A Reassessment Beyond the Global Crisis
1. Exposition – capitalism as systemic risk What if capitalism were to collapse? Many critics of capitalism do not realize that there is no viable alternative to capitalism after the demise of socialism; there are only alternatives within market capitalism. Varieties of capitalism span a broad range from market fundamentalism to welfare capitalism, and these varieties correspond to varieties of democracy (Hall and Thelen 2005; Willke 2009a). As a specific governance regime for the economy, capitalism is based mainly on self-organization and self-governance of markets, supplemented with varying institutional arrangements to safeguard the proper functioning of the market. However, at the same time global capitalism has become a systemic risk, and the global financial crisis should be regarded as a ‘normal accident’ within an untenable architecture of global finance. This paradox of capitalism – presenting a systemic risk because of and in spite of its achievements – is the base-line for this book. Even market fundamentalists do not doubt that markets require legal institutions, political frameworks and cultural patterns in order to function as markets. The details of the relations between politics and economy, of the political preconditions of a market economy and of the architectures of a political economy are, of course, contested. But it seems evident that a positive, self-reinforcing relationship between capitalism and democracy depends on reining in the self-destructive tendencies of an unfettered market capitalism by defining rules for public goods (Malkin and Wildavsky 1991), rules for accountability (Held 2004; Keohane 2003), rules against ‘predatory’ abuses of market power...
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