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The end of grounded capitalism in European peripheral economies: can it be reground?
Alternative economic policies in EuropePavia University
24th and 25th April 2015
José ReisFaculty of Economics. University of Coimbra
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1. Some references to discuss capitalism as a gounded system
• Alfred Marshall: "progress chiefly depends on the extent to which the strongest and not merely the highest forces of human nature can be utilized for the increase of social good"
• Albert Hirschman: “a moral basis of capitalist society [that can] be seen as being constantly depleted and replenished at the same time” – with an “excess of depletion over replenishment” leading to crisis, and “specific conditions” to “cohesion and legitimacy”
• Karl Polanyi: “an industrial society can afford to be free”; the right to “a job” at the top of the list of “new guarantees”
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1. Some references to discuss capitalism as a gounded system
• Kenneth Arrow: economic process did not simply consist of using given resources that would eventually be exhausted in a given activity; "learning by doing”: to extend and improve own resources and increase their availability
• John K. Galbraith: “anything that interrupted the investment outlays (...) could cause trouble”, since “compensation through an increase in consumer spending could not automatically be expected”
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2. The predominance of “financialisation”
• Financialisation: financial transactions and the valuation of assets decoupled from any material and productive reality
• A regression: the central position occupied by the productive condition and the process of “learning by doing” disconnected from the institutional, material and relational order which capitalism historically instituted
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3. What exactly is capitalism?
• A “peace formula”, a “stable” mechanism that ensured “the mass loyalty of workers and consumers to post-war capitalism”, a “technocratic system for managing the economy”, an “economic system regulated by policy”? (Streeck)
• Or, capitalism as more than just a system based on the market, transactions, the private appropriation of the means of production, the wage relationship and advanced forms of technological development? – A complex social order– An institutional framework – The material and relational circumstances of capitalism
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4. The conditions of a grounded capitalism
• a) the formation of the industrial society• b) the development of a processes of
“learning by doing” in labour market and productive system
• 3) the generation of material institutions of capitalism.
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5. Industrial society
• In order for markets and transactions to make sense, a very concrete condition must lie at the core of an economic and social system of this type – the institution of a productive, organizational and labour sphere structured through a variety of sectors and activities and a logic that is not limited to accounting for labour costs but also includes capacity building and an income redistribution policy– The condition for an“enlarged replenishment”
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6. Learning by doing
• The transformation of the productive process from something that merely consumes and exhausts resources or capacities in order to create outputs into something which, in addition, creates new capacities
• How people are incorporated into the organisational system itself – learning by doing
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7. The material institutions of capitalism
• Key institutions of capitalism the coalesced with the development of a material order
• The less codified aspects which correspond to the main material frameworks for the (differentiated) organisation of industrial society, namely: a) mobility vs. links to concrete territorial contexts; b) links to professions and organisations and professional recognition; c) the relationship between the educational and the professional and social framework
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8. To an open discussion on southern and peripheral economies
• The new and radical fracture in Europe: centers against peripheries; credit and finance vs. economic relations; the main role of a disfunctional European and Monetary Union
• How to rebuild a productive order, an inclusive and sustainable labour market and how to recovery institutions?