Capitalism takes different forms. It could be crafted to suit different cultures, times or contexts. There is “capitalism with Chinese characteristics” – a so-called partnership of state-run industry and frenzied entrepreneurialism. Liberties, of course, are repressed.
The Japanese model of lifetime employment and cross-ownership to shield companies from shareholder pressures was the rage in the 1980s. The East Asian model of flexible labour markets and low barriers for trade and capital flows fuelled spectacular growth for Tiger economies of the 1990s.
The French strain stresses on need of national champions supported by the state. Sweden’s market system, on the other hand, supports general social spending with high tax rates. The Anglo-American model has sharp competition, light-touch regulation and limited social safety net.
And then there is the German model. Elements of strong unions and corporate efficiency; high-cost labour; generous unemployment benefits and a fragmented base of independent SMEs who are able to compete with high levels of productivity and efficiency.
In more recent years, some countries have tried to copy elements of German capitalism. Spain with high youth unemployment (50%), introduced a German-style apprenticeship program. The German system with its vocational training and long-term cooperation is ideally suited for engineering industries reliant on incremental innovation, long-term investment and production of customer-specific products. There is also substantial inter-firm collaboration in research and development.
The German system isn’t perfect. Critics argue wage inequality and little wage growth over last two decades are drawbacks of the system. As 18th century German philosopher Herder argued, it is important for each nation to sing its own song and develop according to its own historical rhythm. Each country needs to find its own path to economic efficiency and not just transpose the “success” of a current model in another context.
Malaysia has moved from a “British” capitalism to “Japanese” capitalism with the “Look East” policy (1980) to “Shared Prosperity Vision” which hinges on distribution amidst growth. We now have GLCs dominating the economy with political appointees instead of professionals running these organisations. Singapore is no better in terms of dominance of GLCs. But the subtle balance of professionals and politicians has forged the Singapore economy forward because of low corruption.
We need to re-think, not of plans, but what exactly are our cherished values and goals:
· is it a fair deal for all or some;
· is it a secular or religious system of government;
· is it transparency and accountability or different standards for some select group;
· is it progressive and forward-looking education system or an insular and backward-looking one?
And there are several more issues. It will continue to be so as we journey for a better life for all (even those who are refugees).
1. Which Model of Capitalism? Richard Bronk, London School of Economics
2. Germany’s Bizarre Version of Capitalism-Where Bosses and Workers Actually Cooperate Is Winning, Matt Phillips, August 9, 2015