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Different forms of capitalism, different forms of society Comparative Sociology Week 15 Recap • Last week we looked at what comparative sociology is, and how it is done • Any questions, comments? • For the rest of the course, we are going to look at some particular comparisons • Beginning with different forms of capitalism Outline • Definition of capitalism • Consider two different forms – Neo-American – Germanic • How do these different forms relate wider society? Capitalism • What are the key points of capitalism? – Economic system – Private ownership of the means of production – Aim to make profits – Profits kept by owners of the means of production (apart from taxation) – ‘Free’ labour force Dominance of Capitalism • Capitalism is now dominates the world. – The collapse of communism in the old USSR – China’s move into private enterprise • But capitalism takes different forms. – Changes over time – Changes between places Capitalisms Two distinct models • Neo-American model – Individual success – Short-term financial gain • Germanic model – Collective success – Long-term concerns Neo-American model • Shift in the 1980s to the Monetarist school of economics in the US and the UK • Friedman • Minimum intervention by the government in the economy (Laissez-faire) • Belief that left alone the market will find equilibrium Changes made • Deregulation – Many industries moved to control themselves • Tax reductions – Particularly higher bands of taxation • Control of money supply – Inflation controls • Privatisation – Ending of state ownership Free-Market • Supply and demand will balance themselves Competition • Competition between individuals – Headhunting of top personnel • Competition between companies – Market share • Competition for investors – Need to maximise profits to ensure shareholder confidence • What are the strengths and weaknesses of this form of capitalism Impact of the policy under Thatcher • Interest rates increased in the 1980s to bring down inflation – Mass unemployment • Cuts were made to welfare provision • Widening gap between rich and poor Impacts • Discuss with the people sitting next to you what impact you think these changes could have had? Germanic model • Business closely linked to their country/region of origin • Cross-ownership of companies common • Extensive investment in training and research and development • Partnerships between workers and mangers – Collective bargaining/works councils • Extensive welfare provision Advantages of Germanic model • High level of social responsibility • Job stability and security • Reduction of social inequalities – For German nationals Problems with Germanic model • High cost of employment – Welfare costs – Training costs • Need to adapt to a global marketplace – International competition – Short vs long term orientation Advantages and Disadvantages • Discuss with the people sitting next to you the advantages and disadvantages of the Germanic model of capitalism Related to wider culture • American • Collective individualism? responsibility? • What do you think these different ideals say about the cultures of the different places? American dream • Nation build on immigration • American Dream – Social mobility • Competition to be the ‘best’ German stability • Borders changed but immigration lower • Social cohesion valued • Training/education collective responsibility Summary • Capitalism not a stable entity – Changes over time and between places • Two forms – Liberal market – Welfare capitalism • Considered how this relates to national cultures Next week • Look at national culture in more detail – What is culture? – Hofstede’s studies on organisations – Inglehart’s comparative work on values – Cultural change?
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