opt-out of government-provided services. This leaves in the system only those whose premiums may be unaffordably high, and many of them leave the system altogether. [Second], adverse selection works by bringing in low-skilled migrants-- a process that leads to the opting out of the native-born.
"There is no easy solution... 2 major initiatives, however, would make a significant difference:
a) The pursuit of policies that would lead toward equalization of endowments, sp taxation of current income could be reduced and the size of the welfare state brought down
"b) a fundamental change in the nature of migration, so that it is more akin to the temporary movement of labor that does not come with automatic access to citizenship and the gamut of welfare benefits"
"2. Bill Clinton and Barack Obama, and Margaret Thatcher and John Major, all came from modest backgrounds but quite effectively supported the interests of the top 1 percent. Where does the influence of the rich come from? It is quite clear: the funding of political parties and electoral campaigns."
3."The ruling class controls most of the financial capital of the country;
"The ruling class is highly educated
"The elite invest heavily in their progeny and in political control
"the objective of the investment in political control is done not only to improve the contemporaneous economic power of the ruling class, but ensure its domination over time
"members of the ruling class are hardworking and have an amoral outlook on life"
"4. Communism is a social system that enabled backward and colonized societies to abolish feudalism, regain economic and political independence, and build indigenous capitalism""
May 30, 2022
"Capitalismo, a solas: el futuro del sistema que domina al mundo" es un libro que aborda el estado actual del sistema económico hegemónico, el capitalismo, a nivel global.
En este trabajo, Milanovic parte de la hipótesis de que el capitalismo es algo ubicuo y omnipresente hasta en el grado más íntimo de la existencia humana pero, a la vez, no tiene nada en frente a lo que oponerse.
No se trata de un contexto en el cual haya un sistema alternativo en la vereda de enfrente, como fue el caso del comunismo o el socialismo realmente existente a lo largo del siglo XX.
Sin embargo, el economista serbio habla de que, en la actualidad y a lo largo de los últimas décadas posteriores a la caída del espacio soviético y los socialismos realmente existentes, se desarrolló una dinámica caracterizada por distintos subsistemas capitalistas que son capitalistas, sí, pero difieren en elementos al interior de sus respectiva constitución y organización. Estos subsistemas son el capitalismo occidental "meritocrático" y el capitalismo autoritario o "político".
Capitalismo occidental o "meritocrático"
Por un lado está el capitalismo occidental (o meritocrático), que es dominante en Estados Unidos, Canadá, la mayor parte de Europa, Japón, India, Australia y la mayoría de los países latinoamericanos, el cual se caracteriza por un predominio del sector privado en la economía con diferentes grados de intervención del sector público que no resultan fundamentales ni estructurantes y varían de acuerdo a la gravitación del estado en cada una de las economías así como la participación de otros actores como sindicatos y movimientos de la sociedad civil en general.
La variación de la participación estatal en este tipo de capitalismo oscila dependiendo del grado de persistencia de elementos ligados a los estados de bienestar heredados del capitalismo de tipo socialdemócrata, que fue el dominante entre la mitad y los años setenta del siglo XX en estos lugares. Este es especialmente cierto en el caso de los países europeos occidentales, Estados Unidos y Canadá. Pero lo cierto es que, en la actualidad el capitalismo dominante, de tipo neoliberal, tiene al estado como un posibiltador de la reproducción del mundo de los negocios y la renta del capital por sobre la generada por el trabajo.
Capitalismo "político"
Luego, Milanovic habla del otro tipo de capitalismo dominante en el mundo actual, que es el capitalismo político o autoritario, el cual se trata de la variante en la cual el estado tiene un papel más interventor y, si bien asigna un gran espacio a los capitalistas para el desarrollo del mercado, marca límites respecto a la intromisión de los capitalistas en los asuntos de la política, dominada por un poder burocrático que brinda mecanismos de protección e inclusión, aunque a la vez también coerciona y excluye disidencias al no tener contralor en una sociedad civil cooptada por el partido dominante enraizado y simbiotizado con el estado.
Este mismo poder estatal, a la vez, participa sin fronteras claras en el desarrollo capitalista. No hay un firme imperio de la ley así como tampoco de propiedad. Una empresa pueda albergar dentro de sí misma elementos de la propiedad privada, pública y social.
De esta manera, el capitalismo político es la continuación de los socialismos realmente existentes por otros medios, de los estados comunistas como la República Popular China, que conserva su régimen de partido único pero abrió su economía al capitalismo a partir de los años ochenta, y otros en Asia que siguieron un sendero similar. Lo mismo sucede con algunos estados africanos que, en su momento, desarrollaron una especie socialismo realmente existente con elementos nacionales y populares y hoy también con países del llamado capitalismo político.
Sin embargo, este economista no solo pone como ejemplo de estados capitalistas políticos solo a los que vienen del comunismo sino también a países como Singapur, caracterizados por regímenes de partido único pero de tipo derechista.
El aporte del comunismo o socialismo realmente existente
Para Milanovic, el comunismo, contrario a los postulados del marxismo, no existe más y, al menos, no tiene posibilidad de existir en el estado actual del capitalismo, pero sí cumplió una función esencial como desarrollador del capitalismo en la periferia. Y pone como ejemplo una vez más a China y los países asiáticos y africanos en los cuales el desarrollo de variantes indígenas de comunismo, propiciadas en su momento por la URSS, que, paradójicamente, dieron lugar a versiones autóctonas de capitalismo que fueron mucho más allá, en cuanto a su potencial transformador que tuvo en esas sociedades premodernas, que los intentos realizados por los países capitalistas occidentales de los cuales fueron colonias o semicolonias saqueadas y expoliadas por ellos.
Asimismo, mientras el socialismo realmente existente tuvo lugar, asegura el economista, condicionó al capitalismo a adoptar instituciones socialistas en el marco de una configuración hacia la socialdemocracia tanto en sus variantes desarrolladas como, en algunos casos, de países en vías de desarrollo.
Renta de capital y renta de trabajo
Otro aspecto interesante que aborda este libro es la fragmentación y desigualdad existente en el mundo mismo del trabajo, en el que los trabajadores más calificados ganan sueldos altos y pueden acceder también, con esa masa salarial que reciben, a la renta de capital, mientras que quienes acaparan la mayor renta de capital, en la plutocracia, también absorben renta generada por trabajo. Un híbrido que no hace más que acentuar la concentración de recursos y la consecuente mayor desigualdad económica existente, algo que s inherente tanto al capitalismo occidental de tipo "meritocrático" como el capitalismo político o autoritario.
El futuro: entre una mayor atomización y la posibilidad de un capitalismo "popular"
Cuando se pone a hablar sobre el futuro, Milanovic profundiza su tono pesimista y cínico advirtiendo sobre una mayor atomización social provocada por el capitalismo en el que la tendencia hacia el individualismo podría acentuarse todavía más, dejando paso para que el interés capitalista siga conquistando nuevas esferas de la intimidad por medio de la precarización laboral y la creación de nuevas necesidades. "Cuando lleguemos al punto en el que todos nos hayamos convertido en meros agentes de pactos ocasionales, ya no habrá lugar para ninguna amabilidad gratuita. El punto final sería una utopía de riqueza y una distopia de las relaciones personales".
No obstante, aún dentro de este capitalismo que para el autor no muestra signos de agotamiento y en el que, de cara al futuro, todo parece desolador y deshumanizante, pueden darse giros hacia una mayor democratización en el marco de un hipotético capitalismo popular en el que la renta generada por el trabajo tenga mayor peso que la generada por el capital e imponga, al menos parcialmente, sus condiciones a esta última por medio de una mayor organización colectiva de las y los trabajadores.
Ponderación final
Se trata de un libro interesante, escrito en un lenguaje bastante coloquial, que abre la puerta a lecturas quizás más académicas pero no por eso menos llamativas para seguir explorando la actualidad del sistema económico social ubicuamente dominante en la actualidad.
