A stopped clock is right twice a day, and even Robert Samuelson has to get something right once in a while.
American capitalism is on trial. When Americans vote in November, they will unavoidably choose between these competing visions of capitalism. One would try to improve capitalism by controlling it more. The other would aim for faster economic growth by removing government obstacles. It’s a fateful debate.
Yes, American capitalism is on trial. Samuelson does seem to recognize that, as I have argued before, capitalism faces a legitimacy crisis.
The bargain that capitalism makes with society is that profits won’t simply be consumed but will also be reinvested. Jobs and living standards will increase. One reason for the recovery’s weakness is that there’s been a partial disconnect between swelling profits and higher investment. Companies are hoarding earnings. At year-end 2011, non-financial corporations had $2.2 trillion in cash and short-term securities, up 60 percent from 2008.
But the U.S. presidential election in November, much like the debate within mainstream economics, is only about different versions of capitalism—between more or less regulated forms of capitalism. That’s where the big money is.
Elsewhere, however—among the unemployed in America, at the polls in Greece—it’s capitalism itself that is on trial. Its very legitimacy is being called into question.
In the end, that’s what the Samuelsons of the world are worried about. And like stopped clocks, every once in a while they appear to show what time it actually is.
E. J. Dionne clearly understands one of the points I was trying to make:
In this election, we’re not having an argument that pits capitalism against socialism. We are trying to decide what kind of capitalism we want. It is a debate as American as Alexander Hamilton, Andrew Jackson and Henry Clay — which is to say that we have always done this. In light of the rise of inequality and the financial mess we just went through, it’s a discussion we very much need to have now.
Dionne is right about the state of the debate in the United States, because there are no political parties on the Left. That’s not the case, however, in Greece, Germany, and elsewhere, where capitalism itself is on trial.