Abstract
As stated in Chapter 1, the objective of this book is to see whether, in view of the flaws of the traditional capitalist system, political scientists and democratic leaders will develop and implement a new balance between state, business and society. The analysis conducted in this book reveals that several important political and social changes are currently taking place, which blur the demarcation line between a “free-market economy” model and a “social democracy” model, and expand the ideological debate to social and ethical values — a debate which goes far beyond the traditional capitalist analysis. The recent economic crisis has resurrected an old issue on the relative merits of different socio-economic models, in particular between conservative and socialist theories. The questions addressed in this chapter are the following:
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Should the economy evolve toward a societal market economy model based on social democracy?
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Is there a third way between socialism and capitalism?
This debate is crucial at a time when economic crisis has shaken public confidence in the market economy and structural reforms are under way within the EU28.
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Notes
Peavier, R. (2013) The characteristics of capitalism and socialism, About.com Business Finance, available at http://bizfinance.about.com/od/smallbusinessissues/qtCapvSoc.htm.
Smith, A. (1776) An Inquiry into the Nature and Causes of the Wealth of Nations, Oxford, Oxford University Press (1993).
Marx, K. (1906) Capital: A Critique of Political Economy, vol. 1, translated by Samuel Moore and Edward Aveling, New York, Modern Library.
Eisel, S. (2012), Between ideologies: the social market economy, working paper, available at http://www.kas.de/wf/docs/kas_31897-1522-1-30.pdf?120821161126.
The process of commodification is well described in Spies-Butcher, B., Paton, J. and Cahill, D. (2012) Market Society: History, Theory, Practice, Cambridge, Cambridge University Press, pp.34–41.
Polanyi, K. (1944/2001), The Great Transformation, Boston, Beacon Street. See in particular Chapter 6, pp.71–80.
Samuelson, P. (1948/2009) Economics: An Introductory Analysis, nineteenth edition, New York, McGraw-Hill.
Sachs, J. (2012) The Price of Civilization, London, Vintage, p.28.
On the crisis of the 1970s, see Frieden, J.A. (2006) Global Capitalism: Its Fall and Rise in the Twentieth Century, New York, Norton and Norton Company, Chapter 16 (oil shocks, commodity boom, stagflation, recession, Volcker counter-shock and so on).
The economic ideology of the social market economy model is well presented by Eisel, S. (2012) Between ideologies. See also Wrobel, R.M. (2010) Social market economy as alternative approach after the financial and economic crisis, available from Ralp.wro-bels@th-zwickau.de.
Locke, J. (1690) The Second Treatise of Government, New York, Barnes & Noble Publishing.
Mikols, P.A. (2011) The Financial Crisis: A View of Germany’s Recovery, DAAD Study Tours, available at https://sites.google.com/site/ccgestudytour/hamburg-2011/reports-and-reflection/the-financial-crisis-a-vi.
On this subject see Capron, M. (2000) La comptabilité sociale et societal, in Colasse, B. (ed.) (2000) Encyclopédie de Comptabilité, Contrôle de Gestion et Audit, Paris, Economica.
For a review of this question see Davies, P.L. (2000) The Board of Directors: Composition, Duties and Powers, OECD, December, available at http://www.oecd.org/daf/ca/corporategovernanceprinciples/1857291.pdf.
Fox, J. and Lorsch, J. (2012) What good are shareholders?, p.57.
Lekvall, P. (2009) The Swedish Corporate Governance Model, Swedish Corporate Governance Board, available at http://www.corporategovernanceboard.se/media/28166/the%20swedish%20corporate%20governance%20model%20-%20article%20 in%20the%20iod%20handbook%202009.pdf. Contrary to the situation in most other countries, where the nomination committee is a subcommittee of the board, Swedish nomination committees are appointed by the shareholders and made up predominantly of major shareholders or their representatives. The rationale behind this is the belief that the board should not nominate its own members, but instead nominations should be made by a body representing the shareholders.
Fox, J. and Lorsch, J. (2012) What good are shareholders?
Haldane, A.G. (2010) Patience and finance, Oxford China Business Forum, September 2, p.17 available at http://www.bank of England.co.uk. While High Frequency Tradings (HFTs) are not new, their speed of execution has undergone a quantum leap. A decade ago, the execution interval for HFTs was seconds. Advances in technology mean today’s HFTs operate in million micro-seconds. Tomorrow’s may operate in nano-seconds. HFTs operate in size as well at speed. HFT firms are believed to account for more than 70 per cent of all trading volume in US equities, 40 per cent of volumes in US futures and 20 per cent of volumes in US options. In Europe, HFTs account for around 30–40 per cent of volumes in equities and futures. These fractions have risen from single figures as recently as a few years ago.
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© 2014 Jean-Jacques Lambin
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Lambin, JJ. (2014). Toward a Societal Market Economy. In: Rethinking the Market Economy. Palgrave Macmillan, London. https://doi.org/10.1057/9781137392916_14
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DOI: https://doi.org/10.1057/9781137392916_14
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