No le puse cinco estrellas porque no coincido en algunas ponderaciones, como su afirmación de que no hay alternativas a futuro por fuera del capitalismo a no ser experiencias aisladas y acotadas, y pasa por alto o soslaya casos que me hubiera gustado que aborde en tanto "híbridos" de capitalismo occidental y político como algunos en Europa del Este y Asia Central (Rusia, Ucrania, Belarus, y otros países de la ex URSS, la ex Yugoslavia) y Latinoamérica (La "marea rosa" de los 2000s y la actualidad).
En este trabajo, Milanovic parte de la hipótesis de que el capitalismo es algo ubicuo y omnipresente hasta en el grado más íntimo de la existencia humana pero, a la vez, no tiene nada en frente a lo que oponerse.
No se trata de un contexto en el cual haya un sistema alternativo en la vereda de enfrente, como fue el caso del comunismo o el socialismo realmente existente a lo largo del siglo XX.
Sin embargo, el economista serbio habla de que, en la actualidad y a lo largo de los últimas décadas posteriores a la caída del espacio soviético y los socialismos realmente existentes, se desarrolló una dinámica caracterizada por distintos subsistemas capitalistas que son capitalistas, sí, pero difieren en elementos al interior de sus respectiva constitución y organización. Estos subsistemas son el capitalismo occidental "meritocrático" y el capitalismo autoritario o "político".
Capitalismo occidental o "meritocrático"
Por un lado está el capitalismo occidental (o meritocrático), que es dominante en Estados Unidos, Canadá, la mayor parte de Europa, Japón, India, Australia y la mayoría de los países latinoamericanos, el cual se caracteriza por un predominio del sector privado en la economía con diferentes grados de intervención del sector público que no resultan fundamentales ni estructurantes y varían de acuerdo a la gravitación del estado en cada una de las economías así como la participación de otros actores como sindicatos y movimientos de la sociedad civil en general.
La variación de la participación estatal en este tipo de capitalismo oscila dependiendo del grado de persistencia de elementos ligados a los estados de bienestar heredados del capitalismo de tipo socialdemócrata, que fue el dominante entre la mitad y los años setenta del siglo XX en estos lugares. Este es especialmente cierto en el caso de los países europeos occidentales, Estados Unidos y Canadá. Pero lo cierto es que, en la actualidad el capitalismo dominante, de tipo neoliberal, tiene al estado como un posibiltador de la reproducción del mundo de los negocios y la renta del capital por sobre la generada por el trabajo.
Capitalismo "político"
Luego, Milanovic habla del otro tipo de capitalismo dominante en el mundo actual, que es el capitalismo político o autoritario, el cual se trata de la variante en la cual el estado tiene un papel más interventor y, si bien asigna un gran espacio a los capitalistas para el desarrollo del mercado, marca límites respecto a la intromisión de los capitalistas en los asuntos de la política, dominada por un poder burocrático que brinda mecanismos de protección e inclusión, aunque a la vez también coerciona y excluye disidencias al no tener contralor en una sociedad civil cooptada por el partido dominante enraizado y simbiotizado con el estado.
Este mismo poder estatal, a la vez, participa sin fronteras claras en el desarrollo capitalista. No hay un firme imperio de la ley así como tampoco de propiedad. Una empresa pueda albergar dentro de sí misma elementos de la propiedad privada, pública y social.
De esta manera, el capitalismo político es la continuación de los socialismos realmente existentes por otros medios, de los estados comunistas como la República Popular China, que conserva su régimen de partido único pero abrió su economía al capitalismo a partir de los años ochenta, y otros en Asia que siguieron un sendero similar. Lo mismo sucede con algunos estados africanos que, en su momento, desarrollaron una especie socialismo realmente existente con elementos nacionales y populares y hoy también con países del llamado capitalismo político.
Sin embargo, este economista no solo pone como ejemplo de estados capitalistas políticos solo a los que vienen del comunismo sino también a países como Singapur, caracterizados por regímenes de partido único pero de tipo derechista.
El aporte del comunismo o socialismo realmente existente
Para Milanovic, el comunismo, contrario a los postulados del marxismo, no existe más y, al menos, no tiene posibilidad de existir en el estado actual del capitalismo, pero sí cumplió una función esencial como desarrollador del capitalismo en la periferia. Y pone como ejemplo una vez más a China y los países asiáticos y africanos en los cuales el desarrollo de variantes indígenas de comunismo, propiciadas en su momento por la URSS, que, paradójicamente, dieron lugar a versiones autóctonas de capitalismo que fueron mucho más allá, en cuanto a su potencial transformador que tuvo en esas sociedades premodernas, que los intentos realizados por los países capitalistas occidentales de los cuales fueron colonias o semicolonias saqueadas y expoliadas por ellos.
Asimismo, mientras el socialismo realmente existente tuvo lugar, asegura el economista, condicionó al capitalismo a adoptar instituciones socialistas en el marco de una configuración hacia la socialdemocracia tanto en sus variantes desarrolladas como, en algunos casos, de países en vías de desarrollo.
Renta de capital y renta de trabajo
Otro aspecto interesante que aborda este libro es la fragmentación y desigualdad existente en el mundo mismo del trabajo, en el que los trabajadores más calificados ganan sueldos altos y pueden acceder también, con esa masa salarial que reciben, a la renta de capital, mientras que quienes acaparan la mayor renta de capital, en la plutocracia, también absorben renta generada por trabajo. Un híbrido que no hace más que acentuar la concentración de recursos y la consecuente mayor desigualdad económica existente, algo que s inherente tanto al capitalismo occidental de tipo "meritocrático" como el capitalismo político o autoritario.
El futuro: entre una mayor atomización y la posibilidad de un capitalismo "popular"
Cuando se pone a hablar sobre el futuro, Milanovic profundiza su tono pesimista y cínico advirtiendo sobre una mayor atomización social provocada por el capitalismo en el que la tendencia hacia el individualismo podría acentuarse todavía más, dejando paso para que el interés capitalista siga conquistando nuevas esferas de la intimidad por medio de la precarización laboral y la creación de nuevas necesidades. "Cuando lleguemos al punto en el que todos nos hayamos convertido en meros agentes de pactos ocasionales, ya no habrá lugar para ninguna amabilidad gratuita. El punto final sería una utopía de riqueza y una distopia de las relaciones personales".
No obstante, aún dentro de este capitalismo que para el autor no muestra signos de agotamiento y en el que, de cara al futuro, todo parece desolador y deshumanizante, pueden darse giros hacia una mayor democratización en el marco de un hipotético capitalismo popular en el que la renta generada por el trabajo tenga mayor peso que la generada por el capital e imponga, al menos parcialmente, sus condiciones a esta última por medio de una mayor organización colectiva de las y los trabajadores.
Ponderación final
Se trata de un libro interesante, escrito en un lenguaje bastante coloquial, que abre la puerta a lecturas quizás más académicas pero no por eso menos llamativas para seguir explorando la actualidad del sistema económico social ubicuamente dominante en la actualidad.
No le puse cinco estrellas porque no coincido en algunas ponderaciones, como su afirmación de que no hay alternativas a futuro por fuera del capitalismo a no ser experiencias aisladas y acotadas, y pasa por alto o soslaya casos que me hubiera gustado que aborde en tanto "híbridos" de capitalismo occidental y político como algunos en Europa del Este y Asia Central (Rusia, Ucrania, Belarus, y otros países de la ex URSS, la ex Yugoslavia) y Latinoamérica (La "marea rosa" de los 2000s y la actualidad).
January 8, 2022
Kapitalisme is het systeem dat heeft "gewonnen". Zelfs China is kapitalistisch ("politiek kapitalistisch" volgens Milanovic). Dat heeft een goede reden: het systeem brengt ons meer welvaart en autonomie dan alle eerder gepaseerde alternatieven.
