Capitalism Unleashed: Finance, Globalization, and Welfare
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This accessible and persuasive book challenges the notion of our capitalist destiny. It provides a clear and concise history of the problems facing the economies of Europe, Japan, and the US during the latter half of the twentieth century and questions whether capitalism has really brought the levels of economic growth and prosperity that were hoped for. Andrew Glyn then looks at the impact that the rapidly developing economies of China and the South are likely to have on the older economies of the North. As the race is on to maintain growth and protect competitive advantage, Glyn asks: is the "race-to-the bottom" inevitable as the anti-globalizers predict, with welfare states being dismantled to meet competitive demands? Or is there an alternative model, which sees a strong commitment to welfare provision as essential to economic growth? Can we afford not to tackle inequality at home as well as abroad?
workers (8 Mar. 2002 quoted by Pollock 2004:193). The UK government has also pioneered the use of private ﬁnance to fund investment projects for use within the public sector (PFIs). Begun under the Conservative government, this form of funding has contributed 10–15% of public services investment since 1997 and by the middle of 2003 had delivered 600 new public facilities including 34 hospitals, 119 other health facilities and 239 new and refurbished schools.28 Just as with privatization a decade
pursuing shareholder value in the USA, often boosted proﬁts at the expense of workers who lost out in terms of jobs, wages or pension levels.15 International Finance The growth of international ﬁnancial ﬂows has been one of the more notorious aspects of the expansion of ﬁnance, stimulated by progressive abandonment throughout the OECD of the capital controls. These had more or less severely constrained the extent to which a country’s ﬁrms and residents could invest overseas through purchasing
Source: Ofﬁce of National Statistics. See Data Appendix. 16 countries. 20 Inflation (% p.a.) Real wages (% p.a. five-year average) % per year 15 10 5 0 1960 1965 1970 1975 1980 1985 Fig. 1.2. Inﬂation and Real Wage Increases, 1963–2003 Source: IMF. See Data Appendix. 13 countries. 1990 1995 2000 7 CHALLENGES TO CAPITAL Wage pressure also contributed to a squeeze on proﬁtability. By the mid-1970s the gross proﬁt share in manufacturing, a sensitive and readily available indicator
the 1970s and 1980s was the subject of soul searching there (see Chapter 4). A wide spectrum of explanations for Europe’s poor growth has been offered in the literature.11 One of the more intriguing suggestions, with strong echoes in Japan, has been that the ageing of the population and labour force has reinforced caution and an aversion to risk taking, in contrast to the youthful and dynamic USA. Amongst the more mainstream, economic explanations, at one extreme the liberalizers have argued that
countries, perhaps to little more than half a per cent per year in two or three decades.22 Whilst changes on the ‘supply side’ tend to be slow acting, economic prospects are much more dramatically affected by demand ﬂuctuations. The genie of ﬁnancial competition and expansion has been released by deregulation and ﬁnancial innovation. Whilst the worst effects of the resulting ﬁnancial fragility have been felt in the Asian countries hit by the crisis of 1998, it would be wrong to assume that the