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Post by pieter on Aug 12, 2019 9:39:16 GMT -7
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Post by pieter on Aug 12, 2019 9:49:16 GMT -7
How a completely normal professor devised a radically different economic system
Whereas in the past critics of capitalism came up with at least concrete alternatives to the system, they now only come up with vague utopian ideas. Capitalism haters abound, but tangible proposals for a better system are not forthcoming. So the Italian professor of economics Giacomo Corneo came up with just one.
Text Maaike Schoon 6 to 8 minutes reading time #newcapitalism In the series New Capitalism, Vrij Nederland speaks to new and old thinkers, about new ideas for today's economy. In this fifth and final episode: Giacomo Corneo, economist and professor at the Free University in Berlin. A completely normal professor of economics, who nevertheless came up with an economic system that is radically different and thus attracts crowds. The earlier episodes can be found here.
Capitalism is uncool. That was it when it was still in its infancy, and it still is. People have declared it dead since the emergence of the model. Pronounced proponents can only be found among influential, but small, minorities. Ask a few random Germans if they are happy with the market economy; half will deny. Replace the word market economy with capitalism, and that share is falling further.
But, says economist and professor Giacomo Corneo, where critics and thinkers used to find each other in a search for a different model, today only critics are left. Previously, economists, politicians and thinkers dared to become concrete about an alternative, now the critics remain extremely vague. The ideas are naive, the inventors of them are often not economically trained. They have nothing more to offer than a vague vision of the future, a utopian picture of how it could be, without a practical route planner how to get there. Capitalism haters abound, but tangible proposals for a better system are not forthcoming.
And so he developed only one himself.
Corneo is considered a perfectly normal professor of economics, originating from Italy, trained there, and currently working as a professor of Public Finance and Social Policy at the Free University of Berlin. A relatively unknown economist who nevertheless attracts great reviews (in Foreign Affairs and the Suddeutsche Zeitung, among others) and full houses with his proposals for an alternative. As a result, he is now placed in the same category as economic cross thinkers such as Thomas Piketty and Kate Raworth (known for the Donut Economy).
The question keeps coming back: is the alternative better than our current model? Is it fairer? And usually the answer is: not really.
His sincere search for answers to the greatest problems of capitalism strikes a chord in a time when capitalism is under fire with renewed enthusiasm. In the book that Corneo wrote - Is Capitalism Obsolete? - a father (an economist) enters into a conclave with his critical daughter about the state of current capitalism.
The daughter sums up: the current capitalist system is destroying the earth, and the food that is there is unevenly distributed. The differences between extreme poverty and enormous wealth have only increased. In addition, under the influence of market ideology, people are forced to set goals that are purely about making a profit, rather than personal growth, and so they become alienated from themselves and from each other. How can he, representative of the status quo, defend that? The economist searches for alternative models. From Plato's Politeia, to Thomas More's utopian ideas, via the development of the planned economy, socialism, to the basic income. The question keeps coming back: is the alternative better than our current model? Is it fairer? More democratic?
And usually the answer is: not really.
Do you actually have a daughter yourself? Is she just as critical? "Ha! Yes, I have a daughter, but she is now sixteen and is still concerned with things other than capitalism criticism. I am the fictional daughter in the book when I was young. And I am also the father myself; that search for another model is also my search. Well considered, it's a conversation with myself. " "What bothers me is that despite all the criticism of capitalism, there are no real answers. While we now actually have data and evidence for what works and what doesn't. We have seen the fall of communism. We know what can go wrong if the government emerges as an entrepreneur. We know what doesn't work. So you can also extract from it what works. What I ultimately propose in the book may be progressive in nature, but it is not ideologically driven. " What is your alternative to the current system?
"The idea is that we give public ownership a much greater role in the economy. I call it shareholder socialism. The government buys an important part of the shares of the large companies in a country. So for a part of us, those companies become the citizens. "
"Not all shares are bought, but a majority - the government should not start running companies. And not just any company, but companies that show that they pursue certain values that we consider important; ecological, social - that can be further determined by involved citizens themselves. "
"According to my model, the proportion of people in poverty would fall from nine to six percent."
"The return on that investment is paid directly to citizens by the government. The effect is twofold: the management of such a company can focus on profit, because that is what they are trained to do. In this way the market retains its value. The government imposes social and ecological objectives, because that is the task of administrators and politicians. I have calculated that in the case of the United States, such a Sovereign Wealth Fund, can pay around two thousand dollars a year to every citizen, and that can increase as the fund grows. "
"That is of course not enough to live on, but it is enough to partly eliminate the greatest poverty - according to my model, the proportion of people in poverty would fall from nine to six percent." The Dutch pension funds are a bit like your proposal. But there is much debate about what exactly they invest in: many still invest in fossil energy, while not all participants want that.