Er is natuurlijk ook genoeg mis mee. Volgens Milanovic commercialiseert het kapitalisme bijvoorbeeld te veel in ons leven: menselijke relaties worden een kosten-baten analyse en het feit dat succes in onze wereld gelijk staat aan geld maakt veel kapot. Daarnaast zijn er de bekende problemen: in veel kapitalistische landen neemt de ongelijkheid toe en is de politiek door intransparante partijfinanciering vatbaar geworden voor de wensen van het grootkapitaal.
Milanovic laat in zijn boek zien hoe en waarom het westerse liberale kapitalisme verdedigd moet worden. Immers het politieke kapitalisme van China en Vietnam heeft zich ook bewezen als werkbaar model (economisch gezien) maar zijn dictaturen met amper vrijheid. De inwoners kiezen welvaart boven vrijheid, iets wat niet als houdbaar werd geacht bij ons in het "westen". Andere landen kunnen volgen.
Milanovic draagt verschillende oplossingen aan om het kapitalistisch systeem te verbeteren. Deze zijn echter gericht op het hyperkapitalistische Amerikaanse systeem (e.g. politieke partijfinanciering aan banden leggen, ongelijkheid verminderen via belastingen, publieke en geen private scholen). En zijn daardoor amper van toepassing op meer sociaal-democratische kapitalische landen als Nederland. Jammer. Genoeg te doen hier zou je denken.
Er is natuurlijk ook genoeg mis mee. Volgens Milanovic commercialiseert het kapitalisme bijvoorbeeld te veel in ons leven: menselijke relaties worden een kosten-baten analyse en het feit dat succes in onze wereld gelijk staat aan geld maakt veel kapot. Daarnaast zijn er de bekende problemen: in veel kapitalistische landen neemt de ongelijkheid toe en is de politiek door intransparante partijfinanciering vatbaar geworden voor de wensen van het grootkapitaal.
Milanovic laat in zijn boek zien hoe en waarom het westerse liberale kapitalisme verdedigd moet worden. Immers het politieke kapitalisme van China en Vietnam heeft zich ook bewezen als werkbaar model (economisch gezien) maar zijn dictaturen met amper vrijheid. De inwoners kiezen welvaart boven vrijheid, iets wat niet als houdbaar werd geacht bij ons in het "westen". Andere landen kunnen volgen.
Milanovic draagt verschillende oplossingen aan om het kapitalistisch systeem te verbeteren. Deze zijn echter gericht op het hyperkapitalistische Amerikaanse systeem (e.g. politieke partijfinanciering aan banden leggen, ongelijkheid verminderen via belastingen, publieke en geen private scholen). En zijn daardoor amper van toepassing op meer sociaal-democratische kapitalische landen als Nederland. Jammer. Genoeg te doen hier zou je denken.
March 21, 2020
The mind of the conspiracy theorist: in a world where almost all governments are Socialist, the evil Capitalists (like the Jews in the imaginary of Europeans a century ago) are running the show.
February 15, 2021
Probably the best book I've read in the last year. For reference, my political beliefs at the time of reading were probably closest to that of Hillary Clinton - generally pro-market while favouring government intervention in the presence of market failures (notably healthcare). Similarly, I was a strong believer that liberal democracy was some hallowed form of government that every country should aspire to. If you achieved it, congrats, welcome to the 21st century and prosperity. If not, sucks to suck, better luck next coup d'etat.
While this book did provide strong evidence for some of my beliefs, I found following arguments new, insightful, and somewhat contradictory to my beliefs.
1) The moral failures of capitalism
The abstraction of money leads to a society that wants more money for the sake of having more money - not actually for any material benefit that more money could provide us. The idea of money is better than money itself. I can't say I'm innocent of this myself, although I tell myself I only want more money so I can retire at 35. Milanovic argues that this driver of human behaviour has led to more corruption and weaker institutions over time, an argument I certainly buy, especially with the examples he gives.
2) Overturning the Marxist view of the progression of history
Marxists would say that the progression of human history will look something like this: Feudalism -> Capitalism -> Socialism -> Communism. Milanovic argues that the role of communism in human development has actually been as a way for Asian countries to throw off the yoke of colonialism and transition to a capitalism (Feudalism -> Communism -> Capitalism). That period in time required a "leftist" ideology to destroy the conservative feudalistic modes of production and simultaneously nationalist sentiments to actually, uh, build a nation. Is leftist nationalists not what the Communist parties of China and Vietnam turned out to be? (likely others as well, but I don't know enough to say). And is capitalism not what they are practicing, de facto, today?
3) Blurring the lines between political capitalism and liberal democratic capitalism
I had always considered forms of government of China and the United States to be wholly discrete and disjoint. I believed that I lived in a country with rule of law, democracy, strong property rights and that those in China did not. After reading this book, I have begun to see it more as a Political Compass/vector space sort of thing. Sure, we are generally freer and can count on institutions upholding basic principles. Yet Donald Trump is able to pardon 3 of his convicted criminal campaign managers (some in return for not snitching on him). That sort of exercise of raw political power is more at home in China - there is clearly some overlap between our forms of government. Yet I can still for example, exercise my 1st amendment rights with no fear of government retribution. We are further along some "freedom" axis but it's not the binary 0/1 discrete switch I had subconsciously thought it was. You don't just go 0-> 1 and get strong institutions and rule of law permanently and forever. It's something you have to work hard to maintain.
While this book did provide strong evidence for some of my beliefs, I found following arguments new, insightful, and somewhat contradictory to my beliefs.
1) The moral failures of capitalism
The abstraction of money leads to a society that wants more money for the sake of having more money - not actually for any material benefit that more money could provide us. The idea of money is better than money itself. I can't say I'm innocent of this myself, although I tell myself I only want more money so I can retire at 35. Milanovic argues that this driver of human behaviour has led to more corruption and weaker institutions over time, an argument I certainly buy, especially with the examples he gives.
2) Overturning the Marxist view of the progression of history
Marxists would say that the progression of human history will look something like this: Feudalism -> Capitalism -> Socialism -> Communism. Milanovic argues that the role of communism in human development has actually been as a way for Asian countries to throw off the yoke of colonialism and transition to a capitalism (Feudalism -> Communism -> Capitalism). That period in time required a "leftist" ideology to destroy the conservative feudalistic modes of production and simultaneously nationalist sentiments to actually, uh, build a nation. Is leftist nationalists not what the Communist parties of China and Vietnam turned out to be? (likely others as well, but I don't know enough to say). And is capitalism not what they are practicing, de facto, today?
3) Blurring the lines between political capitalism and liberal democratic capitalism
I had always considered forms of government of China and the United States to be wholly discrete and disjoint. I believed that I lived in a country with rule of law, democracy, strong property rights and that those in China did not. After reading this book, I have begun to see it more as a Political Compass/vector space sort of thing. Sure, we are generally freer and can count on institutions upholding basic principles. Yet Donald Trump is able to pardon 3 of his convicted criminal campaign managers (some in return for not snitching on him). That sort of exercise of raw political power is more at home in China - there is clearly some overlap between our forms of government. Yet I can still for example, exercise my 1st amendment rights with no fear of government retribution. We are further along some "freedom" axis but it's not the binary 0/1 discrete switch I had subconsciously thought it was. You don't just go 0-> 1 and get strong institutions and rule of law permanently and forever. It's something you have to work hard to maintain.
May 15, 2023
While there are some interesting parts, a lot of discussion I felt was based on wrong premises or I did not find to be substantiated enough.
The distinction made by the book, of "political" and "liberal meritocratic" capitalism I find to be questionable. As recent legislation now shows (Inflation Reduction Act, CHIPS act, various EU measures), Western countries are increasingly enacting laws to shape the economics via industrial policies. That these are meaningfully distinct enough to analyse them based on this is not really helpful and a lot of countries have what is identified with political capitalism, yet they have not achieved meaningful growth like China did. Yet political capitalism is discussed to net higher growth, for example, but that is mostly an extrapolation of the East Asian experience. Furthermore, its argument for how Communism was instrumental in achieving capitalist success in East Asia firstmost while true, is argued too expansive as its purpose - as in many other countries (Africa, USSR) it did not achieve this. Too much of an extrapolation of China for Communism's role as a whole.
