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By: Gavin Chait on 12 July 2007
There is a great new book you'd do yourself a favour to read. "Good capitalism, bad capitalism" by William Baumol, et al (Yale University). They identify four types of capitalism:
1) State-guided - government "guides" the market; so France and Germany with their state "champions"
2) Oligarchic - where the bulk of the power and wealth is held by a small number of individuals and families; Russia
3) Big-firm - most of the economy exists in a few large corporations; South Africa
4) Entrepreneurial - most of the economy is controlled by small firms; er, no-one actually, maybe the UK
Countries have some blend of two. Russian moving from oligarchic to state-led. The US moving from entrepreneurial to big-firm. Oligarchic tends to be the worst performer and possibly the one you don't like. It really does act to concentrate wealth in the hands of the few.
To keep it brief, the best performer is a balanced big-firm/entrepreneurial economy. It allows for easy market access for new firms and new ideas, as well as rapidly removing dead-wood large firms cluttering up the place.
The reason the US has done so well and dominates the world economy is because they're in this category (although, the writers suggest that they do themselves no favours by moving towards an unbalanced big-firm economy). China is using a mix of State-guided and entrepreneurial and is rapidly catching up.
If anti-capitalists want to be part of the conversation on the shape of future markets then they need to learn the language. Tramping through 1960s world-communist jargon is equivalent to discussing genetics from the point of view of Lamarck's theory of acquired inheritance. Mostly it's just an oddity.
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