YALE UNIVERSITY PRESS, 2007
Since capitalism became virtually the only form of economic system available, it has become both necessary and possible to distinguish between different forms of it. The task of doing so has usually fallen to political scientists, sociologists, and institutional economists. This book is notable for being a contribution to the study of the diversity of capitalism from the stable of orthodox neo-classical economics. It is also unusual in being, as its title implies, a normative account, dealing not just in terms of relative efficiency or appropriateness for different tasks, but making the fundamental moral evaluation of good and bad.
The authors distinguish four forms of capitalism: state-guided, oligarchic, big-firm, and entrepreneurial. The first two are 'bad' and identified with various parts of the ex-communist and developing world; the third is rather bad, and is associated with continental western Europe; the fourth is good, and is represented by the US and other US-friendly Anglophone countries--though to be viable it has to occur in some unspecified conjunction with the big-firm model.
That oligarchic capitalism of the kind that has developed in Russia and some other parts of the former Soviet Union is 'bad', whether in a moral or efficiency sense need not be disputed here. Western neo-liberal economists who advised authorities in that part of the world that the crucial thing was to privatise, and that markets would surely follow, and that social and political institutions and infrastructure were irrelevant provided that economic resources were privately owned, have had long enough to ruminate on their error. Certainly these authors have absorbed all those lessons.
State-guided or developmental capitalism is far more problematic. It has been the model pursued, in varying forms, in a large number of states from Latin America to South East Asia, and it has both remarkable successes and disastrous failures to its account. Western social democrats have a disturbing tendency to point to the state-led character of economic growth in such places as Taiwan, Singapore and South Korea as some kind of justification of their own political preference for big government. It is not. In most examples of this kind of capitalism, at least in their formative stages, state power was used to suppress dissent, sometimes brutally, and to protect local elites and their often uncompetitive economic interests, with highly inegalitarian consequences. The economic success of some of these cases simply shows us that 'bad' capitalism can be successful...