Progressive capitalism

Last updated

Progressive capitalism is an approach to capitalism that seeks to improve the current neoliberal American capitalism that emerged in 1980. [1] Progressive capitalism aims to improve economic results through four defining beliefs, namely the vital role businesses play in the economy by creating jobs, fostering innovation, enabling voluntary exchange, and providing competitive goods and services; the recognition of the important role public goods, public institutions, public services and public infrastructure play in supporting businesses including: research, schools, health care, social insurance, taxation, labor law and regulation of markets; the need for the state to be involved in design and oversight of the playing field; and the integration of social justice, stewardship of natural resources and responsibility to all major stakeholders. It is being advocated by Ro Khanna and Joseph Stiglitz.

Contents

Overview

Capitalism incorporates the principles of private property, capital accumulation, wage labor, voluntary exchange, a price system, and competitive markets. [1] [2] It aims to deliver strong economic results and achieve competitive advantage in a global economy. Progressive capitalism is a refinement of capitalism. It aims to increase well paying jobs and economic growth through four defining beliefs:

  1. The central role businesses play in the economy requires for success that they invest in their employees, protect the environment, support their communities, deal fairly and ethically with their suppliers, and increase value for shareholders.
  2. The important role of Institutions providing public goods and services, including infrastructure, research, schools, health care, social insurance, taxation, labor law, and regulation of markets. [3]
  3. The need for the state to be involved in their design.
  4. The advocacy of social justice, defined as fairness (the assignment of rights and duties in the institutions of society, which enables all people both to receive the basic benefits of society and to contribute to obligations of society). Further advocacy for stewardship of natural resources and protection of the environment.

Progressive capitalism seeks to show how these improvements can be used by politicians and policy-makers to produce programs of economic reform. It does this by analyzing and proposing reforms and policies for the United States federal governance, corporate governance, equity markets, national systems and universities including support for innovative research, education and training systems. [4]

Further, progressive capitalism describes the role the state should play in the economy—an empowering one, improving on the current American capitalism [1] approach with better results that promote economic growth, more well-paying working/middle class jobs and help for new small businesses (for example, with wage support programs like the Earned Income Tax Credit). It seeks to provide better results for society and families than alternatives such as the command-and-control role of traditional socialism or the concentrating results from today's American capitalism which tends to redirect benefits toward the economically powerful and marginalize the economic majority. [5] [6]

The Progressive Party of Henry A. Wallace entertained the notion of progressive capitalism after its formation in 1946. [7]

Progressive capitalism is currently being popularized by Ro Khanna, [8] [9] [10] who believes free enterprise rewards hard work and innovation and is not just for the privileged and connected few. [11] [12] Progressive capitalists believe that a partnership among the private business sector, federal government and research universities fuels growth and that strategic investments will increase both the demand and supply of well-paying jobs in the 21st century. The partnership generates new technology and builds the launch pads for new and growing businesses.

Joseph Stiglitz writes in People, Power, and Profits: Progressive Capitalism for an Age of Discontent (2019) that society needs a better understanding about the true source of "the wealth of a nation" which lies in the creativity and productivity of the nation's people and their productive interactions with each other and their institutions. [12] He argues that progressive capitalism is not an oxymoron [12] and explains how progressive improvements of capitalism would achieve a more dynamic economy, with greater shared prosperity and uplift the majority again to a middle-class life. [13]

In The Salt Lake Tribune 's "The Public Forum" the editor discusses labels used by political parties in their respective efforts for the 2020 election. A key conclusion in the article is that a large majority of Americans "would say they are capitalists." The focus needs to be on how to implement capitalism and how much the approach provides for collaboration between business and government at all levels on programs for investments and safety-net protections. The article offers a middle ground approach by "offering up these labels: Trumpism = reactionary capitalism; Bidenism = progressive capitalism." Concluding with "Now let’s move on and compromise." [14]