However, it has a quite good discussion of how globalisation undermines the welfare state due to income polarisation - as the erosion of a middle class creates incentives for the bourgeoisie to withdraw from social net and create its own systems. Yet, the repeated discussion of immigrant I find to have been quite lacking.
The book is correct that globalisation has been leading to an income convergence, however it is too optimistic and does not note obvious limits such as purely ecological ones (if China were to have an income like the EU has, with Branko assuming continued growth in the West). Much more accurate is a divergence of, say, 15:1 decreasing to 9:1 or something like that but not becoming identical as he predicts - without due reason, in my view.
Lastly, its discussion of morality is bereft of any empirical evidence despite the length of its discussion. While I find the theses interesting, I do not think they are useful without having empirical results to validate them: for example he argues that capitalism has made us performatively "nicer", however also decreases cooperative behaviour. Yet evidence as to why is left. The arguments presented are useful for a materialist explanation of greed etc. however.
Ultimately, while it had some interesting discussion, I don't think on the whole it is that enlightening.
The distinction made by the book, of "political" and "liberal meritocratic" capitalism I find to be questionable. As recent legislation now shows (Inflation Reduction Act, CHIPS act, various EU measures), Western countries are increasingly enacting laws to shape the economics via industrial policies. That these are meaningfully distinct enough to analyse them based on this is not really helpful and a lot of countries have what is identified with political capitalism, yet they have not achieved meaningful growth like China did. Yet political capitalism is discussed to net higher growth, for example, but that is mostly an extrapolation of the East Asian experience. Furthermore, its argument for how Communism was instrumental in achieving capitalist success in East Asia firstmost while true, is argued too expansive as its purpose - as in many other countries (Africa, USSR) it did not achieve this. Too much of an extrapolation of China for Communism's role as a whole.
However, it has a quite good discussion of how globalisation undermines the welfare state due to income polarisation - as the erosion of a middle class creates incentives for the bourgeoisie to withdraw from social net and create its own systems. Yet, the repeated discussion of immigrant I find to have been quite lacking.
The book is correct that globalisation has been leading to an income convergence, however it is too optimistic and does not note obvious limits such as purely ecological ones (if China were to have an income like the EU has, with Branko assuming continued growth in the West). Much more accurate is a divergence of, say, 15:1 decreasing to 9:1 or something like that but not becoming identical as he predicts - without due reason, in my view.
Lastly, its discussion of morality is bereft of any empirical evidence despite the length of its discussion. While I find the theses interesting, I do not think they are useful without having empirical results to validate them: for example he argues that capitalism has made us performatively "nicer", however also decreases cooperative behaviour. Yet evidence as to why is left. The arguments presented are useful for a materialist explanation of greed etc. however.
Ultimately, while it had some interesting discussion, I don't think on the whole it is that enlightening.
December 14, 2019
Another great book from Branko Milanović! Well-written, well-documented and drawing from a wide variety of sources.
Summary:
'Capitalism, Alone' describes how capitalism became the only system of organising society that matters in the world. Two main types of capitalism are currently competing: liberal and political, where USA and China respectively represent these varieties. Development of each of them is described using historical examples and statistical data.
The author describes how capitalism became what it is today and how it ended up dominating the globe. Milanović draws heavily (but not exclusively) from Marxist and classical liberal economists and points out shortcomings in both approaches. He touches upon inequality (his main research area), technological change, and migration.
I particularly enjoyed sober descriptions of the Chinese form of capitalism and explanations why corruption and the lack of rule of law are a required feature of this system (it retains the power among the political caste). In the chapter on interaction between capitalism and globalization the author describes the citizenship premium (rent from being born in the right country) and migration (which is the rational way to address gloabal inequalities). He suggests a cosmopolitan approach to decrease the global levels of inequality by opening the borders but is well-aware of political repercussions of such decisions. Suggested solution would require limiting the rights of incoming workers. Milanović describes that this is already the case in developed countries which have different levels of citizenship (e.g. Green Card vs. undocumented migrants in the US).
Another covered feature of contemporary capitalism is increasing commodification of ever-expanding spheres of life and restructuring of family ties that is related to it.
Summary:
'Capitalism, Alone' describes how capitalism became the only system of organising society that matters in the world. Two main types of capitalism are currently competing: liberal and political, where USA and China respectively represent these varieties. Development of each of them is described using historical examples and statistical data.
The author describes how capitalism became what it is today and how it ended up dominating the globe. Milanović draws heavily (but not exclusively) from Marxist and classical liberal economists and points out shortcomings in both approaches. He touches upon inequality (his main research area), technological change, and migration.
I particularly enjoyed sober descriptions of the Chinese form of capitalism and explanations why corruption and the lack of rule of law are a required feature of this system (it retains the power among the political caste). In the chapter on interaction between capitalism and globalization the author describes the citizenship premium (rent from being born in the right country) and migration (which is the rational way to address gloabal inequalities). He suggests a cosmopolitan approach to decrease the global levels of inequality by opening the borders but is well-aware of political repercussions of such decisions. Suggested solution would require limiting the rights of incoming workers. Milanović describes that this is already the case in developed countries which have different levels of citizenship (e.g. Green Card vs. undocumented migrants in the US).
Another covered feature of contemporary capitalism is increasing commodification of ever-expanding spheres of life and restructuring of family ties that is related to it.
March 20, 2021
This is a fantastic book reflecting on various facets of capitalism in our current decade (and a little history with the trajectory of communism in Eastern Europe and China). He discusses pertinent issues like work, migration, UBI with such straightforward simplicity. For example, one interesting point he brought up was the fact that skilled expats gravitate towards countries precisely because they are unequal in nature— less taxes, more material benefits. Hence, welfare states are conversely attracting “lower skilled” labour that want to qualify in their social safety nets, while skilled workers gravitate towards unequal societies— this results in a brain drain. He also discusses the exorbitant prices of Ivy League schools, which is the source of exclusivity and status for the elite in maintaining an otherwise false superiority. This is because as an undergrad you merely have to pass school to qualify for a prestigious certificate without exerting that much effort, and the prohibitively expensive school fees ward off middle-class households. Therefore we see the persistence of the elite and alumni networks ensuring their children inherit a guaranteed chance of admission, passing on arguably the most important form of social capital.
A great read.
---
When a country enters a transition period from elitist to mass education, as most Western countries did in the second half of the twentieth century, gains in knowledge, acquired through both longer and better education, were massive. But when most people have gone to school about as much as they wish and have learned about as much as they care or are able to, societies reach an educational ceiling that cannot be overcome: technology ultimately wins the race with education. Thus, we cannot rely on small increases in the average education level to provide the equalizing effect on wages that mass education once did.
--
If more pessimistic migrants are indeed also effectively less ambitious or less skilled, rich countries with extensive social welfare systems will tend to attract the “wrong” kinds of migrants.
--
Such migrants might prefer to migrate to, say, Colombia rather than Sweden, even if Colombia is poorer. Since they expect to haul themselves high up in the recipient country’s distribution, they will attach greater importance to a country’s inequality than to its mean income. The reverse, as we saw, holds for pessimistic or low-skilled migrants who expect to be placed low in the recipient country’s distribution: they will tend to choose more equal countries. For that reason, there may be adverse selection of pessimistic migrants moving to countries with more developed social safety nets. If more pessimistic migrants are indeed also effectively less ambitious or less skilled, rich countries with extensive social welfare systems will tend to attract the “wrong” kinds of migrants.
--
The high cost of education, combined with the actual or perceived educational quality of certain high-status schools, fulfills two functions: it makes it impossible for others to compete with top wealth-holders, who monopolize the top end of education, and it sends a strong signal that those who have studied at such schools are not only from rich families but must be intellectually superior.
