Varieties of capitalism in the globalizing world

Follow-up paper

Varieties of Capitalism in the Globalizing World

2010- St.Petersburg

Contents

Introduction

Capitalism

Types and Models of the Capitalism in the Globalizing World

Globalization

Globalization and Capitalism

Global Financial Crisis

Conclusion

Introduction

In our work on the topic “Varieties of capitalism in the globalizing world” we consider the following questions: what is capitalism, the main points of this system and we give a brief historical background to the emergence of capitalism. In the first part of our work we describe the main existing forms and models of capitalism in the world.

The second part of our topic is devoted to the phenomenon of globalization. We also give basic information about globalization and consider capitalism in the era of globalization.

In the third part of our work, we consider all the exciting topic of the crisis and look at capitalism in the era of the global financial crisis.

And in the end we will make some conclusions on the above information.

In our opinion, our topic “Varieties of capitalism in the globalizing world”is quite interesting and relevant, global financial crisis, according to many sources, has not yet ended, and capitalism has not changed to any other system.

Capitalism

Below is an attempt to give a working definition of the term 'capitalism', to trace the emergence of capitalism in a historical context.

The Oxford English Dictionary notes that the word "capitalism" first used in 1854 by the novelist William Makepeace Thackeray to denote the set of conditions of ownership of capital. In 1867, in his book Das Kapital Karl Marx used the term "capitalism" to refer to the capitalist mode of production, as well as "capitalist" - the owner of capital. To indicate the economic system for the first time the term was used in 1884 in the book Douai "Best of Times."[1]

Many economists give approximately the following definition of capitalism: a system of property rights, coexisting with the markets of production and consumption of goods and services, which the famous words of Adam Smith, manages the "invisible hand" that sets the price depending on supply and demand.

Despite the fact that democracy at the level of city-states emerged, apparently in ancient Greece and Rome, explicit examples of democracies in history have been observed to de Tocqueville observations with his American: he described the American example enables some researchers to argue that since about from 1630, simultaneously developed two systems - democratic rule and capitalism.

Historian Fernand Braudel, who attributed the rise of capitalism to the period of 1400-1800 years, admitted that he failed to define this phenomenon, but it is aware of the most important characteristic of capitalism as a system of economic relationships that are incompatible with feudalism, which is a different system of economic relationships. Trade in goods and services exist in many of the feudal system, such as the Aztecs, the Incas, in Japan of the Shoguns, in imperial China, India and the Ottoman Empire.

Capitalism has the following distinctive features:

1. The economy is producing goods and services, as well as commerce and other types of legitimate economic activity.

2. The means of production are privately owned.

3. The source of subsistence for the majority of society is the work not under duress, as is the case in other economic systems, and on the free recruitment, sale of labor in the form of wages.

Types of Capitalism

There are two types of capitalism in a modern world:

1^st type: capitalism in imperialistic and other developed capitalistic countries: USA, Western Europe, Japan, Canada;

2^nd type: neo-colonial capitalism, that is works as a basis for the functioning of the 1^st type capitalism (incl. Russia).

Models of capitalism according the theory of Benjamin D. Suarez

There are a lot of classifications of capitalistic models in the today’s world, made by different scientists. For our work we have chosen the classification of capitalistic models according the theory of Benjamin D.Suarez.

There are many forms of capitalism and they all very much differ from each other, but all of them come to several models of capitalism.

Imperialistic models

Japanese model

It is a national state monopolistic capitalism based on market and government regulation. Democracy in Japan means submission of private interests to common interests. It is a variant of collectivism democracy. Nation in Japan is above all things. Japanese culture plays an important role. Japanese democracy: subordination of private interests in favour of public interests. Japanese model of capitalism can be characterised by stable economics, high level of life and sustainable development of economics.

European models of capitalism

There are two main types of European models of capitalism:

A) social-democratic model of Scandinavian type:

Small and medium-sized business acts as a basis. It is characterized by high level of life, stability, social protection;

B) social-market model of Common market countries:

Such countries have developed economics, high level of social protection of citizens by the government (France) or monopolistic banks (Germany). These countries typically have high level of life, high stability, sometimes they have high level of unemployment and crime (esp. Italy).

USA capitalism

Capitalism in the USA is a classic state-monopolistic capitalism with high role of government in economics and politics. The main characteristics of US-capitalism are: high level of formal democracy, high average level of life, unemployment, crimes.

Canadian model

In the basis of Canadian capitalism there is social-market economics and harmonization of interests of all population, however, there is rather high level of unemployment and ethnic conflicts (ex. Quebec).

Neo-colonial models

Eastern Asian capitalism (“Dragons”: South Korea, Hong Kong, Taiwan and ASEAN countries)

Eastern Asian capitalism is a capitalism with dominate role of government. Specific democracy of “asian type” built on Confucianism ethics. Level of life: in “Dragons” level of life is average, in ASEAN – below average. It can be characterized by dramatic stratification of society, mafia, corruption, high crime rates.