2020 World Economic Forum

The 2020 World Economic Forum at Davos highlighted disenchantment with the increasingly dominant American model of shareholder-first, profit-maximizing firms. [15] Summarizing Joseph Stiglitz's comments about the event: "In speech after speech this year, business leaders and academics explained how Milton Friedman’s successful advocacy of shareholder capitalism [16] led directly to the crises we face today and the political divisions they have fueled. To be sure, recognition that there is a problem is necessary if we are to change course. But we also have to understand that the causes of societal maladies go beyond maximizing shareholder value. At the root of the problem is neoliberalism's [17] excessive faith in markets and skepticism of government, which underpins a policy agenda focused on deregulation and tax cuts. After a 40-year experiment, we can declare it a failure. [18] Growth has been lower, and most of the gains went to the top. While this should be obvious, there is no consensus among our business leaders. And yet some of the business leaders at Davos this year, especially those from Europe, seemed to have grasped the urgency of responding to climate change and the scope of what is needed. And some have actually taken giant strides, the tide has turned. In short, unfettered capitalism has played a central role in creating the multiple crises confronting our societies today. If capitalism is to work – if it is to address these crises and serve society – it can't do so in its current form. There must be a new kind of capitalism – what I have elsewhere called progressive capitalism, [13] [18] entailing a better balance of government, markets, and civil society."

Criticism

Critics of neoliberal capitalism associate the economic system with social inequality, unfair distribution of wealth, and power; materialism, repression of workers and trade unionists, social alienation, economic inequality, unemployment, and economic instability. Nick Beams of the World Socialist Web Site writes that progressive capitalism will not address the problems created by neoliberal capitalism, which institutionalized a system whereby the wealth created by the labor of the working class was siphoned up to the heights of society. This wealth concentration leads to the decline in real wages and the greatest level of social inequality seen at any point in US history. [19]

See also

Related Research Articles

Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, price systems, private property, property rights recognition, voluntary exchange, and wage labor. In a market economy, decision-making and investments are determined by owners of wealth, property, or ability to maneuver capital or production ability in capital and financial markets—whereas prices and the distribution of goods and services are mainly determined by competition in goods and services markets.

<span class="mw-page-title-main">Corporatocracy</span> Society controlled by business corporations

Corporatocracy is an economic, political and judicial system controlled by business corporations or corporate interests.

In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any other external authority. Proponents of the free market as a normative ideal contrast it with a regulated market, in which a government intervenes in supply and demand by means of various methods such as taxes or regulations. In an idealized free market economy, prices for goods and services are set solely by the bids and offers of the participants.

<span class="mw-page-title-main">Market economy</span> Type of economic system

A market economy is an economic system in which the decisions regarding investment, production and distribution to the consumers are guided by the price signals created by the forces of supply and demand. The major characteristic of a market economy is the existence of factor markets that play a dominant role in the allocation of capital and the factors of production.

<span class="mw-page-title-main">Joseph Stiglitz</span> American economist (born 1943)

Joseph Eugene Stiglitz is an American New Keynesian economist, a public policy analyst, and a full professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979). He is a former senior vice president and chief economist of the World Bank. He is also a former member and chairman of the Council of Economic Advisers. He is known for his support for the Georgist public finance theory and for his critical view of the management of globalization, of laissez-faire economists, and of international institutions such as the International Monetary Fund and the World Bank.

Neoliberalism, also neo-liberalism, is a term used to signify the late-20th century political reappearance of 19th-century ideas associated with free-market capitalism. The term has multiple, competing definitions, and is often used pejoratively. In scholarly use, the term is frequently undefined or used to characterize a vast variety of phenomena, but is primarily used to describe the transformation of society due to market-based reforms.

In economics, shock therapy is a group of policies intended to be implemented simultaneously in order to liberalize the economy, including liberalization of all prices, privatization, trade liberalization, and stabilization via tight monetary policies and fiscal policies. In the case of post-Communist states, it was implemented in order to transition from a command economy to a market economy.

<span class="mw-page-title-main">Economic inequality</span> Distribution of income or wealth between different groups

Economic inequality is an umbrella term for a) income inequality or distribution of income, b) wealth inequality or distribution of wealth, and c) consumption inequality. Each of these can be measured between two or more nations, within a single nation, or between and within sub-populations.

Democratic capitalism, also referred to as market democracy, is a political and economic system that integrates resource allocation by marginal productivity, with policies of resource allocation by social entitlement. The policies which characterise the system are enacted by democratic governments.

