segunda-feira, julho 16, 2007

High Brow

"Good Capitalism, Bad Capitalism” helpfully moves the debate on from competing national models to the underlying structures that shape the relative effectiveness of different sorts of capitalism. Written by three economists, including 85-year-old William Baumol, arguably the leading thinker about the economics of innovation since Joseph Schumpeter, it identifies four main varieties of capitalism.
First, state-guided capitalism, in which government tries to guide the market, typically by supporting certain industries that it expects to become “winners”. Second, oligarchic capitalism, in which the bulk of the power and wealth is held by a small group of individuals and families. Third, big-firm capitalism, in which the main economic activities are carried out by established giant enterprises. Fourth, entrepreneurial capitalism, in which a major role is played by small, innovative firms.
The only thing that all four of these models of capitalism have in common is that they recognise the right of private property ownership. Nor is there any single country that has exactly any one of the models described; in most national economies there is some blend of at least two. Moreover, the blend changes over time, and with it, the performance of the economy. Less than two decades after the fall of communism, Russia is already moving rapidly from oligarchic capitalism to an authoritarian state-guided capitalism.
Neither of those two Russian models are the best producers of economic growth, at least in the long run. Oligarchic capitalism is the worst performer; state-guided capitalism can work well for a while, especially when an economy is in catch-up mode, as Japan once was. What works best, argue the authors, is a mix of big-firm capitalism and entrepreneurial capitalism. And this happens to describe America's economy during the past 20 years, during which time it has reversed its seemingly inevitable long-term decline and delivered a “productivity miracle”.
The possibility of change is at the heart of “Good Capitalism, Bad Capitalism”. The authors are sceptical—for the most part, plausibly—of claims that the growth rates of economies are largely predestined by culture or geography, as books such as “The Wealth and Poverty of Nations” by David Landes or Jared Diamond's “Guns, Germs and Steel” suggest. There are no quick fixes, but over time the right policies can make a big difference, as can the wrong policies. (...)

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