GROWTH AND/OR PROSPERITY?
Past, Present and Emerging
Socioeconomic Regimes
Robert Boyer (Institute of the America)
Symposium “Capitalism, Entrepreneurship, and
Sustainability”,
Universiteit Nijmegen, June 21st 2013
INTRODUCTION
1. The general context: the uncertain recovery out of
the world financial and economic crisis, the
austerity caused European recession and the
preoccupying Chinese growth slow down.
2. The intellectual mood: a reappraisal of past indexes
measuring performance : GDP does not capture well
being.
3. The current great transformation should not be
wasted : prosperity should be the basic aim for
governments .
THRE STATEGY OF THIS
PRESENTATION
1. Prosperity is a multifaceted notion:
° Well being of individuals within a society
° Access to basic public goods.
° Social cohesion
° Security and stability
° Ecological quality
2. Review how the growth/prosperity trade off can be
achieved within past, present and imagined socioeconomic regimes.
SYNOPSIS
1. The golden age of Fordism : without legacy?
2. The competition led regime and the rise of
inequality.
3. The finance led regime: an elusive prosperity
4. Is welfare capitalism over?
5. The knowledge based economy :a reappraisal
6. Is the Green economy the solution?
7. Inequality is the major threat to prosperity.
8. Conclusion
I. THE GOLDEN AGE FORDISM:
Growth with a form of prosperity
TECHNOLOGICAL AND
INDUSTRIAL
MODERNIZATION
PRODUCTIVITY
INCREASES
HIGH AND STABLE
GROWTH
AVERAGE WAGE
INCREASES
FORDIST CAPITAL / LABOUR
INSTITUTIONALIZED
COMPROMISE
LESS INEQUALITIES
AMONG WAGE EARNERS
INCOME
WELFARE SYSTEM
DIFFUSION OF MODERN
LIFESTYLES
MORE STABLE WAGE
EARNERS INCOME
INCREASES FOR THE
POORER
ACCESS TO MAJOR
FORDIST GOODS
II. THE COMPETITION LED
REGIME:
Growth at the cost of rising inequalities
1. The new liberal doxa: increasing
inequalities are necessary for growth
recovery and domestic competitiveness
The anti-egalitarian paradigm shift of the 90s
4. The surge of very top incomes in the US
III. THE FINANCE LED
REGIME:
An elusive growth with explosive
inequalities and financial fragility
:
+
Monetary policy,
stabilizing the financial +
markets
-
Limiting public
deficits
G
Credibility of State
actions
Public
spending
Taxation favourable to
the most mobile
factors
E
+
+
-
Increased
profitability
required
Productive
investment
+
Governance of
firms for the
shareholders
Household
saving behaviour
Privatisation of certain
components of social
security
B
C
D
+
Prof
+
A
+
Stock pric
F
Industrial
specialisation,
financial
concentration
FINANCIAL REGIME
+
+
Flexibility of
employment
contracts
Wealth effects, saving/
consumption
+
Funded
pension
systems
+
+
Production
capacity
+
Current
consumption
Purchase of
housing and
durable goods
+
Loan
collateral
+
+
+
Effective
demand
Empl
w
5. Rising inequality: largely the outcomee
of the domination of finance
2. The rise of finance: the top managers divorce
from rank and file workers.
Quasistagnation of
average real
salary versus
the explosion
of CEOs
remunerations
Increasing inequalities and financial fragility and
crisis go hand on hand
Source : David Moss
(2010) Comments on
Bank
Failure/Regulation/In
equality Chart, August.
IV. IS WELFARE CAPITALISM
OVER?
1.Welfare as a component of social capital,
enhancing innovation and growth
 A legacy of the polder model
VISSER J. and HEMERIJCK A. (1997), 'A Dutch
Miracle' - Job Growth, Welfare Reform and
Corporatism in the Netherlands, Amsterdam
University Press.
 A powerful analytical tool …
…..Alas that has not diffused within the
European Union.
How some welfare systems enhance dynamic efficiency
Short run negative
impact on employment
ACHIEVEMENT
OF SOCIAL
JUSTICE
Income minima
Unions right
recognition
WELFARE
SYSTEM
General access
to health care
General access
to education
Unemployment
insurance
Ambiguous short
run impact upon
employment
Productivity
hike
Incentive to labour
saving innovation
Medium term higher
productivity increases
Higher wage
More demand
Voice allows better
organization
Better economic
reactivity of
firms
Higher
More healthy population
participation rate,
and workers
less absenteism
More competent
workforce
+
Innovation and
technical change
+
+
+
Higher
potential growth
+
+
+
Labour supply
Ability to cope
with innovation +
More risk
acceptance
Moral hazard problems
Unemployment trap
HIGHER
DYNAMIC
EFFICIENCY
2.Social democratic capitalisms have
maintained a better defence of social
justice
 A clear
distinctivene
ss of basic
institutional
forms of
Nordic
countries
The synergy between citizens’ universal rights and
wage-earners search for security
3. Still limited inequality in some EU countries
..
..but explosion of inequality in English speaking
countries
Graph 12 – Rising inequalities for English speaking countries after the mid 1980s
• Graph 12 – Rising inequalities for English
speaking countries after the mid 1980s
V. THE KNOWLEDGE BASED
ECONOMY
The failed hope of a new and more
equalitarian growth regime
VI. IS THE GREEN ECONOMY
THE SOLUTION?
Ecological sustainability but uncertain
social impact
Less dependency
from imported
energy, commodities
GREEN
TECHNOLOGIES
A new productive
paradigm
Reduction of
externalities
Social acceptability
Less constraint from
external balance
New competences
new industries
More efficient
economy
Saving costs of
environment repair
Ability to improve
well being
VII. INEQUALITY IS THE
MAJOR THREAT TO
PROSPERITY.
LATIN AMERICA



