Roads to Social Capitalism
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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.
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Chapter 3: Full Employment Capitalism through an Employer of First Resort

Peter Flaschel and Sigrid Luchtenberg


3.1 Introduction Flexicurity is a combination of flexibility and security in working arrangements. The concept is a response to the needs European labour markets are facing. On the one hand, the EU has to come to terms with changes in the world economy. ... Jobs change more quickly than before. On the other hand, the EU needs to reinforce the European social models, which are committed to social protection, social cohesion and solidarity. Workers .... need good social protection in case a new job is not easily at hand or when employment is no longer a realistic option. Flexicurity is an attempt to unite these two fundamental needs. It promotes a combination of flexible labour markets and adequate security. Flexicurity can also help provide an answer to the EU’s dilemma on how to maintain and improve competitiveness whilst reinforcing the European social model. Flexicurity does not mean ‘hire and fire’ .... . ‘External flexicurity’ attempts to offer safe moves for workers from one job into another, and good benefits to cover the time span, if needed. Rather than job security, flexicurity focuses on ‘employment security’. Employment security means staying in employment ... . The philosophy behind flexicurity is that workers are more prepared to make ... moves if there is a good safety net. EU Member States have recognised that they need to develop innovative policies to help people stay in employment whilst ensuring that companies remain competitive on the global stage. .... The European Commission has, in response to this request, extensively researched possible solutions...

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