Analysis and discussion
While capitalistic systems have seemingly provided means of immense growth in the past, it has endured plenty of criticism. With a number of accounts, Whyte reveals the criminogenic character of capitalism deeming it a fundamentally inhumane system (2009, pp61-68).
Numerous problems arise from the prevalent industrial consolidation as well as the increased
influence of the multi-national enterprises (MNEs). As Heath and Potter point out some MNEs exert far more power than governments (2004, p329). This economic concentration, however, leads to a contradiction within the capitalism itself by destroying the incentives to encourage individual enterprise (The Economist, 1999). The consequences are conflicting situations, for instance, Kovacic and Shapiro suggest the US courts show tendency to treat lightly on big businesses (2000, p46). The critical view adopted by Klein goes another step further (2007, pp4-21); she claims that MNEs are systematically exploiting the state of fear and disorientation in times of crisis and natural disasters to not only gain vast profits but also reshape the world according to the capitalistic model. It can further lead to corporatism, whereby MNEs combine powers with government in order to control and manipulate the citizenry.
Hence, a question arises, why do markets not function according to the market-mechanism model? Stiglitz (2006a, p190) argues that often the reason why the “invisible hand” seems invisible is because it is not there. It is also worth noting, that the self-interested and profit-driven nature of capitalism can provoke undermining or manipulation of the market.
Stiglitz further identifies (2006a, xiv) that the markets will not work if there are “externalities”, such as the exploitation of natural resources and destruction of ecological system (Heywood, 2003, p285). Considering the differences of capitalism adoption between countries, it becomes clear that the more liberated economies, particularly the US, will have a weaker performance regarding environmental protection than the coordinated economies where there are more governmental regulations. This would therefore demand a more globally regulated market.
On the contrary, however, there is a tendency to not only integrate all nations into one global capitalist system (Heywood, 2003, p152) but even further to converge existing economies towards a more liberal market (Hague and Harrop, 2007, p150). Despite ostensible advantages and benefits for all, the globalisation of capitalism has resulted, apart from some positive development in Chine and India, in vast inequities. As Stiglitz (2006b) points out the inequalities within almost all countries as well as between the richest and poorest countries are rising in spite of improved trade conditions (e.g. NAFTA). In fact, these agreements are often benefiting the developed rather than developing countries because the free trade agreements are not really free trade. Hertz (2002, p274) points out that developing countries are losing almost $2 billion a day because of inequitable trade rules, such as the extraction of Iraqi oil.
Additionally, individualism that is closely linked to the capitalism development has led to increased competition among both producers and consumers. Consumerism has not only widely replaced the old values, but even more, it has become the central part of many people’s lives. Additionally, as Ritzer (2006, pp3-4) points out, the global capitalistic system depends on hyper-consumption and its exportation to the rest of the world. Hence, another question arises as to how long this system of ever increasing consumption, production and exploitation can continue? Certainly, government intervention is essential if the consequences of climate change are to be at least minimized if not reversed. In this sense, however, governments are trapped between consumerism on one side and powerful MNEs on the other fairly ineffective and powerless but also unwilling to bring about a real change.
With regards to the emergence and growth of Asian capitalism many authors point to the importance of culture and the hybrid capitalism developed in several Asian countries as a possible prospective model (Johnson, 1995, p68; Morrison, 2002, pp112-116).
It is, however, yet to see, whether a different, more ethical culture can enable a sustainable development of the capitalist system or whether the capitalistic values, such as increasing growth and relentless thriving for profit will lead to convergence of Asian capitalism towards Western-style system. Yeung (2004, p42) presents convincing evidence of some convergence of Chinese capitalism towards the Anglo-American capitalism while also arguing that it still diverges from its key institutions and structures.
Conclusions
To answer the question about long-term capitalistic development, it can be drawn upon suggestions from several authors. Porritt (2005, pp86-107) and Hawken et al. (1999, p2) provide the concept of “sustainable capitalism” respectively “natural capitalism” and further argue that capitalism can be adapted to deliver a sustainable development in the future. On the other hand, however, the strong consumerism culture which is being carefully nurtured even in the light of the recent economical crisis does not provide such an optimistic perspective. In fact, Ritzer (2006, p2) and Klein (2009) believe that even as crises passes humans will go on consuming just as much as before or even more, until they are forced to cut back. With regards to globalization and potential wealth redistribution between the countries, the question should be rised as to whether the capitalistic system is the most suitable and whether the most suitable will be enough to ensure sustainable development.
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