Book Review

Decent Capitalism

A blueprint for reforming our economies

Sebastian Dullien, Hansjörg Herr and Christian Kellerman - Pluto Press, 2011-05-25

Arising from a seminar with 'high-level experts from banking, finance and economics' in Frankfurt in 2009, the book's perspective reflects the professional views to be expected from such a gathering. While critical of the glaring faults in the system leading up to the financial crisis then unfolding, and proposing changes in light of this, these only seek to restrict the problems the system generates and compensate by regulation and supervision.

Though noting 'profligate lending practices' as a main cause of the US real estate bubble, it comments uncritically that 'credit and credit growth are not bad in themselves', without a glance at the way that credit is created under the current debt-money system, and its consequences – inevitably growing levels of debt, leading up to the inevitable Crash.

Given this limitation of outlook, it critically comments on the 'unleashing of financial markets' and its serious consequences, though not on their essential nature as forms of gambling, extracting wealth from the productive economy.

The authors uncritically accept 'growth' and 'full employment' as desirable if not essential, with only minor qualification of this, mainly near the end of the book, where they seek to justify some variety of continuing 'growth' despite the need for resource conservation and energy reduction. They do not even mention the policy of 'planned obsolescence', dreamed-up toward the end of WW2 to keep-up demand for new products to avoid Capitalism's great fear: the saturation of markets. Far better to waste ever-increasing amounts of resources, than to satisfy everyone's needs with ever-less need for labour, as mechanisation/automation takes over! Near the end of the book they do consider the possibility of shorter working hours and more leisure, but with no great enthusiasm.

They note the effect of 'wage demands' on inflation, without concern for profit levels, bonuses and dividends, and treat the raising of interest-rates only as a way of 'controlling inflation' in the short term, without noting its effect on costs, and thereby as a cause of inflation in the longer term – or the effect of the charging of interest as a main cause of growing inequality of wealth.

They are critical of the dominance of finance over industry, but without offering a remedy, and of 'outsourcing' and the rising pressure on pay and working conditions. In all, they cover a wide range of issues with finance-capitalism, highlighting its problems and injustices, and propose measures to 'tame' it, consisting mainly of regulation and state-support or control/provision. They make the case for 'Resurrecting the Public Sector' (Chapter 7 title) – public ownership of 'monopolistic services', e.g. water, railways, etc.

As an introduction to the wide topic of 'the global economy' and the problems with it, the book has merit; but I was disappointed in its failure to 'step outside the box' of mainstream economic theory and question some of its basic assumptions.

– Brian Leslie