--
As Martin Jacques writes: “The emergence of China as a global power relativizes everything. The West is habituated to the idea that the world is its world; that the international community is its community, that international institutions are its institutions.… that universal values are its values.… This will no longer be the case”
--
Rent derived from citizenship is thus more similar to a monopoly rent obtained by associations such as guilds that act in restraint of trade. Just as in guilds, citizenship can be acquired by co-option, or by birth.
--
Citizenship is rather a legal construct that exists only in our minds (and is, in that sense, “ideal”).
--
Distance, as Aristotle noted, often makes people indifferent to the lot of others, perhaps because they do not see them as peers with whom they compare their income or wealth.
--
In none of these areas is the policy directed toward the demand side, that is, against the beneficiaries of corruption in rich countries, against the consumers of drugs in Europe and the United States, or against the users of sex workers’ services. The reason why this is so is not that the antisupply approach is more efficient; in fact, there are strong arguments that it is less efficient. The reason is that going after the demand side is politically much more difficult.
--
Money is a great equalizer, and commercial societies provide the best examples of its power.
--
On top of that, discarding the competitive and acquisitive spirit that is hardwired into capitalism would lead to a decline in our incomes, increased poverty, deceleration or reversion of technological progress, and the loss of other advantages (such as goods and services that have become an integral part of our lives) that hypercommercialized capitalism provides.
--
This is why Barack Obama, despite all of the rhetorical embellishments about public education in his speeches, sent both of his daughters to an elite private high school and later to the most expensive private universities.
--
Perhaps, happy in their comfortable lifestyle, they would not worry too much about global economic rankings at first. But people from more successful and increasingly rich countries would start buying properties in that country, moving to the most attractive locations, eating in the best restaurants, and gradually displacing the local population. That this is not a fantasy can be seen in today’s Italy.
--
In a fully globalized and commercialized world, if Italian incomes continued to fall relative to incomes in other countries and regions, the beauty of Italy would no longer be enjoyed by its original inhabitants.
--
But it is an impossible task to convince sufficiently large numbers of people to withdraw from this world, give up on the amenities of commercialization, and accept a much lower standard of living, if they have been socialized in the acquisitive spirit and have internalized all of its goals.
--
through long socialization in capitalism, people have become capitalistic calculating machines. We have each become a small center of capitalist production, assigning implicit prices to our time, our emotions, and our family relations.
--
In individual nations, a large middle class has been considered important for protection of property rights and political stability (since this class has tended to protect its property from being confiscated by the poor and to prevent the rich from claiming monopoly on governance)
A great read.
---
When a country enters a transition period from elitist to mass education, as most Western countries did in the second half of the twentieth century, gains in knowledge, acquired through both longer and better education, were massive. But when most people have gone to school about as much as they wish and have learned about as much as they care or are able to, societies reach an educational ceiling that cannot be overcome: technology ultimately wins the race with education. Thus, we cannot rely on small increases in the average education level to provide the equalizing effect on wages that mass education once did.
--
If more pessimistic migrants are indeed also effectively less ambitious or less skilled, rich countries with extensive social welfare systems will tend to attract the “wrong” kinds of migrants.
--
Such migrants might prefer to migrate to, say, Colombia rather than Sweden, even if Colombia is poorer. Since they expect to haul themselves high up in the recipient country’s distribution, they will attach greater importance to a country’s inequality than to its mean income. The reverse, as we saw, holds for pessimistic or low-skilled migrants who expect to be placed low in the recipient country’s distribution: they will tend to choose more equal countries. For that reason, there may be adverse selection of pessimistic migrants moving to countries with more developed social safety nets. If more pessimistic migrants are indeed also effectively less ambitious or less skilled, rich countries with extensive social welfare systems will tend to attract the “wrong” kinds of migrants.
--
The high cost of education, combined with the actual or perceived educational quality of certain high-status schools, fulfills two functions: it makes it impossible for others to compete with top wealth-holders, who monopolize the top end of education, and it sends a strong signal that those who have studied at such schools are not only from rich families but must be intellectually superior.
--
As Martin Jacques writes: “The emergence of China as a global power relativizes everything. The West is habituated to the idea that the world is its world; that the international community is its community, that international institutions are its institutions.… that universal values are its values.… This will no longer be the case”
--
Rent derived from citizenship is thus more similar to a monopoly rent obtained by associations such as guilds that act in restraint of trade. Just as in guilds, citizenship can be acquired by co-option, or by birth.
--
Citizenship is rather a legal construct that exists only in our minds (and is, in that sense, “ideal”).
--
Distance, as Aristotle noted, often makes people indifferent to the lot of others, perhaps because they do not see them as peers with whom they compare their income or wealth.
--
In none of these areas is the policy directed toward the demand side, that is, against the beneficiaries of corruption in rich countries, against the consumers of drugs in Europe and the United States, or against the users of sex workers’ services. The reason why this is so is not that the antisupply approach is more efficient; in fact, there are strong arguments that it is less efficient. The reason is that going after the demand side is politically much more difficult.
--
Money is a great equalizer, and commercial societies provide the best examples of its power.
--
On top of that, discarding the competitive and acquisitive spirit that is hardwired into capitalism would lead to a decline in our incomes, increased poverty, deceleration or reversion of technological progress, and the loss of other advantages (such as goods and services that have become an integral part of our lives) that hypercommercialized capitalism provides.
--
This is why Barack Obama, despite all of the rhetorical embellishments about public education in his speeches, sent both of his daughters to an elite private high school and later to the most expensive private universities.
--
Perhaps, happy in their comfortable lifestyle, they would not worry too much about global economic rankings at first. But people from more successful and increasingly rich countries would start buying properties in that country, moving to the most attractive locations, eating in the best restaurants, and gradually displacing the local population. That this is not a fantasy can be seen in today’s Italy.
--
In a fully globalized and commercialized world, if Italian incomes continued to fall relative to incomes in other countries and regions, the beauty of Italy would no longer be enjoyed by its original inhabitants.
--
But it is an impossible task to convince sufficiently large numbers of people to withdraw from this world, give up on the amenities of commercialization, and accept a much lower standard of living, if they have been socialized in the acquisitive spirit and have internalized all of its goals.
--
through long socialization in capitalism, people have become capitalistic calculating machines. We have each become a small center of capitalist production, assigning implicit prices to our time, our emotions, and our family relations.
--
In individual nations, a large middle class has been considered important for protection of property rights and political stability (since this class has tended to protect its property from being confiscated by the poor and to prevent the rich from claiming monopoly on governance)
December 18, 2022
I think Milanovic is one of the current public economists with the most refined and acute sense of historicity. He is really well read in history and philosophy, what makes him really interesting and different from his peers.
I liked the book. His categories of liberal and Political capitalism are daring and can make you really think global capitalism from a different perspective. His categories are arbitrary, but I recongnize his agency as an intellectual in trying to propose some different epistemological tool.
My favourite part though is one of the small anexes, when he talks about the historical role of communism for the third world in the 20th century. For Milanovic, Communism was the third worlds path to industrial development, just like the bourgeoise revolution were to first world countries. That really puts 20th century communism under a new light, and he does it dialoging with great Marxian historians and with Marx himself.
The middle of the book I found it very dull and irrelevant. He discusses the citizenship premium with some very economicist view of migration and cultural assimilation, alayzed under a pure materialistic lens. He then make some loose proposals for an ideal set of rules for a possible migration flow (which makes everybody richer under globalization) and some kind of social consensus. It lacks a lot of sociological and cultural arguments for that.
In summ, it's a very interesting, propositive and provocative book on capitalism at large, geographically, chronologically and theoreticly speaking. Well written and quite accessible. I do recommend this book.
I liked the book. His categories of liberal and Political capitalism are daring and can make you really think global capitalism from a different perspective. His categories are arbitrary, but I recongnize his agency as an intellectual in trying to propose some different epistemological tool.