Structural heterogeneity
but reduced
More democracy, more
response to social demand

More taxes, learning from
past crises
Dynamism of exports of
primary resource
A mild but significant
reduction of inequalities
UNITED STATES

Opening to foreign
competitions
Delocalization of
mass production
New productive
paradigm
Financialisation



Split in the workers
/ Managers alliance
Weaker bargaining
power of blue collar
workers
•Rising
inequalities
Mutually
reinforcing
•Unbalanced diverging
trajectories
credit led
regime
Employment, discrimination
by schooling / Social
groups
ASIA
• Rising
inequalities
Destruction of
collective welfare
• Competitive
pressures on
the world
Export-led
growth
• Help to
Américan
finance
Blocking of
social demands
Financial limits to welfare
Competitive pressures
Slower growth
Single Market
Lag in new
productive paradigm


Less tax basis
Large increases of top income
Outflow of FDI
De facto financialisation
EUROPE


Kuznets phase 1
inequality
The crisis puts at risk
European welfares
Explosion of capital
remuneration



Marketization
Foreign Direct
Investment
Productive
modernization
Centralisation /
Monopoly of power
VIII. CONCLUSION:
C1 – It is not proven that growth is always and
everywhere antagonistic to prosperity. The
post WWII fordist regime was perceived by
the contemporaries as providing a kind of
prosperity, at the cost of an environmental
deterioration.
C2– The conservative pro market policies have
successfully promoted a competition led
regime that pushes growth and economic
performance with frequent adverse impact
upon economic security and equality.
C3 – The divorce between growth and
prosperity reaches unprecedented levels with
finance led regimes: unfair, in-equalitarian,
structurally instable, crisis prone.
C4– The clear limits of this hyper capitalism
give relevance and legitimacy for antigrowth strategies preserving social cohesion,
environmental sustainability, delinking from
the world economy.
C5 –Within dis-embedded capitalism, depressions
and recessions are not at all prosperity
friendly- look at the welfare cuts in the EU
since 2010- , but a strong control of society
may preserve social welfare even during a
long stagnation period – look at Japan since
the 1990s-. There is no mechanical and
general link between economic
growth/stagnation and wellbeing.
C6 – Per se ecological sustainability does not
generate economic viability , nor social
cohesion neither political legitimacy.
Furthermore technological innovations do
not determine a single socioeconomic
regime. The Knowledge Based Economy
had many variants from social democratic to
market led. The same diversity is to be
expected from the Green economy.
C7 – The explosion of inequality within quite all
societies is probably the most urgent issue at
stake. The few societies that have been able
to tame a welfare capitalism and to limit
inequalities, continue to deliver a form o
prosperity. Nevertheless, the failure of the
Lisbon strategy to diffuse this “model” to
Southern Europe is at the heart of the E.U.
crisis.
Thanks for your attention
and patience
Robert BOYER
INSTITUT DES AMERIQUES
60 Boulevard du Lycée – Vanves (France)
e-mail : [email protected]
web sites : http://www.jourdan.ens.fr/~boyer/
http://robertboyer.org/