05 Mar 2011 14:30

Since quite some time I feel that political economy is like a game of Rock-paper-scissors.

[A [vicious] cycle of various systems that each beat each other…]

Before capitalism, there was feudalism. The dynamic growth of the industrial revolution allowed capitalism to displace earlier forms of organization, but the wild original capitalism also produced extreme inequality and was vulnerable to heavy cyclical shocks.

So, capitalism is vulnerable to socialism and communism, who was promising prosperity and equality. While initially allowing a strong mobilization of resources, communism tends to petrify, and therefore lose any progressive dynamic after some time.

Therefore, communism is vulnerable to a ‘social market economy’, basically Keynesian macroeconomics. Such a policy is more dynamic than communism, and not so exposed to shocks and inequality as ‘originial’ or ‘Austrian’ capitalism.

Unfortunately, Keynesian economics is vulnerable to ‘neo classical’ capitalism, as unconstraint companies without respect for environment or workers can make more profit than those playing by the Keynesian rules…

So, the sequence would go… Classical capitalism is beaten by socialism, which, in turn is beaten by Keynesian economics, which are then, beaten by neo-classical capitalism. The sequence should then repeat itself….

Or, in other words, the only fact that makes capitalists accept a relatively fair and prosperous model like Keynesian economics, is fear of violent communist revolution. With that fear weakening, they see no reason why they should care about unemployment and general prosperity.

[One historical variety is of course fascism. It keeps the old big business elites in power (unlike communism) and usually accepts deficit spending (for wars and the like)] As it modernizes less than communism and is at least as static when in power, it should last even shorter, even if they aren’t losing a big war]

Unfortunately, I can’t see a way how MMT ore some form of Neo-Keynesianism can beat Neo-liberalism.

The natural successor of neo-classical capitalism would have to be some form of Neo-communism. But with communism so discredited as it is at present, this seems unlikely.

So, my pessimistic view: The most likely things will be some fascism-like systems, that will, without an alternative, be followed by series of failed states, and a collapse of civilization, back to the middle-ages.


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