Capitalism is in crisis. I know this not because the waiter tried to charge me £12.75 for a cup of tea and an espresso (“I’m so sorry, of course you didn’t order the bread basket and olives” – nice try), but because Loretta Napoleoni, esteemed economist and author of Maonomics (released February 14th), was telling me so.
For her, the West has too long been trapped in battles of ideological dogma when it comes to economic policy (contrast this with China’s willingness to adapt its economic model to suit the specific needs of the times). Nowehere is this plainer to see than in the wranglings over the Eurozone debt crisis. Neither harsh austerity, nor a full-blown Keynsian stimulus is the solution. Instead, what is needed is a middle ground that places social equity at its heart. Government should create incentives for large scale investments in projects that produce tangible social benefits (e.g. clean energy). Monetary easing should provide the initial jump-start to get the projects off the ground. This would then encourage the private sector, which is currently sitting on large piles of cash, to loosen its purse strings and get in on the action as well. However, lack of vision is preventing people from leaving their entrenched positions and finding a way to harmonise the interests of government, private business and society at large.
Loretta Napoleoni’s books include Maonomics: Why Chinese Communists Make Better Capitalists Than We Do (2012), Rogue Economics (2008) and Terrorism and the Economy: How the War on Terror is Bankrupting the World (2010)