South Asian capitalism (India, Pakistan, Sri-Lanka)

It is a so-called “feudal clannish” capitalism, that is characterized by big separation between the rich and the poor and serious interethnic problems. Political fluctuation is also typical for these countries.

Buddhism dominates, that is why denying of material wealth is typical.

Muslim capitalism of Arabian countries

The concentration of all power is in hands of dynastic sheiks. Democratic institutions does not play any role in these countries. There is high average indexes of life standards but in reality there is a high separation between the rich and the poor. Basis of valuables is Koran.

African capitalisms of militaristic feudal type

For African capitalisms agrarian and raw-material economics are a basis. It can be characterized by high level of poverty, famine. There is a small layer of very rich people. It has clannish tribal democracy.

Latin American model

This is an autocratic criminal capitalism of agrarian type. This model is characterized by high segregation of population, corruption and high rates of crime.

It is clear that all the models listed above are constantly in a changing process as concerning the form and main points. In what direction are they changing? The answer to this question demands the careful analysis of each concrete model. But even in this case it will differ according to this or that ideology which consciously or unconsciously the researcher adheres.

Capitalism in Russia

Capitalism in Russia is a capitalism of neo-colonial type.

It is characterized by the dependence from the West. In the centre there is pro-American and pro-Western regime, based on the bourgeoisie. There is high separation between the rich and the poor and a small layer of very rich people. These rich people earn money by operations with foreign capital.

World Financial Crisis

“Few people today realize that economical globalization involves crises globalization”(S. Maltsev)

The current economic crisis, in fact, begun a few centuries ago - at the time of the rise of capitalism. The system, which is based on the idea of innovation and promote scientific and technological progress in debt, so the manufacturer can create an additional product, exchanging it for money, food and other benefits, sooner or later, had to collapse.

The current global financial crisis, there are many different reasons. But, in our opinion, there are two main reasons that a local crisis of U.S. mortgage poor quality escalated into full-blown global crisis.Firstly, it's extremely high debt load of our financial and economic system.And, secondly, it has reached an unprecedented level of globalization of the world's financial processes.

First make our system extremely vulnerable to a situation of falling prices, while the second allowed the crisis quickly spread throughout the world system.

In this sense conversion into securities of U.S. mortgage debt of poor quality only played the role of a detonator for a bomb lying long under the global financial system.

Of course, if the pre-crisis prices of many asset classes were not as high, if the shoulders were not so great if the interdependence of markets was not so strong; the crisis has not escalated to the world.

At the beginning of this year there was a World economic forum in Davos. It has fallen with criticism upon globalization, capitalism, bankers and the authorities. Modern form of winning virtually all the capitalist world can surely be called financial capitalism. This primarily refers to the role that global finance and they created the global financial markets play in today's world order.

“It is not simply world crisis. It is crisis at globalization conditions, it is globalization crisis” has declared the president of France Nikolas Sarkozy. According to the president of France, the finance, free trade and a competition “only means, instead of the purposes in itself”. Businessmen were replaced by speculators.

We considered that a freedom or enterprises above all and by that have weakened democracy. Before us there is a crisis not economic, but deeply public. Also that it at all hasn’t ended that any “bottom” is not reached, and that continuation follows.

Key questions today- not to replace capitalism, but how to develop it in less inconsistent form.

Conclusion

As a conclusion we would like to say, that key questions today- not to replace capitalism, but how to develop it in less inconsistent form. And we have two different ways of the solution:

1. We ourselves will change sights at economy.

2. Time will force us to change them.

Clear for understanding the fact that the world in future will be not such as world today’s. The world needs the renewed capitalism and general values.

We must satisfy a need in protection, justice and equal possibilities by means of cooperation, adjustments and state administration, or the world expects isolation and protectionism.

In the future it will be an era of regulation, and in the world broken into large economic regions, consisting whenever possible for the countries with as much as possible homogeneous economy and levels of development.

And we should remember that capitalism is a system and any system live definite period of time. Another system should change capitalism on its place.

List or resources

1. www.polit.nnov.ru

2. www.kontinent.org

3. www.wikipedia.org

4. О множественности моделей капитализма см.: Crouch C . Capitalist Diversity and Change. Oxford: Oxford University Press, 2005.

5. David Coates, “Models of Capitalism: growth and stagnation in the modern era”

6. Models Of Capitalism, “Debating Strengths And Weaknesses”

7. Федотова В.Г. Глобальный капитализм: три великие трансформации: социально-философский анализ взаимоотношений экономики и общества

8. http://www.ashgate.com/pdf/SamplePages/Globalization_The_Juggernaut_of_the_21st_Century_Intro.pdf

9. http://www.patriotica.ru/enemy/arin_kapkan.html

[1]www.wikipedia.org