The basic economic foundations of industrial capitalism as we’ve known them for the past 150 years or so have an activist state at their core…. the intuition that there’s some coherent account of what the ‘market distribution’ would be absent public policy is mistaken. You have policy choices all the way down.
Yes. It’s important to remember that capitalism (and the whole idea of “free markets” as we understand them) were only made possible with the emergence of modern states. States provide not only the security & stability necessary for markets, they also provide (at public expense) the basic infrastructure, jobs training (public education), the legal structure that protects property rights and enforce contracts, and more. To admit that doesn’t make someone a socialist or a proponent of interventionism.
But ignoring that reality makes one underestimate the fragility of capitalism and markets. There’s a reason why economic growth is steady and constant (minus the odd recession here and there) in Sweden, but not in Somalia.
If you’d like to tag along with my POL 102 class this semester, here’s your chance.
This week we’re discussing political economy, and our additional “text” is a pair of NPR Planet Money podcasts about Denmark:
Both podcasts aired in 2010, but they’re still relevant. In addition to a great deal of information about Danish political economy (and its extensive social welfare system), the podcasts also debate the costs/benefits of the Danish system.
For those of you familiar with the rhetoric about “European socialism,” Denmark is the poster child. The Danish state has one of the highest tax rates in the world, as well as one of the most extensive social safety nets in the world. Remarkably, it also has a dynamic economy and a (historically) low unemployment rate (though it has recently crept up to 7.8%—it was 4.2% in 2010 when the podcasts were produced, and had reached a low of 1.9% in 2008; by comparison US unemployment was 9.6% in 2010 and is currently 8.3%).
If you want to go a step further, here’s a module I created (with support from a grant from my university’s Center for Teaching and Learning) about welfare states called, not surprisingly, “The Welfare State” (hosted on Rice University’s Connexions open source learning platform). Beyond a short description of welfare state (as a concept), it provides data tables and discussion questions using economic indicators from Sweden, Japan, the US, Britain, France, Germany, and Denmark.