Roads to Social Capitalism

Roads to Social Capitalism

Theory, Evidence, and Policy

Peter Flaschel and Sigrid Luchtenberg

The current crises in the financialization of capitalism, and their repercussions on the financial viability of entire countries, severely question the achievements of mainstream economics and its disregard of Keynes’s theory of effective demand and finance. In view of this, Peter Flaschel and Sigrid Luchtenberg consider roads to a type of capitalism that could eventually be considered as ‘social’ in nature. The authors underpin their study with theory, empirical evidence, and policy from a positive as well as a normative perspective. As points of departure for their concept of social capitalism, the theoretical framework provides a synthesis of the work of Marx, Keynes, and Schumpeter on ruthless capitalism, regulated capitalism, and competitive socialism.

Chapter 7: Capital Accumulation, Environmental Decay and Rehabilitation

Peter Flaschel and Sigrid Luchtenberg

Subjects: economics and finance, history of economic thought, radical and feminist economics

Extract

More than a quarter of the nation’s bridges are structurally deficient or functionally obsolete. Leaky pipes lose an estimated seven billion gallons of clean drinking water every day. And aging sewage systems send billions of gallons of untreated wastewater cascading into the nation’s waterways each year. These are among the findings of a report to be released Wednesday by the American Society of Civil Engineers, which assigned an overall D grade to the nation’s infrastructure and estimated that it would take a $2.2 trillion investment from all levels of government over the next five years to bring it into a state of good repair. (Michael Cooper, January 27th 2009, The New York Times) The ‘crises’ we are going to consider in this chapter are environmental ones. There are early examples where firms started mining, e.g. gold seeking activities which simply destroyed the affected environment, used natural products in new contexts, e.g. water reservoir filling for electricity production, deforesting of the rainforest in order to plant food and so on. Often, the search for natural products in new areas leads to situations where the danger for the environment is still unknown or is underrated (like, e.g. oil production in the sea). There is a gradual systemic effect here at work, driven by ruthless cost competition which seeks to produce the output as cheaply as possible without concern about environmental effects (which are quite often also affecting human beings – at work as well as at home). It...

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