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A three-step programme to re-civilise capitalism

From Triple Crisis:

What should protesters protest for? They rightly oppose the many faults of the current economic system, but what is the alternative? What ground should occupiers occupy? What can politicians who reject corporatist politics-as-usual, and economists who reject wrong economic thinking do in response to justified protest? How can the economy be transformed to serve the 99%, instead of the 1%?

Capitalism can work if reformed, and history can teach us much. In the period 1940-80, the Keynesian, mixed-economic models of north-west Europe, North America and many developing regions delivered to the poor and weak, while not frightening the strong. The financial sector was fairly small, well-regulated and simple; it financed the real economy, as it is supposed to. Growth, employment and security were high, poverty was reduced and liberty preserved, partly because social democracy helped both to moderate capitalism and to oppose communism.

From this experience, we know that reversing the huge growth of inequality can raise fiscal revenues, for use in job creation and investment, helping the many countries now needing to create employment without excessive government deficits. We also learned in that period that smart, accountable financial regulation impedes re-creation of crises. When in the 1980s finance was deregulated, both nationally and internationally, crises became the new normal, first in much of the developing world and then in the developed countries. The process of extreme liberalisation also contributed to growing inequality.


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