Accumulation by dispossession is a concept presented by the Marxist geographer David Harvey. It defines neoliberal capitalist policies that result in a centralization of wealth and power in the hands of a few by dispossessing the public and private entities of their wealth or land. Such policies are visible in many western nations from the 1970s and to the present day. Harvey argues these policies are guided mainly by four practices: privatization, financialization, management and manipulation of crises, and state redistributions.

Market fundamentalism, also known as free-market fundamentalism, is a term applied to a strong belief in the ability of unregulated laissez-faire or free-market capitalist policies to solve most economic and social problems. It is often used as pejorative by critics of said beliefs.

Economic progressivism or fiscalprogressivism is a political and economic philosophy incorporating the socioeconomic principles of social democrats and political progressives. These views are often rooted in the concept of social justice and have the goal of improving the human condition through government regulation, social protections and the maintenance of public goods. It is not to be confused with the more general idea of progress in relation to economic growth.

Capitalism is an economic system based on the private ownership of the means of production, and their operation for profit. Other characteristics include free trade, capital accumulation, voluntary exchange, and wage labor. Its emergence, evolution, and spread are the subjects of extensive research and debate. Debates sometimes focus on how to bring substantive historical data to bear on key questions. Key parameters of debate include: the extent to which capitalism is natural, versus the extent to which it arises from specific historical circumstances; whether its origins lie in towns and trade or in rural property relations; the role of class conflict; the role of the state; the extent to which capitalism is a distinctively European innovation; its relationship with European imperialism; whether technological change is a driver or merely a secondary byproduct of capitalism; and whether or not it is the most beneficial way to organize human societies.

<span class="mw-page-title-main">Criticism of capitalism</span> Arguments against the economic system of capitalism

Criticism of capitalism is a critique of political economy that involves the rejection of, or dissatisfaction with the economic system of capitalism and its outcomes. Criticisms typically range from expressing disagreement with particular aspects or outcomes of capitalism to rejecting the principles of the capitalist system in its entirety.

<span class="mw-page-title-main">Income inequality in the United States</span>

Income inequality has fluctuated considerably in the United States since measurements began around 1915, moving in an arc between peaks in the 1920s and 2000s, with a 30-year period of relatively lower inequality between 1950 and 1980.

Redistribution of income and wealth is the transfer of income and wealth from some individuals to others through a social mechanism such as taxation, welfare, public services, land reform, monetary policies, confiscation, divorce or tort law. The term typically refers to redistribution on an economy-wide basis rather than between selected individuals.

The socialist mode of production, or simply (Marxist) socialism or communism as Karl Marx and Friedrich Engels used the terms communism and socialism interchangeably, is a specific historical phase of economic development and its corresponding set of social relations that emerge from capitalism in the schema of historical materialism within Marxist theory. The Marxist definition of socialism is that of production for use-value, therefore the law of value no longer directs economic activity. Marxist production for use is coordinated through conscious economic planning. According to Marx, distribution of products is based on the principle of "to each according to his needs"; Soviet models often distributed products based on the principle of "to each according to his contribution". The social relations of socialism are characterized by the proletariat effectively controlling the means of production, either through cooperative enterprises or by public ownership or private artisanal tools and self-management. Surplus value goes to the working class and hence society as a whole.

Market socialism is a type of economic system involving social ownership of the means of production within the framework of a market economy. Various models for such a system exist, usually involving cooperative enterprises and sometimes a mix that includes public or private enterprises. In contrast to the majority of historic socialist economies, which have substituted the market mechanism for some form of economic planning, market socialists wish to retain the use of supply and demand signals to guide the allocation of capital goods and the means of production. Under such a system, depending on whether socially owned firms are state-owned or operated as worker cooperatives, profits may variously be used to directly remunerate employees, accrue to society at large as the source of public finance, or be distributed amongst the population in a social dividend.

