Political Governance of Capitalism
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Political Governance of Capitalism

A Reassessment Beyond the Global Crisis

Helmut Willke and Gerhard Willke

This path-breaking book highlights that systemic risks emerge from a globally operating financial industry that is not only disconnected from the real economy but also allowed to hide in ‘shadow banking’ practices. Governance based on national regimes fails to cover ‘finance-led’ global capitalism. The authors argue that the risk of systemic meltdown will reappear unless intelligent governance regimes are installed, combining legally binding rules and civil society pressures to restore the balance between risk-taking and accountability. They illustrate the goal is ‘resilient’ capitalism in which the rules of the game are set by politics and knowledge-based discourse.
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Chapter 5: On Global Capitalism and the Future of Democracy

Helmut Willke and Gerhard Willke


The dire reality of the relationship between capitalism and democracy at a global level is that neither capitalism nor democracy can be called success stories yet. At best, half of the members of the UNO can be considered democracies (Marshall and Cole 2008: 5), and even in reasonably functioning democracies capitalism is rather rationalization or aspiration than reality if we understand capitalism as an economic system of market-driven competition on level playing fields for competitors. This somewhat sobering state of affairs highlights a need for governance theory to scrutinize not only the apparent deficiencies of capitalism – as brought to light by the ongoing crisis – but equally seriously the more hidden flaws and imperfections of democracy. Even for most developed countries, say the OECD countries, the traditional forms of democracy (which have served them well for a long period of time) are showing signs of fatigue in view of exceeding societal complexities, transnational interdependencies and ensuing ungovernability. Globalization and an emerging knowledge society are aggravating the woes of national systems of democracy. National polities are caught in a catch-22 between assumed or postulated sovereignty and factual semi-sovereignty at best (Agnew 2005; Grande and Pauly 2005; Keohane 2002). Democracy presupposes sovereignty of a delimited territory and its citizens for deciding on collectively binding rules. If in actual fact many relevant rules are decided by different constituencies or institutions, the national democratic legislatures are facing a problem of legitimacy. Even within the European Union there are signs of legitimacy problems in spite of...

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