Models of Development.pptx

Models of Development I-Models of Capitalism  According to ‘L. Pereira’, five current models of Capitalism may be identified :  Among the developed countries -the liberal democratic or Anglo-Saxon model -the social or European model -the endogenous social integration or Japanese model  Amon...

Models of Development I-Models of Capitalism  According to ‘L. Pereira’, five current models of Capitalism may be identified :  Among the developed countries -the liberal democratic or Anglo-Saxon model -the social or European model -the endogenous social integration or Japanese model  Among developing countries -the Asian developmental model -the liberal-dependent model that characterizes most other developing countries(especially Latin American countries)  According to ‘Pereira’ ,‘..Capitalism is not a mere abstraction — a market economy ,liberal with minimum state intervention— but rather a historically situated economic system, always evolving, always reflecting technological change and political struggles ‘Forces making for convergence exist, but they have not yet been able to generate a unique model of capitalism. Therefore, there should be a discussion of ‘models of capitalism’. Different historical and political experiences and the relative backwardness of some nations are sufficient justification for elaborating several models of capitalism in both developed and developing countries. Each model has a distinct way of organizing production ,assigns the state a specific role, and has distinct institutions and basic values’. Pereira uses a political criterion to distinguish the models of capitalism ,namely, the historical decisions these models made on the nature and degree of ‘state’ intervention..’ after all, the state is a major institution in capitalist societies’. In addition ,and by asserting that the nature of this state is a ‘decision’ of the ‘society’, the socio-political nature of the criterion is stressed. In Developed Countries In the Liberal Democratic Model(U.K &U.S) -State intervention is as limited as possible. The state has a limited role in education, in health care and social care, and in social protection or welfare. -“Labor” protection — that is, labor protection laws whose cost falls on business enterprises and not on the state — is minimal. --The number of government-owned companies is minimal. The regulation of business enterprises is limited -Individualism, technological innovation and competition prevail over cooperation and social solidarity. In the Social Democratic Model(Germany,Scandinavian states) -The power of the professional class, especially the public bureaucracy, is greater than it is in the Anglo-Saxon model. - State intervention takes place at the production or industrial-policy level, in labor protection, and in the free or almost free provision of collectively used social services. Although, among the European countries in this group, some are more social than others because they guarantee social rights more extensively and effectively, we may not to differentiate Rhineland capitalism from the Scandinavian variety: they are both social democratic and they seek to integrate and to build solidarity through state regulation. In the Endogenous Social Integration Model(Japan) -The state leaves social protection to households and business enterprises, and therefore to the traditions or to the spirit of solidarity they share. - This model of capitalism is characterized by a greater economic equality than exists in Europe, but it does not rely on the institutions of the social state: individual security is left to households and business enterprises. In Developing Countries The Developmental Model (China) -is characterized by the informal existence of a national development strategy - a system of laws, public policies, agreements and understandings that create lucrative investment opportunities for entrepreneurs - implemented by strong state survey over the economy so as to make this strategy operational, and by a low level of labor protection. This model is obviously inspired by the Japanese model. The Liberal-Dependent Model(Latin Ameican States) - is characterized by the dependent nature of its elites in varying degrees, and by the absence of a national development strategy. Some observations on these models:  Why do we have the social state in the European model and the liberal state in the Anglo-Saxon model? because socialist or social democratic parties in the European model had and still have a greater influence in the building of their corresponding states than in the Anglo-Saxon model countries. The European or social model of capitalism is deeply entrenched in European society, and so its emergence did not require a social democratic party to be in power; the social state in Germany, for instance, was for the most part achieved by the conservative party, that is, the Christian Democratic Party, which called its policy the “social market economy”.  the professional class is present and powerful in all of developed models of capitalism. In every country a conservative or a center -right party and a progressive or social democratic party alternate in power. But the victory of a conservative or liberal party does not mean that capitalism will revert to classic capitalism; capitalism remains techno-bureaucratic and social democratic. This victory means only that the liberal forces that oppose the social state or social democratic capitalism have moved forward slightly, just as the victory of the progressive or social democratic party means the opposite.  Given the ideological hegemony exercised by the United States in the 1990s, it was suggested that the liberal model of capitalism would be superior to the social model. But when we compare them in terms of the five political goals of modern societies — security, freedom, welfare, social justice, and environmental protection — it is hard not to see the better results achieved by the more solidary model.  