@Jackofalltrades phil,
Capitalism, as we've developed it today, is outmoded. The 18th century growth concepts still work for the emerging economies and the Third World but have lost a lot of their utility in the industrialized West.
We're only just beginning to grasp the transformation that was ushered in during the Reagan years. As Chris Hedges argues in his recent book "Empire of Illusion, The End of Literacy and the Triumph of Spectacle" America's decline became inevitable when, three decades ago, it morphed from being a culture of production into a culture of consumption. When Reagan entered the White House America was the world's largest creditor nation. When he left America had become the world's largest debtor nation. However, so dominant was the American economy that foreign creditors have gladly financed America's excess ever since.
Former Republican insider, Kevin Phillips, compared the decline of the American empire to the previous experiences of the Spanish, the Dutch and finally the British empires. Americans tend to be uncomfortable with the notion of empire but their nation's political, economic and military hegemony constitute just that except in name only.
Phillips, in his book "American Theocracy" notes that all of the earlier empires fell into decline when they abandoned manufacturing in favour of finance. He examines the rise of the FIRE (finance, insurance, real estate) economy in the United States that accompanied the export of America's manufacturing base. What Phillips shows is that America, like the British, Dutch and Spanish by turns before it, has fallen into the trap of using its wealth to grow the economies of its successors, in this case China and India. He also demonstrates why FIRE economies, no matter how massive, are very brittle and tend to break when economic downturns occur. Manufacturing economies are, by comparison, much more robust and resilient.
An article appeared recently, I believe in either
Harper's or
The New Yorker magazine, about an awakening in America to the critical need to restore its manufacturing base. The article suggested that attempts to reverse the trend have failed. That's almost inevitable when globalization frees the movement of capital by dismantling of duties and tariffs. You can't have both. Capitalism won't allow that.
American intellectual Lewis Lapham, who comes from a very patrician Republican family, believes the rot set in during the Nixon years when, as he describes it, wealth came to be equated with virtue.
In shifting from production to consumption, capitalism can become truly degenerate. One need only look at the emergence of America's 'bubble economy' and the accompanying rise of what's called 'casino capitalism' to get that point. Capitalism, like socialism, comes in a variety of forms, some far less benign than others.
Canadian-born economist John Kenneth Galbraith, who served in the administrations of Roosevelt, Truman, Kennedy and Johnson, pointed out that America is intolerant of socialism with but one exception - socialism for the rich. He would not have been surprised whatsoever at the Wall Street bailouts nor the casino capitalism that triggered them.
Surely subsidies are indicative of socialism and what sector has been so subsidized as America's military-industrial complex? The history of contract overruns is staggering.
So, while we see the United States as the bastion of capitalism, it is astonishingly socialist but inordinately toward the most advantaged. Scandinavian socialism targets the ordinary citizen. American socialism targets what George w. Bush referred to as his "...base, the 'haves' and the 'have-mores'."