"The best example I know of such a public investment fund that works, although it is not perfect, is the Norwegian oil fund. They may not invest in anything. If it is felt that a company investing in no longer meets, for example, ecological or social conditions that have been set, the fund must sell all the shares of that company. This is done after investigation by a separate committee; you cannot expect that from individual fund managers, who are trained and have the task of making as much return as possible. You have to separate the two objectives - return and ethics.
But from the conviction: we need the market. "Yes, I think we have to recognize that people simply think the benefits of the market are important - especially if you put it next to the most important alternative, the planned economy. I also do not think that we should be affectionate about people's desire for consumption, for beautiful things; that is where socialist systems had to acknowledge their deficiency. But more important: it is not one or the other; a good system is pluralistic. " What do you think is the greatest mistake of capitalism? "The ideology behind capitalism, the combination of a free market and production through supply and demand, is in itself an effective means of increasing material wealth. But without the necessary regulation, the ideology is so powerful that it tends to leave the field of economics. Then it affects our morals, our political thinking, and our policies. While there, sometimes very different values are far more important than the values of the free market and supply and demand. "So the question is: how do you maintain any degree of prosperity, without the ideology behind it, everything, including your personal life, starting to dominate? The idea of a social investment fund as I propose is one of the ways. "
"We know that financial crises do not stay away forever; I do not know where the next crisis will come from, but it is inevitable that it will come. "
You describe how we should look at politics, since it is so intertwined with the current capitalist system. Is the political system also broken? "There has been a huge shift in the organizational structure of the economy. Previously, workers from large factories were united and were able to influence their employers and politics in this way. There was, so to speak, a proletarian aristocracy, they earned wages that the self-employed can only dream of today. "
"But that society no longer exists. She has become fragmented and much more unequal. That's because at the same time capitalist dynasties have emerged, CEOs who live in totally separate worlds, who have nothing to do with the rest of society: Piketty has shown how an ever-growing share of capital is inherited, rather than itself earned. But that possessing class is still the only one that has direct influence on politics: other intermediaries, such as churches or political parties, have lost influence - political parties have fewer and fewer members. Add to that the fact that a completely different generation is in power than just after the Second World War. That generation was much closer to the problems of the working class. That way you get a problematic political system, in which politicians are in conversation with one part of society, of which they are increasingly becoming part of themselves. " "At the same time I see a shift - a few weeks ago I spoke to people from the Greens in Germany about the idea of public ownership. Political parties are looking for new ideas. More conservative economists here also see the added value of social investment funds in the fight against poverty. "
You wrote your book in an attempt to respond to the growing dissatisfaction with capitalism. Do you think that dissatisfaction will increase further? 'I think so. If you look at the big problems we have now; the great economic inequality, climate change, the poor position of young people in the labor market. These problems are still not being properly addressed, while the need for solutions is very high. We knew that financial crises will not stay away forever; I do not know where the next crisis will come from, but it is inevitable that it will come. The dissatisfaction will only grow. It is up to us to come up with solutions before that time. "
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Post by karl on Aug 12, 2019 15:23:30 GMT -7
Pieter
Interesting situation I must say with Mr. Giacomo, Corneo. He apparantly has written and published a paper denouncing the foundation of democracy being capitalism as evil. Perhaps it is, or perhaps it is not evil other then what a few make it so.
What he has not done though, is place the subject of his paper for what it is to properly understand it, or as follows:
Capitalism
Political ideology
DescriptionCapitalism is an economic system based on the private ownership of the means of production and their operation for profit. Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system and competitive markets. {Wikipedia}.
Now as above, is an easily understood description of which is the subject of his issues.
From the birth of a product to the final destination, needs be understood,, for this is not subjective or emaginative, but the reality of the path a product {manufactured hard product}. The manufacturier once after first purchasing the neccessary raw materials from which ever source, will then through the manner of steps of manufacture, will with each step, increase the value of the product through each of various steps of manufacture. This until the product is completed, then after calculating the total cost from beginning to final product phase, will sell the product at a price that pays for its self and then a little more as final product. The product then will be purchased by various handlers with each reselling the product for a profit until the product has reached the final seller. The seller then will resell to the final consumer at a profit.
The above is highly simplified but provides the basis of the point of capitalism.
What it means though, the means of production and consumption is in private hands. An excellent example of the failure of having a state owned and controlled means of production an consumption is very well exampled by the late Soviet method.
It is interesting of the not mentioned of the Nordic model that interestingly enough, has been espoused by the American politician, Mr. Sanders.
Karl
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