CAPITALISM DEAD

Is Capitalism Dead



Is Capitalism Dead

Background

The new capitalist model that emerges from this crisis must operate according to more consistent principles. The Fed should set interest rates with the long-run value of the dollar in mind. Government must be more selective about manipulating markets; over the long term, business works best when it is subject to market discipline alone. In those cases -- and there will and should be some -- in which government intervenes on behalf of social goals, its support must be counterbalanced with taxpayer protections and regulation. Government-sponsored, upside-only capitalism is the kind that's in crisis today, and we say: Good riddance.

Increasing Government Spending

Increased public spending is not unique to France. It has affected all OECD countries and was conducted in three waves:

The share of public expenditure in GDP has more than doubled during the First World War, before declining during the 1920s.

Then she rose sharply during the Second World War and the Liberation, before declining again in the 1950s.

This quantitative change was accompanied by a deformation of the structure of expenditure under the combined effects of the development tasks of the State (including the progress of Education), the creation of Social Security, and then in a lesser extent, the decentralization. Thus, the traditional sovereign expenses (diplomacy, defense, police, justice) represent only a fifth of the state budget, and less than one tenth of the expenditure against more than half in the early twentieth century. Moreover, the Expenditure of Social Security, non-existent a century ago, exceeds that of the state since 1995 (Althusser, 2009).

The public expenditure consumption will also increase the estimated productivity (for example, result in social spending on education and health services, cultural, and technical training for workers, to raise the level of employment, thereby increasing the estimated productivity), in addition to its contribution to the increase in GDP this . As the general economic subsidies given to private and public projects to increase the rate of profit of these projects, which affects their ability to increase productivity (Stoler, 2005). The public expenditure on traditional services, defense, security and justice leads to achieve the necessary stability to the productive process. On the other hand, is a public expenditure is an important part of the components of effective demand (or demand for consumer and investment goods), which directly affects the volume of production, provided that the level of economic activity is less than full employment of factors of production (land, labor and capital), and to enjoy the flexibility of the productive apparatus which allows the movement of factors of production among the various economic activities (Frank, 2005).

It is noted that social public expenditure of both types, both social transfers in kind (such as the amounts to be allocated for the production of goods and services used to achieve social purposes, health, cultural, educational and housing) or social transfers in cash (such as those made for the benefit of the poor to meet the cases of illness or old age or unemployment) to increase the ...