In This Review
21st Century Capitalism
Capitalism vs. Capitalism: How America's Obsession with Individual Achievement and Short-Term Prot Has Led It to the Brink of Collapse
Its title notwithstanding, Heilbroner's ruminating essay is not really about the 21st century. Its author is fascinated by the history of ideas, and he notes that Adam Smith, Karl Marx, John Maynard Keynes and Joseph Schumpeter, four towering figures in the history of ideas, foresaw in different ways the ultimate downfall of capitalism as a system of social organization. In view of its outstanding success in improving material well-being during the past four decades, something that might have confounded the first three thinkers mentioned, Heilbroner is less clear about their conclusion. But he is troubled by capitalisms intrinsic weaknesses its tendencies toward inflation and unemployment and especially its moral vacuousness. He is nostalgic for some form of decentralized socialism, but believes capitalism in some form has enough life in it to see us well into the next century.
Albert, head of France's largest insurance company and a former official of the Commissariat au Plan, describes the form of capitalism he would like to see, although he is uncertain about the likely outcome. He celebrates the fact that capitalism has triumphed as a system for organizing and mobilizing society's resources. But he emphasizes that capitalism has several distinct branches, and he strongly prefers what he calls the Rhine model, which dominates in Germany, Switzerland, the Netherlands, Sweden and in some respects in Japan (although it is being challenged in all these locations), to what he calls the neo-American model, which dominates in the United States and, in some but not all respects, Britain. The Rhine model, in Albert's view, is characterized by a long-term view of the future that affects both saving and investment, especially in people, and above all by a feeling of community solidarity that is reflected not only in cooperative labor-management relations but also in a willingness by the rich to be taxed to pay for a generous system of social security. The neo-American model, in contrast, creates the possibility of rapid increases in wealth by individuals, extols the results and adopts a devil-take-the-hindmost attitude toward less fortunate or less successful members of society. France is suspended between the two models, tugged by the siren call of the neo-American version with its strong emphasis on individualism, but unwilling to accept the full social consequences. Albert's book is a tract to influence the choice.
Written originally in 1991, Albert's book holds that the Rhine model demonstrably outperforms the neo-American model in output, productivity, price stability, social security and even returns to investors. It is unclear whether he would qualify these judgments in late 1993, following two years of substandard German and Japanese economic performance, or whether he would consider these years aberrant.
Albert's book is provocative and replete with tendentious half-truths, particularly about the United States and Japan. But he opens a deeply important question, namely how to maintain a vibrant economic system and still spread its fruits not merely widely but universally. A crucial question he does not address is whether a general feeling of community solidarity, however desirable, can be created where it does not already exist and, if so, how and by whom.