Abstract
ABSTRACT This paper argues that the state and the market are the main institutions regulating capitalism, and, correspondingly, that the form of the economic and political coordination of capitalism will be either developmental or liberal. It defines the developmental state, relates it to the formation of a developmental class coalition, and notes that capitalism was born developmental in its mercantilist phase, turned liberal in the nineteenth century, and, after 1929, became once again developmental, but, now, democratic and progressive. All industrial and capitalist revolutions took place within the framework of developmentalism, whereby the state coordinates the non-competitive sector of the economy and the five macroeconomic prices (which the market is unable to make “right”), while the market coordinates the competitive sector. In the 1970s, a crisis opened the way for a short-lived and reactionary form of capitalism, neoliberalism or rentier-financier capitalism. Since the 2008 Global Financial Crisis, the neoliberal hegemony has come to an end, and we are now experiencing a period of transition.
Highlights
Capitalist societies will be either developmental or liberal depending on the way they deploy their major institutions, namely the state and the market
Marx supposed it would change into socialism, but instead it was transformed into technobureaucratic capitalism after the Second Industrial Revolution, into social-developmental capitalism during the Golden Years of Capitalism, and from around 1980 once again into liberal capitalism
I acknowledge that I have an ideological bias, but my main argument is that developmentalism is a more balanced form of coordinating capitalism than economic liberalism, and generates more growth with financial stability
Summary
In analyzing the forms of capitalism and of the state, we must, first, ask how, historically, capitalist societies have been coordinated, that is, which are the institutions or rules that preside over social action, which rights are assured and which obligations individuals have to the nation, how political objectives are set, how productive factors are allocated, how wealth and income are distributed, and how global warming is avoided. They were eclipsed by neoclassical economics and neoliberalism, which criticized the developmental state and social democracy, and defined as its major objective reducing wage and non-wage labor costs in response to the new competition With this objective in mind, neoliberal economists insisted that liberal capitalism was superior to social democracy and developmentalism, arguing that markets are more “impersonal” in coordinating the economy, while ceasing to protect workers would encourage work and punish laziness. They were unable to demonstrate such superiority, essentially because the greater social cohesiveness of the European societies compensated for the extra costs embedded in the welfare state and in the protected labor market. From 2008 the center moved again, most likely toward a conservative developmentalism, but this change is beyond the scope of this paper
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