My favourite part though is one of the small anexes, when he talks about the historical role of communism for the third world in the 20th century. For Milanovic, Communism was the third worlds path to industrial development, just like the bourgeoise revolution were to first world countries. That really puts 20th century communism under a new light, and he does it dialoging with great Marxian historians and with Marx himself.
The middle of the book I found it very dull and irrelevant. He discusses the citizenship premium with some very economicist view of migration and cultural assimilation, alayzed under a pure materialistic lens. He then make some loose proposals for an ideal set of rules for a possible migration flow (which makes everybody richer under globalization) and some kind of social consensus. It lacks a lot of sociological and cultural arguments for that.
In summ, it's a very interesting, propositive and provocative book on capitalism at large, geographically, chronologically and theoreticly speaking. Well written and quite accessible. I do recommend this book.
September 25, 2019
Branko Milanovic discute sobre el futuro del capitalismo en una era en la que parece que es el único sistema disponible. El capitalismo liberal de Estados Unidos o el capitalismo político de China. El libro elabora sus diferencias, similitudes y distingue su evolución durante los últimos dos siglos. Para el liberal la herencia del siglo XIX y del capitalismo social democrático de la posguerra. Para el político una extraña evolución marcada por los efectos de las revoluciones comunistas, en estos países fue el socialismo el que permitió su transición al capitalismo cumpliendo la función de la burguesía en el liberal.
El libro discute como el capitalismo hoy en día ha triunfado llegando a todos los niveles de nuestra vida, de la producción hasta la vida amorosa y plantea una discusión sobre un futuro que se antoja distópico producto de la hiper comercialización y fetichismo de todos los aspectos de la vida.
Es un gran libro para discutir nuestro presente a la luz de lo que cada vez parece más nuestro futuro en una era de gran desigualdad.
El libro discute como el capitalismo hoy en día ha triunfado llegando a todos los niveles de nuestra vida, de la producción hasta la vida amorosa y plantea una discusión sobre un futuro que se antoja distópico producto de la hiper comercialización y fetichismo de todos los aspectos de la vida.
Es un gran libro para discutir nuestro presente a la luz de lo que cada vez parece más nuestro futuro en una era de gran desigualdad.
Read
February 11, 2021Δε βάζω βαθμό, γιατί δεν ξέρω κατά πόσο εύκολο είναι να βάλει κανείς βαθμό σε ένα επιστημονικό έργο έξω από το πεδίο σπουδών του. Το σίγουρο είναι ότι πρόκειται για ένα βιβλίο που θέτει τεκμηριωμένους προβληματισμούς και αξίζει να διαβαστεί.
Ο Μιλάνοβιτς ορίζει τα δύο κύρια κοινωνικοοικονομικά συστήματα που επικρατούν στην εποχή μας, τον "φιλελεύθερο αξιοκρατικό καπιταλισμό", με επίκεντρο τις ΗΠΑ και τον "πολιτικό καπιταλισμό", με επίκεντρο την Κίνα και αναλύει τη δυναμική και τα χαρακτηριστικά τους.
Εστιάζει ιδιαίτερα στο θέμα της ανισότητας και της δημιουργίας μιας αυτοαναπαραγόμενης ελίτ που έχει τη δυνατότητα να επηρεάζει τις πολιτικές εξελίξεις υπέρ της και κρούει τον κώδωνα του κινδύνου για το ενδεχόμενο οι χώρες της Δύσης να περάσουν σε ένα μοντέλο "πλουτοκρατικού καπιταλισμού", με περιστολή των δημοκρατικών ελευθεριών, περιθωριοποίηση της πολιτικής και μειωμένη κοινωνική κινητικότητα.
Στον αντίποδα όλων αυτών, προτείνει πολιτικές που θα μπορούσαν να μειώσουν τις ανισότητες και να συμπεριλάβουν μεγαλύτερα τμήματα της κοινωνίας και περισσότερες χώρες στην κοινωνική πρόοδο.
Ο Μιλάνοβιτς ορίζει τα δύο κύρια κοινωνικοοικονομικά συστήματα που επικρατούν στην εποχή μας, τον "φιλελεύθερο αξιοκρατικό καπιταλισμό", με επίκεντρο τις ΗΠΑ και τον "πολιτικό καπιταλισμό", με επίκεντρο την Κίνα και αναλύει τη δυναμική και τα χαρακτηριστικά τους.
Εστιάζει ιδιαίτερα στο θέμα της ανισότητας και της δημιουργίας μιας αυτοαναπαραγόμενης ελίτ που έχει τη δυνατότητα να επηρεάζει τις πολιτικές εξελίξεις υπέρ της και κρούει τον κώδωνα του κινδύνου για το ενδεχόμενο οι χώρες της Δύσης να περάσουν σε ένα μοντέλο "πλουτοκρατικού καπιταλισμού", με περιστολή των δημοκρατικών ελευθεριών, περιθωριοποίηση της πολιτικής και μειωμένη κοινωνική κινητικότητα.
Στον αντίποδα όλων αυτών, προτείνει πολιτικές που θα μπορούσαν να μειώσουν τις ανισότητες και να συμπεριλάβουν μεγαλύτερα τμήματα της κοινωνίας και περισσότερες χώρες στην κοινωνική πρόοδο.
January 12, 2021
Panorama muito rico sobre duas variações do sistema econômico capitalista (liberal meritocrático e o político). Apesar de ser um livro essencialmente acadêmico, trata com profundidade e clareza em muitos temas da pauta política contemporânea.
Considerações do autor sobre a cadeia global de produção me deixaram especialmente preocupado sobre o futuro da América Latina (apesar de o foco passar longe do nosso continente, o que poderia ser aprimorado).
Destaque para o insight sobre rendas de cidadania, excelente para discussões jurídicas sobre direitos sociais e econômicos.
Considerações do autor sobre a cadeia global de produção me deixaram especialmente preocupado sobre o futuro da América Latina (apesar de o foco passar longe do nosso continente, o que poderia ser aprimorado).
Destaque para o insight sobre rendas de cidadania, excelente para discussões jurídicas sobre direitos sociais e econômicos.
August 14, 2021
This is a somewhat strange book.
Let me start with the positive: the central division of the book, between liberal meritocratic capitalism (which broadly encompasses what we'd call the world's democracies) and political capitalism (the state-led model, exemplified by China) is useful and well-defined, and is a good reminder that the old capitalism-socialism tension (or capitalism-communism as it's more typically known) essentially no longer exists. Various statistics and tidbits about US inequality and the comparison of capitalism today to older forms were interesting, and the book had many surprising bits of information throughout. The book is short and well-written.
That said, many aspects of the book's structure and content were strange and left me wondering what to make of it.
The discussion of political capitalism was entirely unconvincing. For one thing, Milanovic only cites eleven countries whose systems "fit the requirements of political capitalism", including very small economies like those of Rwanda and Laos and questionable inclusions like Botswana's. Moreover, some of these countries-- Ethiopia, Algeria and Malaysia come to mind-- have recently faced major turbulence and pressures to move in a different direction. It is therefore hard not to think of "Political Capitalism" as not so much an alternative system to liberal meritocratic capitalism as a regional outlier centered on East and Southeast Asia.
The rest of the chapter is similarly weak. A central point of the book is that corruption is not only persistent in the political-capitalist world but fundamental and necessary. It is therefore odd that to empirically ground this claim, Milanovic notes that of these 11 countries, 6 have corruption ranks significantly worse than the median. This is about as close to "zero relation between corruption and political-capitalist status" as possible, and Milanovic notes that the exemplar of the group, China, actually has a slightly better-than-average corruption rating. Yet the supposed endemicity of corruption in these countries plays a central role in the rest of the book. It's also strange that this crucial division of liberal-meritocratic and political capitalism disappears, as far as I could tell, for almost the entire remainder of the book.
Then there are many little issues that were strange.
The book has little boxes next to key paragraphs serving as a kind of caption for the passage, which is fine. However, one reads "Libertarian utopia of a small state can be reached only through protocommunist policies," which is a striking enough sentence even before noting that (as far as I could tell) nothing in that or adjacent passages says anything with the words "libertarian," "utopia" or "protocommunist," and I genuinely could not understand the relation between that box and the passage.