Neoliberals and Neoconservatives who dominated the American state (whose model of capitalism was already close to their ideal) tried to extend their model to the rest of the world. It proved to be limited in Europe because, if it is true that European countries “softened” their labor protection laws, they were nevertheless able to retain and even expand their social state. It also proved to be limited in Japan for socio-cultural reasons. In the dynamic Asian countries, including China and India, the impact was limited too because these countries understood that the neoliberal reforms prescribed by the Washington Consensus conflicted with their national development strategies based on a strategic role for the state.  in other developing countries that implemented neoliberal reforms( by opening their financial markets, and by practicing the macroeconomic policy recommended by Washington, based on an appreciated exchange rate to fight inflation ) they were faced with financial crises and with economic growth rates substantially below their potential. In the early 2000s, the election of left-wing and nationalist political leaders in Latin American countries has reflected the failure of neoliberal reforms and the attempt of these countries to adopt a new developmentalism inspired by the Asian tigers. However ,political crises and external geo-strategic factors have been present since then to complicate those attempts. II-Models of Socialism State Socialism Market Socialism  State Socialism Model  The main characteristics that define all State Socialism examples are : -Common Ownership and Collectivization : This means state ownership of major means of production, including banks, factories, large farms etc -Central Planning :One of the generic features of socialist political systems has been to have a highly regulated economy. Central planning was adopted to bring the desired change in economy, the aim being to subsume societal production within one enormous bureaucracy. -One Party State and Centralized Political Control: this feature of monopoly of one party state became trademark of the former Soviet Union, Poland ,Romania, former Czechoslovakia , East Germany(all till 1989).The only party permitted in such societies is the communist party which acts as the apex of political life. In addition, most of the State Socialism systems developed formidable state structures where power became highly concentrated in the hands of an elite group. ’. It is difficult to identify party separately from government as party controls the government; generally, all executives and officials of the government are occupied by the Communist party.  Market Socialism Model  also called liberal socialism, represents a compromise between socialist planning and free enterprise, in which enterprises are publicly owned but production and consumption are guided by market forces rather than by government planning. A form of market socialism was adopted in Yugoslavia in the 1960s in distinction to the centrally planned socialism of the Soviet Union. A similar development occurred in Hungary during the late 1960s and early 1970s.It is currently implemented with different degrees in Cuba and Vietnam.  This model –like in State Socialism -is also characterized by the presence of one party in control of political life.  Some observations on these models:  Sthathis Kalyvas stated that Party decay and regime decay in State Socialism states are connected through (a) the effects of political reforms, (b) the introduction of political competition, and (c) the interaction of political and economic reforms. - As for the effects of political reforms ,single parties failed to adapt to the political and economic reforms they themselves initiated.Political reforms were apparently undertaken in order to spur economic change, but they inadvertently undermined the parties’ leading role. The goal was to reform ruling parties by introducing some accountability and competition to elected bodies, reducing party functions in the society, allowing greater -regarding political competition , and as a result of political reforms, single parties had to transform themselves into real parties that could appeal successfully for popular support. They failed. Their performance in the first semi- free elections (i.e. where a degree of competition was introduced as in Poland and the Soviet Union )was dismal. In the Soviet Union, the March 1989 elections for two thirds of the seats of the Congress of People’s deputies showed that unexpectedly many voters used their new rights to punish party candidates.Not only popular support faded away, but ruling communist party also had no understanding of electoral rules and committed gross miscalculations during electoral. The jobs of party officials were related to administration, -finally, market reforms eroded the bureaucratic coordination of ruling parties, launching a process that intertwined (internal) demoralization with (external) alternative options. This process led to the decay of communist parties because once reforms were undertaken, the penetration of market institutions increased the incentives for opportunism while political reforms weakened the monitoring and enforcement capacity of the party. The result was the massive exit of members and officials.  As for Market Socialism cases ,experiences point to the following.. - It is in principle possible to reconcile socialist objectives and ideals with key features of the market mechanism. (The Yugoslav experience of market socialism that lasted for four decades suggests there are ways of combining the most important socialist objectives, such as preventing major income inequalities and ensuring fast economic development in order to provide increasing living standards for the whole population, with elements of the market mechanism ).However ,combining both planning and market has also its problems due to their structural differences: the state is expected here to have effective supervisory