Comparative Critique Of Comparative Capitalism - 1214 Words

CASE STUDY #4: COMPARATIVE CAPITALISM Case Study #4: Comparative Capitalism Florence F. Messi St Thomas University Miami Gardens, Florida Abstract The Merriam-Wester dictionary defines capitalism as an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market. (2015). However for an ideal capitalism to fully operate it requires a set of conditions or institutions such as legitimacy of government and the rule of law, a well-defined property right, firms acting as price takers, not barriers to entry and exit, free capital and labor†¦show more content†¦Yes, the â€Å"varieties of capitalism† model is a recognition that market capitalism economics is in reality political economy. Merriam Webster defines political economy as the theory or study of the role public policy in influencing the economic and social welfare of a political unit. (2015). When analyzing the â€Å"varieties of capitalism† model, spheres of coor dination-which are constraints placed on firms by their nation economic, political system and social system-that define a country capitalism, these spheres of coordination correspond to many fields of inquiry relevant to political economy. Spheres of coordination such as employees’ relationships, vocational training, internal finance governance, refer to the field of study such as regulation, interest groups, comparative institutions, relationships between government and business which are relevant to political economy. Insofar as the Austrian economist Joseph Schumpeter referred to capitalism as a process of â€Å"creative destruction†, which of the two â€Å"varieties of capitalism† is consistent with Schumpeter’s theory? 1. Before choosing which of the two â€Å"varieties of capitalism† is consistent with Schumpeter theory of creative destruction, it is important to remind here what creative destruction is. Creative destruction, an expression coined by the Economist Joseph Schumpeter refers to the incessant product and process innovation mechanism by which new production units replace outdated ones. (Schumpeter, 1942).