The discussion of communism seems to argue that communism was better for poor countries than rich countries, and seems to imply that had some positive effect for these countries-- which is a rather astounding claim when considering the famines, clearly linked to the communist regime policies, that killed tens of millions in China, Ethiopia and elsewhere. In fact what might make a lot of sense would be to say that communism was horrendous but that the follow-up regimes of political capitalism in communist countries performed strongly even if (as in China and Vietnam) they purported to still be communist. Milanovic could try to argue that the catastrophes under communism were somehow necessary for the subsequent success; I do not believe this is true, but without acknowledging the horrors under communism, Milanovic's claim that communism was a kind of useful bridge between feudal or early economic stages and political capitalism feels as if it is disregarding a huge part of this story.
Lastly, the attempts at "policy recommendations" come off as very offhand. For example, to "deconcentrate capital ownership," which the author sees as a central challenge, he offers three kinds of suggestions. The first is government intervention to make capital ownership more attractive to small and medium shareholders, for example through "a government-guaranteed insurance scheme that would set a floor (of, say, zero real return) for some classes of sufficiently small investments." I think any reader who has dealt with these issues for any length of time will immediately sense that this may lead to extreme risk-taking by these investors, and indeed the author senses this, and writes in an end-note that therefore the guarantee could be capped at losses of, say, 30%, and only to "sufficiently small investors". This ends up being precisely the kind of administratively complex, limited, regulation-heavy, and in the end rather minor changes that tend to do more to distort incentives than to contribute, especially given that many of the poor will surely not even have the wherewithal for even minor capital investments.
Overall, a puzzling and not very illuminating book. I would recommend looking at other books on inequality (including perhaps the author's own, which I have not read but seems to have been very well-received), since the discussion of inequality in the US and the West was for me the main point of interest for this book.
Let me start with the positive: the central division of the book, between liberal meritocratic capitalism (which broadly encompasses what we'd call the world's democracies) and political capitalism (the state-led model, exemplified by China) is useful and well-defined, and is a good reminder that the old capitalism-socialism tension (or capitalism-communism as it's more typically known) essentially no longer exists. Various statistics and tidbits about US inequality and the comparison of capitalism today to older forms were interesting, and the book had many surprising bits of information throughout. The book is short and well-written.
That said, many aspects of the book's structure and content were strange and left me wondering what to make of it.
The discussion of political capitalism was entirely unconvincing. For one thing, Milanovic only cites eleven countries whose systems "fit the requirements of political capitalism", including very small economies like those of Rwanda and Laos and questionable inclusions like Botswana's. Moreover, some of these countries-- Ethiopia, Algeria and Malaysia come to mind-- have recently faced major turbulence and pressures to move in a different direction. It is therefore hard not to think of "Political Capitalism" as not so much an alternative system to liberal meritocratic capitalism as a regional outlier centered on East and Southeast Asia.
The rest of the chapter is similarly weak. A central point of the book is that corruption is not only persistent in the political-capitalist world but fundamental and necessary. It is therefore odd that to empirically ground this claim, Milanovic notes that of these 11 countries, 6 have corruption ranks significantly worse than the median. This is about as close to "zero relation between corruption and political-capitalist status" as possible, and Milanovic notes that the exemplar of the group, China, actually has a slightly better-than-average corruption rating. Yet the supposed endemicity of corruption in these countries plays a central role in the rest of the book. It's also strange that this crucial division of liberal-meritocratic and political capitalism disappears, as far as I could tell, for almost the entire remainder of the book.
Then there are many little issues that were strange.
The book has little boxes next to key paragraphs serving as a kind of caption for the passage, which is fine. However, one reads "Libertarian utopia of a small state can be reached only through protocommunist policies," which is a striking enough sentence even before noting that (as far as I could tell) nothing in that or adjacent passages says anything with the words "libertarian," "utopia" or "protocommunist," and I genuinely could not understand the relation between that box and the passage.
The discussion of communism seems to argue that communism was better for poor countries than rich countries, and seems to imply that had some positive effect for these countries-- which is a rather astounding claim when considering the famines, clearly linked to the communist regime policies, that killed tens of millions in China, Ethiopia and elsewhere. In fact what might make a lot of sense would be to say that communism was horrendous but that the follow-up regimes of political capitalism in communist countries performed strongly even if (as in China and Vietnam) they purported to still be communist. Milanovic could try to argue that the catastrophes under communism were somehow necessary for the subsequent success; I do not believe this is true, but without acknowledging the horrors under communism, Milanovic's claim that communism was a kind of useful bridge between feudal or early economic stages and political capitalism feels as if it is disregarding a huge part of this story.
Lastly, the attempts at "policy recommendations" come off as very offhand. For example, to "deconcentrate capital ownership," which the author sees as a central challenge, he offers three kinds of suggestions. The first is government intervention to make capital ownership more attractive to small and medium shareholders, for example through "a government-guaranteed insurance scheme that would set a floor (of, say, zero real return) for some classes of sufficiently small investments." I think any reader who has dealt with these issues for any length of time will immediately sense that this may lead to extreme risk-taking by these investors, and indeed the author senses this, and writes in an end-note that therefore the guarantee could be capped at losses of, say, 30%, and only to "sufficiently small investors". This ends up being precisely the kind of administratively complex, limited, regulation-heavy, and in the end rather minor changes that tend to do more to distort incentives than to contribute, especially given that many of the poor will surely not even have the wherewithal for even minor capital investments.
Overall, a puzzling and not very illuminating book. I would recommend looking at other books on inequality (including perhaps the author's own, which I have not read but seems to have been very well-received), since the discussion of inequality in the US and the West was for me the main point of interest for this book.
November 23, 2020
Ei ollut huono, mutta ei myöskään aiheuttanut ihastuksen tai oivalluksen huokauksia. Mutta en kyllä rehellisyyden nimissä muista tästä juuri mitään vaikka luin pari kuukautta sitten.
September 16, 2020
Fantastic in scope and in its depth, has some factual errors that do not merit a lower ranking
July 30, 2021
Probably the most important book I’ve read this year.
February 9, 2020
Four chapters of very insightful analysis on the features, flaws and prospects of the two main variants of capitalism in existence today - the Western liberal model and the Chinese authoritarian (or 'political') model; one rather bizarre chapter in which Milanovic rushes through a series of leftover thoughts on the present and the future of capitalism, including a strange quasi-defence of the commodification and Uberisation of wider society, which he presents as a positive development that enjoys widespread social support.
May 25, 2020
Capitalism is the only game in town now. Communism has been defeated. This book describes the 2 kinds of capitalism: Liberal vs political.
Liberal Capitalism: The Global North
1. Classical pre-WWI: capitalists are rich and do not work, workers are poor and work. No redistribution so inequality is high.
2. Social democratic post WWII: like classical but with redistribution so inequality is Low.
3. Liberal meritocratic current: capitalists are rich and work and earn a lot and marry each other, workers are poorer and work. Some redistribution but inequality is increasing
Political Capitalism: China, Vietnam, Singapore and others
1. The state controls everything but let the people make money. Legitimacy is based on continuous economic performance. Bureaucracy is efficient, there is no rule of law, and the state is autonomous.
2. Selective enforcement of the law keeps the population cowed, and leads to corruption. The merchant class in China had never been able gain political power.
3. Communism used to work and was instrumental in helping the colonised Global South transit to modernity.
Globalisation
1. Migration stems from the citizenship premium and increase global output. But mass migration diluted the citizenship premium and is opposed by natives. So maybe letting them work without full citizenship rights is more acceptable (like Singapore; warning: migrant workers can become second class people).
2. Capital movement created Global Value Chains so companies from Global North transferred their technological know-how’s to the Global South. This makes working class people in the Global North unhappy. Tax havens let rich people hide their money and is hard to eradicate.
