August 6, 2008

When has capitalism not worked?

Chicken and egg, cart before the horse -- pick any of the obvious clich?s. Here's an old point, but one worth repeating in the run-up to the Olympic games: Russia stumbled in its early crack at capitalism because economic reform followed political reform. Without a strong centralized government, party bosses seized what they could in the post-Soviet feeding frenzy. If the party put me in charge of one of the people's factories prior to the union's collapse, it was mine for the taking once the Wall came down. China, on the other hand, proceeded with economic reform with the world holding its breath (and now turning blue) in anticipation of political reform.

I only bring this up in order to point to former labor secretary Robert Reich's confusing blog post on authoritarian capitalism.

"The real competition lurking behind the upcoming Olympic games is between democratic capitalism and authoritarian capitalism ... We thought capitalism and democracy went hand in glove. They don't ... when it comes to civil and political rights, China today is where it was almost two decades ago at the time of Tiananmen Square."

He concludes by telling us to think of the upcoming U.S. presidential election as our own Olympic games. According to Reich, "It will showcase to the world whether, and how well, democratic capitalism still works."

I have no idea what he means by this. When has democratic capitalism (at least in this country) not worked? For those tempted to quote Enron or the latest bubble burst, the first was a perversion of capitalism (yet another clich?, the only problem with capitalism is capitalists) and the second is exactly how capitalism is supposed to work in over-heated markets.

Read the whole thing at http://robertreich.blogspot.com. With all due respect to a former labor secretary, what am I missing?

Reprints Discuss this story
This is where the comments go.