Different forms of capitalism, different forms of society Comparative Sociology Week 15

Recap Last week we looked at what comparative sociology is, and how it is done Any questions, comments? For the rest of the course, we are going to look at some particular comparisons Beginning with different forms of capitalism

Outline Definition of capitalism Consider two different forms –Neo-American –Germanic How do these different forms relate wider society?

Capitalism What are the key points of capitalism? –Economic system –Private ownership of the means of production –Aim to make profits –Profits kept by owners of the means of production (apart from taxation) –‘Free’ labour force

Dominance of Capitalism Capitalism is now dominates the world. –The collapse of communism in the old USSR –China’s move into private enterprise But capitalism takes different forms. –Changes over time –Changes between places

Capitalisms Two distinct models Neo-American model –Individual success –Short-term financial gain Germanic model –Collective success –Long-term concerns

Neo-American model Shift in the 1980s to the Monetarist school of economics in the US and the UK Friedman Minimum intervention by the government in the economy (Laissez-faire) Belief that left alone the market will find equilibrium

Changes made Deregulation –Many industries moved to control themselves Tax reductions –Particularly higher bands of taxation Control of money supply –Inflation controls Privatisation –Ending of state ownership

Free-Market Supply and demand will balance themselves

Competition Competition between individuals –Headhunting of top personnel Competition between companies –Market share Competition for investors –Need to maximise profits to ensure shareholder confidence

What are the strengths and weaknesses of this form of capitalism

Impact of the policy under Thatcher Interest rates increased in the 1980s to bring down inflation –Mass unemployment Cuts were made to welfare provision Widening gap between rich and poor

Impacts Discuss with the people sitting next to you what impact you think these changes could have had?

Germanic model Business closely linked to their country/region of origin Cross-ownership of companies common Extensive investment in training and research and development Partnerships between workers and mangers –Collective bargaining/works councils Extensive welfare provision

Advantages of Germanic model High level of social responsibility Job stability and security Reduction of social inequalities –For German nationals

Problems with Germanic model High cost of employment –Welfare costs –Training costs Need to adapt to a global marketplace –International competition –Short vs long term orientation

Advantages and Disadvantages Discuss with the people sitting next to you the advantages and disadvantages of the Germanic model of capitalism

Related to wider culture American individualism? Collective responsibility?

What do you think these different ideals say about the cultures of the different places?

American dream Nation build on immigration American Dream –Social mobility Competition to be the ‘best’

German stability Borders changed but immigration lower Social cohesion valued Training/education collective responsibility

Summary Capitalism not a stable entity –Changes over time and between places Two forms –Liberal market –Welfare capitalism Considered how this relates to national cultures

Next week Look at national culture in more detail –What is culture? –Hofstede’s studies on organisations –Inglehart’s comparative work on values –Cultural change?