Socialist economics comprises the economic theories, practices and norms of hypothetical and existing socialist economic systems. A socialist economic system is characterized by social ownership and operation of the means of production that may take the form of autonomous cooperatives or direct public ownership wherein production is carried out directly for use rather than for profit. Socialist systems that utilize markets for allocating capital goods and factors of production among economic units are designated market socialism. When planning is utilized, the economic system is designated as a socialist planned economy. Non-market forms of socialism usually include a system of accounting based on calculation-in-kind to value resources and goods.

Angela Wigger is a political economist at the Political Science department at the Radboud University in the Netherlands.

References

  1. 1 2 3 Louis Hyman and Edward E. Baptist (2014). American Capitalism: A Reader. Simon & Schuster. ISBN   978-1-4767-8431-1.
  2. ↑ Heilbroner, Robert L. "Capitalism". Steven N. Durlauf and Lawrence E. Blume, eds. The New Palgrave Dictionary of Economics. 2nd ed. (Palgrave Macmillan, 2008) doi : 10.1057/9780230226203.0198
  3. ↑ John Rawls, A Theory of Justice (1971) 4, "the principles of social justice: they provide a way of assigning rights and duties in the basic institutions of society and they define the appropriate distribution of benefits and burdens of social co-operation."
  4. ↑ Sainsbury, David (2013). Progressive Capitalism: How to achieve Economic Growth, Liberty and Social Justice. UK: Biteback Publishing. ISBN   9781849545846.
  5. ↑ Hewlett Foundation, William & Flora. "Beyond Neoliberalism: Rethinking Political Economy" (PDF). hewlett.org. Retrieved 6 June 2019.
  6. ↑ Pollin, Robert. 2007. '"Resurrection of the Rentier", book review of Andrew Glyn's Capitalism Unleashed:Finance, Globalization and Welfare. New Left Review 46:July–August. pp. 141–142. http://www.peri.umass.edu/fileadmin/pdf/other_publication_types/NLR28008.pdf.
  7. ↑ Henry A. Wallace. What Is Progressive Capitalism?, Monthly Review, Vol. 1, No. 12: April 1950
  8. ↑ "How progressive capitalism can be the recipe for economic growth and innovation". FOXBusiness. 15 May 2019. Retrieved 21 August 2019.
  9. ↑ Payne, Charles (15 May 2019). "Rep. Khanna: I am a progressive capitalist". Fox Business. Fox Business. Retrieved 15 May 2019.
  10. ↑ Klein, Ezra (May 2019). "Ro Khanna and the tensions of Silicon Valley liberalism". Vox. Retrieved 1 May 2019.
  11. ↑ Cooper, Mark (30 March 2015). "Content Author". TPRC 43: The 43rd Research Conference on Communication, Information and Internet Policy. 43 (TPRC 43): Download. Retrieved 20 April 2019.
  12. 1 2 3 Stiglitz, Joseph (19 April 2019). "Opinion:Progressive Capitalism Is Not an Oxymoron". New York Times. Retrieved 19 April 2019.
  13. 1 2 Stiglitz, Joseph E. (2019). People, power, and profits : progressive capitalism for an age of discontent (First ed.). New York. ISBN   9781324004219. OCLC   1097200732.{{cite book}}: CS1 maint: location missing publisher (link)
  14. ↑ "Let's be more precise with labels". No. 15 November 2020. The Salt Lake Tribune. 15 November 2020. Retrieved 17 November 2020.
  15. ↑ Stiglitz, Joseph E. (30 January 2020). "Has Davos Man Changed? | by Joseph E. Stiglitz". Project Syndicate. Retrieved 1 February 2020.
  16. ↑ Milton Friedman; Rose D. Friedman (1962). Capitalism and Freedom: Fortieth Anniversary Edition. U. of Chicago Press. ISBN   978-0226264189.
  17. ↑ Bloom, Peter (2017). The Ethics of Neoliberalism: The Business of Making Capitalism Moral. Routledge. pp. 3, 16. ISBN   978-1138667242.
  18. 1 2 Edsall, Thomas B. (3 August 2012). "Separate and Unequal: 'The Price of Inequality,' by Joseph E. Stiglitz". New York Times . Retrieved 4 May 2015.
  19. ↑ Beams, Nick. "The fraud of 'progressive capitalism'". WSWS. Retrieved 7 June 2019.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.