crises can lead to big political upheavals. Think of the Depression and
the subsequent rise of fascism in Europe and the New Deal in America.
What is remarkable about the financial crisis of 2008 is the limited
nature of the reaction.
parties of the left and right have gained ground, but only in Greece
have they gained power. The biggest policy change has been the
introduction of quantitative easing, a technical shift that arouses few
passions on the street.
lack of action is a source of frustration on the left, for whom 2008
seemed to herald capitalism’s collapse. Some, including Paul Mason, the
author of a new book called “Postcapitalism”, still hold out that hope.
They view the “sharing economy”, in which outright ownership of goods is
less important (think car clubs and “freecycled” furniture), as a sign
of capitalism’s impending demise. Jeremy Rifkin, in his book “The Zero
Marginal Cost Society”, talks about “the internet of things, the
collaborative commons and the eclipse of capitalism”.
if you define capitalism as the interaction of individuals with a
market economy, the system is advancing, not retreating. New-economy
websites such as Airbnb and Etsy allow people to earn money in new
ways—renting out their homes while they are on holiday, or selling arts
and crafts. In the past, homeowners might have struggled to find renters
and hobbyists to find buyers; aggregator websites make the task much
is true that some of these new websites undermine existing business
models, just as file-sharing wrecked music-publishing companies. But
investors expect most of these companies to be profitable eventually,
judging by the valuations they attract. Google started as a free
internet-search business but has found a way to monetise its reach. The
move from an economy based on physical goods to one based on software
and intellectual property seems to be allowing higher returns on capital
than before. The internet has been in wide use for 20 years or so, and
corporate profits are close to a post-war high as a proportion of
reducing the cost of information, the internet kills some business
models. But not all. New models will appear and people will always be
willing to pay for products that convey status, whether luxury watches
or fast cars or branded clothing. They can stream music for nothing, but
people will spend vast sums to hear rock bands play live.
new-economy effect is that the old idea of lifetime employment is
fading. More people will follow “portfolio careers”, switching from one
employer, or even industry, to another as the economy changes. This will
require them not just to learn new skills as they age, but to monitor
the economy for new opportunities.
more people are likely to be self-employed, offering services to a wide
range of customers. In a sense, they will be artisans, not employees.
Activities such as sales, marketing and accounting—matters that salaried
employees leave in the hands of specialist colleagues—will become the
responsibility of the individual. Such workers will have to be more, not
less, sensitive to the market economy than the typical office drone.
then there are pensions. Two decades ago, many workers could rely on a
paternalistic system under which companies provided a retirement income
linked to their final salary. New private-sector workers merely build up
a savings pot, which they must use to see them through their retirement
years as best they can.
Britain this pot used to be converted into an annuity, a guaranteed
income for life, another paternalistic solution. Instead, Britons must
now guess at their likely longevity, calculate their spending over two
decades or more while allowing for the effect of inflation, decide on
the asset allocation for their funds, assess the merits of rival
providers and adjust for the impact of their fees. These are decisions
that might defeat the brightest hedge-fund manager. Again, people will
have to be more sensitive to the minutiae of the markets than in the
could be that this process will turn workers in a left-wing direction;
they will demand more government protection from the economic cycle. But
things may shift the other way. New-economy pioneers may be socially
liberal, but their economic views tend to the libertarian right. The
individuals who sell stuff on eBay, or run bed and breakfasts, are
capitalists too, even though they may not think of themselves that way.
And they tend not to like more government regulation, or higher taxes on
Lindsay Mitchell has been researching and commenting on welfare since 2001. Many of her articles have been published in mainstream media and she has appeared on radio,tv and before select committees discussing issues relating to welfare. Lindsay is also an artist who works under commission and exhibits at Wellington, New Zealand, galleries.