Friday, February 15, 2008

Varieties of Capitalism

I have just started Good Capitalism, Bad Capitalism, and the Economics of Growth and Prosperity by William J. Baumol, Robert E. Litan and Carl J. Schramm.

The authors, all associated with the Kauffman Foundation which seeks to promote industrial innovation, make the point that there are many different forms of capitalism practiced in free market nations. They define four categories:
  • entrepreneurial
  • big-firm
  • state-directed and
  • oligarchic.
They suggest that the most successful form of capitalism in promoting economic growth and wellbeing is a mixed entrepreneurial and big-firm capitalism.

The authors seem obviously correct in holding that with the departure from the international scene of Communism, we can more easily attend to the differences of among capitalist systems. Clearly many countries have been working for a very long time to create capitalist economic institutions that best fit their needs and concerns.

Now all we need to do is figure out the best combination of social safety net and free market economy, and then figure out the best political system, and work out the details of a political economy combining the two.

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