Our minds on media.

Economist John Gray points out that capitalism comes in many colors and that the particular brand of capitalism that the US is fairly obsessed with (namely unregulated free markets) is going to cause some serious problems in the near future as it becomes less and less regulated — and no longer by our choice. What is known conventionally as lazzez-faire capitalism is really a fairly anomalous form of capitalism practiced mostly within the anglo-saxon countries (England, US, New Zealand, and Australia). Neo-liberals in these countries have attempted to create free trade without entirely realizing that it will bring them into competition with other species of capitalism (i.e. the German model of capitalism in which welfare is constitutional and stakeholders (employees, suppliers, environmentalists) sit on boards of large corporations.)

By introducing world governments into the global free market, their abilities to counteract social problems become limited by the threat of the flight of capital in markets which can only worsen their situations as they try to counteract the effects of capitalism on the social body. Their Keynesian ability to spend on public works projects and high deficit spending is now overthrown by the market.

Another of his major points is that, as Gresham’s Law states, bad money drives out good money. Now Gresham’s Law is a little out-of-date considering that all money is now fiat money.¹ Nonetheless, he draws a parallel and writes, “Bad capitalism drives out good capitalism.” Social market economies (socialist regimes) are driven “out of business” by world markets that allow for corporations to seek and find cheap labor, areas where regulations are lax. Here again, the problem of these social market economies is now exacerbated by the fact that have fewer Keynesian remedies with which to protect their laboring populations. Impose too much protection and the capital just goes somewhere else.

Technology in Gray’s book seems to play a large but mostly invisible role. He mentions at one point that only Japan can perhaps deal with the concepts presented in “the end of work” by Jeremy Rifkin.

All in all this is a very good book to read, totally accessible to those without a background in economics and well reasoned through and through.