Alan Greenspan And ‘The Modes of Capitalism’

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With Central Planning proving to be ineffective in majority of the cases, Free Market Capitalism and Globalization are the left out options. Capitalism has proven to be rewarding but at the cost of the stress that incurs in the process of handling the risk and hard work that is put in. Free markets does not mean Governments are not at all involved, their intervention is minimized. Capitalism invokes Creative Destruction. Only the best stays longer in the market, old and obsolete is immediately cleared away. Such approach fosters innovation, competition which is against the human desire for stability and certainty. Pure capitalist countries dont exist because if they do, they will be dealing with basic issues that gave birth to socialism and communism. There will countries which are based on constitutions, republics, conditional monarchies and the list goes on. You can find the list of 2010 of all countries in the world here.

If you go little further, there will be Economic freedom if the Free Market Capitalism is entertained. Index of Economic Freedom is good measure of that. For Example if you take 2010 rankings you will get a clear picture. What made me sad when i was exploring this is that Rank of India is 124 and below the world average !

 

Source : http://www.heritage.org/index/Country/India

However, i am only sad but not disappointed because the tariff walls are coming down, the GDP growth is on the agenda, market-oriented economic reforms are coming ( FDI increase, entertaining international trade etc ). With the recession freeing up, change should be around the corner. Be +ve :-). The FDI currently in India is $41.1 bn, this is still Investment Freedom of 35%. Our Governments really needs to improve on that ,

The most important reason why countries which adopted free markets are successful ( in the economic sense ) is that economic freedom induces risk taking because the rewards are going to be high and nation as a whole become financially strong. But the major question which Greenspan highlights is the balance between open competition and civil conduct ( stress implied, ethical procedures etc ) in the free market economies. He also concludes it with example of US being a free market ( which is now but that is another story !! ) economy and over time these benefits of the open markets are diverted to greater civility in the states by improving the quality of life. It may have worked there, but i still have a doubt it will completely succeed in economies with corruption on the list of things to take care of !

Capitalism was never in command of things before World War II, after that, Japan, Europe, Briton, every thing was in ruins. They had to relax the financial markets in 1948 according to the decision by, Ludwig Erhard. After that Europe followed Briton and Capitalism gained prominence. The condition of Germany Post War was chronic. It faced lot of challenges including creative destruction.

Most countries follow it now but there is also fair amount of contradictory ideals against it as well. Check out http://wapedia.mobi/en/Anti-capitalism

Joseph Stiglitz @ his best,

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They dont hand over noble prizes easy, winners have a point, Yet another voice against US and IMF.

 

http://www.mindfully.org/WTO/Joseph-Stiglitz-IMF17apr00.htm

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