By Giacomo Corneo
After communism collapsed in the former Soviet Union, capitalism seemed to many observers like the only game in town, and questioning it became taboo for academic economists. But the financial crisis, chronic unemployment, and the inexorable rise of inequality have resurrected the question of whether there is a feasible and desirable alternative to capitalism. Against this backdrop of growing disenchantment, Is Capitalism Obsolete? presents a refreshingly antidogmatic review of economic systems, taking as his launching point a fictional argument between a daughter indignant about economic injustice and her father, a professor of economics.
Is Capitalism Obsolete? begins when the daughter’s angry complaints prompt her father to reply that capitalism cannot responsibly be abolished without an alternative in mind. He invites her on a tour of tried and proposed economic systems in which production and consumption obey noncapitalistic rules. These range from Plato’s Republic to diverse modern models, including anarchic communism, central planning, and a stakeholder society. Some of these alternatives have considerable strengths. But daunting problems arise when the basic institutions of capitalism—markets and private property—are suppressed. Ultimately, the father argues, all serious counterproposals to capitalism fail to pass the test of economic feasibility. Then the story takes an unexpected turn. Father and daughter jointly come up with a proposal to gradually transform the current economic system so as to share prosperity and foster democratic participation.
An exceptional combination of creativity and rigor, Is Capitalism Obsolete? is a sorely needed work about one of the core questions of our times.
Diane Coyle on The Enlightened Economist wrote:
"The style of exposition is remarkably clear and methodical, although readers lacking a certain Germanic gene for neatly arranging abstract ideas could find it somewhat difficult to digest. Moreover, Giacomo Corneo makes few concessions to those who, like many undergraduate students, are not fully conversant in the language of neoclassical economics and game theory, or might require additional information regarding the Jesuit state in Paraguay, such historical personalities as Charles Fourier and Petr Kropotkin, or the once much-discussed experiments with self-management in Tito’s Yugoslavia and the 'goulash market socialism' in Hungary under János Kádár. Still others might find objectionable the simplistic definition of capitalism as markets with private property and the exceedingly (or deliberately?) narrow selection of empirical illustrations, drawn solely from the Federal Republic of Germany, a wealthier and historically most peculiarly tame example among the core capitalist states. [...] In the end, what alternatives could progressive political forces pursue? The answer may sound familiar if not quaint: a pluralist market economy with an effective and generous welfare state. [...] Why do I suggest taking this book seriously? After all, the barely sketched and in general astonishingly placid view of politics it presents itself borders on naïve utopia. Yet this could be a good starting point for debating the realities of contemporary capitalism, its own insufficiencies and limitations. By dutifully surveying the historical lineage of economic utopias intended to supersede capitalism, Giacomo Corneo produced a useful intellectual challenge. Let us hope it will be accepted."
"I have never found the abstraction ‘capitalism’ a helpful term when it encompasses societies as contrasting as Norway and the United States, and have always quite liked the slightly out-of-fashion ‘varieties of capitalism‘ approach. [...] This is a slighly odd book. I guess it’s meant to be pedagogical, taking students on a tour of historical thinking about economic systems, but this makes the framing material about the current day rather perfunctory, and then the actual reform proposal is stuck in an appendix. Although a mildly diverting read, I’m not sure it works well either as a history of thought book or as a current affairs one."
Lecture on Is Capitalism Obsolete?
Table of Contents of Is Capitalism Obsolete?
- Prologue: A Father and Daughter Debate
- Philosophers and Failures of the State
- Utopia and Common Ownership
- Cooperation, Rationality, Values
- Luxury and Anarchism
- Markets and Socialism
- Shareholder Socialism
- Universal Basic Income and Basic Capital
- Market Economy Plus Welfare State
- Epilogue: A Father and Daughter Come to Terms
- Appendix: A Two-Step Proposal to Enhance the Role of Public Capital in Market Economies
About Giaco Corneo
Giacomo Corneo is Professor of Social Policy and Public Finance at the Free University of Berlin. He studied economics at Universitá Bocconi in Milan, received a Ph.D. at Ministero dell'Universitá in Rome and one from the EDP at EHESS in Paris, and got Habilitation at the University of Bonn. He taught at ENPC in Paris, at the University of Bonn, and the University of Osnabrück. He served as senior advisor at Ministère de l'Economie et des Finances in Paris. He has been since 2004 managing editor of the Journal of Economics. He also serves as associate editor of the International Review of Economics. He is Research Fellow of CEPR, London, CESifo, Munich, and IZA, Bonn.