The future
1. Our house, car, labour has become commodities. Family functions have mostly been outsourced, and morality is gone. Only the pursuit of money remains.
2. Universal Basic Income: cost too much and little experience
3. Robots will destroy old jobs but new ones will appear
4. Political capitalism a la China may become more attractive for some countries even if China is not out to promote it.
Solution for the West
1. Tax the rich a lot more to fund free education and health care and reduce tax for middle class people. Increase estate tax
2. Encourage middle class people to hold bonds and stocks. Government to guarantee return >0%. Give employees ownership of their firm.
Very clearly thought through and explained, Milanovic has written another great book!
Liberal Capitalism: The Global North
1. Classical pre-WWI: capitalists are rich and do not work, workers are poor and work. No redistribution so inequality is high.
2. Social democratic post WWII: like classical but with redistribution so inequality is Low.
3. Liberal meritocratic current: capitalists are rich and work and earn a lot and marry each other, workers are poorer and work. Some redistribution but inequality is increasing
Political Capitalism: China, Vietnam, Singapore and others
1. The state controls everything but let the people make money. Legitimacy is based on continuous economic performance. Bureaucracy is efficient, there is no rule of law, and the state is autonomous.
2. Selective enforcement of the law keeps the population cowed, and leads to corruption. The merchant class in China had never been able gain political power.
3. Communism used to work and was instrumental in helping the colonised Global South transit to modernity.
Globalisation
1. Migration stems from the citizenship premium and increase global output. But mass migration diluted the citizenship premium and is opposed by natives. So maybe letting them work without full citizenship rights is more acceptable (like Singapore; warning: migrant workers can become second class people).
2. Capital movement created Global Value Chains so companies from Global North transferred their technological know-how’s to the Global South. This makes working class people in the Global North unhappy. Tax havens let rich people hide their money and is hard to eradicate.
The future
1. Our house, car, labour has become commodities. Family functions have mostly been outsourced, and morality is gone. Only the pursuit of money remains.
2. Universal Basic Income: cost too much and little experience
3. Robots will destroy old jobs but new ones will appear
4. Political capitalism a la China may become more attractive for some countries even if China is not out to promote it.
Solution for the West
1. Tax the rich a lot more to fund free education and health care and reduce tax for middle class people. Increase estate tax
2. Encourage middle class people to hold bonds and stocks. Government to guarantee return >0%. Give employees ownership of their firm.
Very clearly thought through and explained, Milanovic has written another great book!
May 29, 2021
Many neurosciencentist believe that we make the decision of whether to read or not the book in the first couple of pages. I am so glad I did not commit to that mistake. This book masters the science of flow. The introduction is definetely not ground breacking and is covered extensively in the majority of reviews.
Milanovic begins as every economist who respects his work does. He returns to the roots of the classical political economy and applies it to the socioeconomic conditions of modern times. His work is deeply empirical and in his case that is an advantage. It is an advantage because we rarely encounter such well educated economists. As mentioned the book gets better as it gets. His idea of the "outsourcing of ethics" is a brilliant section. Although the title seems nihilist, the content is far from it. Milanovic understands the impact of human ability to change its course of history and most of all the factor of uncertainty.
Another Milanovic advantage is his well trained in the World Bank command of global economic data (You can find most of them on his other books although this book is much more rewarding. His analysis of China is thought provoking and incredibly insightful.
From frequent mentions of ancient Greek philosophy to John Rawls, Milanovic understands that the study of economics is a study of ethics. Thats why "Capitalism Alone" offers a refreshing view on global economic matters. Where I have to disagree with Milanovic is his quotation that even if the means of production are common held, our nature has been so commotified that a reset is hard. The acknowlegdement af a chance that capitalism shapes citizens that behave like a "homo economicus" logically suggests that a reversal can be achieved as social systems impact our behavior (unless someone suggests that hierarchy and social capital is a deep part of our nature). But even this minor "objection" is mostly formalistic. Milanovic correctly suggests that a change in human cognition is necessary to reform an economic and political system.
Milanovic begins as every economist who respects his work does. He returns to the roots of the classical political economy and applies it to the socioeconomic conditions of modern times. His work is deeply empirical and in his case that is an advantage. It is an advantage because we rarely encounter such well educated economists. As mentioned the book gets better as it gets. His idea of the "outsourcing of ethics" is a brilliant section. Although the title seems nihilist, the content is far from it. Milanovic understands the impact of human ability to change its course of history and most of all the factor of uncertainty.
Another Milanovic advantage is his well trained in the World Bank command of global economic data (You can find most of them on his other books although this book is much more rewarding. His analysis of China is thought provoking and incredibly insightful.
From frequent mentions of ancient Greek philosophy to John Rawls, Milanovic understands that the study of economics is a study of ethics. Thats why "Capitalism Alone" offers a refreshing view on global economic matters. Where I have to disagree with Milanovic is his quotation that even if the means of production are common held, our nature has been so commotified that a reset is hard. The acknowlegdement af a chance that capitalism shapes citizens that behave like a "homo economicus" logically suggests that a reversal can be achieved as social systems impact our behavior (unless someone suggests that hierarchy and social capital is a deep part of our nature). But even this minor "objection" is mostly formalistic. Milanovic correctly suggests that a change in human cognition is necessary to reform an economic and political system.
September 8, 2020
18th book of 2020.
This book has a great start, giving a framework to think about modern economies, nearly declaring an economic 'end of history' in that capitalism has proven to be the state that all developed countries have converged upon. I most appreciated the taxonomy for flavors of capitalism in the world today:
Classical Capitalism - Think belle epoch France or England.
Meritocratic Liberal Capitalism - USA today. Increasing inequality, divergent interests between classes.
Political Capitalism - Lots of problems with corruption. Able to sustain high growth rates.
I felt like each of these concepts would have justified a book to themselves, both in terms of how this nomenclature plays out across the world and at different points in history. Instead, the author talks about the future of capitalism as the system encroaches more and more into realms traditionally occupied by social norms. Also interesting, but I felt like this section was missing data for it to feel like anything beyond interesting musings.
Overall, I like that it gave me a good way to think about different capitalist systems, but would have wished for more detail on any of the myriad good ideas that are discussed throughout the book.
This book has a great start, giving a framework to think about modern economies, nearly declaring an economic 'end of history' in that capitalism has proven to be the state that all developed countries have converged upon. I most appreciated the taxonomy for flavors of capitalism in the world today:
Classical Capitalism - Think belle epoch France or England.
Meritocratic Liberal Capitalism - USA today. Increasing inequality, divergent interests between classes.
Political Capitalism - Lots of problems with corruption. Able to sustain high growth rates.
I felt like each of these concepts would have justified a book to themselves, both in terms of how this nomenclature plays out across the world and at different points in history. Instead, the author talks about the future of capitalism as the system encroaches more and more into realms traditionally occupied by social norms. Also interesting, but I felt like this section was missing data for it to feel like anything beyond interesting musings.
Overall, I like that it gave me a good way to think about different capitalist systems, but would have wished for more detail on any of the myriad good ideas that are discussed throughout the book.
December 4, 2019
The call for greater equality eloquently voiced in the author’s seminal book, “Global Inequality”, spills the beans on where he comes out on a core question of the book, “where should global capitalism go in the future?”. His opinion is a form of “people’s capitalism” (equality of opportunity and limits on societal divergence of income and wealth) should replace today’s “liberal meritocratic capitalism” (think of your favorite investment banker living in New Canaan, and their 16 year old driving a bright red Mercedes convertible they received as a birthday present) and not the more autocratic, but economically successful “Political Capitalism” model (China, Vietnam, etc.) where greater affluence is traded for free speech. How to get there? Four policies are suggested: tax relief for the middle classes, greater spending on quality education, an immigration policy that provides opportunity but does not run afoul of the sad, nativist reality in many countries, and the elimination of excessive private spending in election campaigns (can you think of a country where all of this might be helpful??).
Worth a read! 😀
Worth a read! 😀
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