Adonis Diaries

Part 1.  Two main factors:  For discriminating among developed capitalist economies, (Jan. 9, 2010)

How stable are developed capitalist economies?

Election law systems and political decision of the winning coalition in election that generates State’s initiatives programs constitute the two main factors that differentiate among the capitalist economies in developed nations.

First, the election voting system determines the type of capitalist economy.

Political conflict is at the heart of an economic system:  It results in irreconcilable interests among winners and losers in elections. Political conflict is related to the kind of consensus among political alliance blocks, representing the popular and the middle classes interests. Only a political decision of the winner in election can resolve the impasse: society has to admit this fact, instead of investigating the secondary factors for economic recovery, development, and stability.

Machiavelli and Carl Schmitt claim the autonomy of politics, and invite to think institutions as a way of resolving conflicts that alienate periodic social changes: this position refutes the concept that conventional rules and regulations contain economic activities that are meant to re-structure market deficiencies.  Institutional reforms (for modernization, efficacious productivity, and emerging branches in economies) are modeled relative to political conflicts: it is the political alliance that pressure reforms to please their constituencies.

The capitalist social-democratic system in Germany is the outcome of stable agreements between the lower and middle classes, which translated to job protection and generous social security system: the election law is proportional and multiparty.

The British (Westminster) election law is a bipartisan majority rule; it over represents the interests of the middle classes.  Thus, it favors socio-political compromises that admit job market flexibility (read, easy firing policies and lesser social security protection).  The needy class in England suffer from harsh universal health delivery system and long delay for non-emergency hospitalization.  Margaret Thatcher managed to rally the major political groups behind strategic radical reforms of the institutions, which created for her a social base supporting her economic programs.

France has been experimenting with a variety of election systems, but has been following the German’s model trend in the last decades. The majority system is based on two turn election, which permits the expression of political minorities.  Recently, French election system is leaning more toward the British system with the emergence of two major political blocks and the adoption of 5-year plans.

The emergence of “categorical” syndicates that are no longer interested in considering solidarity with other groups is weakening the social-democratic compromises: Syndicates are dissociating from uniting with single political blocks.

The US bipartite presidential election law is favoring the middle and higher classes, simply because the majority of worker syndicates failed to rally to a single political party. The US economy is going to suffer from major instability in direction because the Democratic Party declined the challenge to taking political decisions based on the winner’s rights to taking responsibilities.  The maimed universal health plan is one consequence; so is US position on climate changes and foreign policies.

The economic instability is also evident in that small local firms are different from small, but global enterprises.   Their heterogeneous demands are being expressed accordingly: Thus, these unstable political coalitions witnessed in European States.

The second main factor or State’s initiatives economic programs will be discussed in part two.