SUPERCAPITALISM
Coexistence of Democracy and Capitalism.
Reich (2007) postulates that, the coexistence of democracy and Capitalism has been threatened since mid-twentieth century. The evolution of big companies with great economies of scale has led to change in political world with democracy not offering what the all citizens needswant. Today many politicians are beholden by the corporate entities. It is not what the citizen says but what these big corporations say.
Early post-World War II period until about 1970
American economy witnessed remarkable growth in GDP during early years after World War II until about 1970. The depression in 1970 necessitated invention of new products as well as creativity in business to enhance efficiency. Capitalism system has then been adapted by many economies and competition has been hyper. The capitalism has lead to production of new goods at low cost. this has been a relief to the needs and wants of consumers. On the other hand democracy has not yet responded well to satisfy common man needs and wants.
Societal problems
In the recent years this capitalism has lead to some problems, great income and wealth inequalities, job insecurity. Capitalism has turned to supercapitalism. Corporations and labor union have allied with politicians to control capitalism. The competition has been stiff to new entrants.
The not Quite Golden Age
The government response to big corporations was perceived as antitrust legislation by these corporations. This lead to regulations such as environmental pollution control involving pollution permits. The alliance by the corporations, the government and the labor unions was set by the existence of corporations which welcomed government regulation and the fact that by Mid 1940s workers age had not been increased to desired levels. This was a representative of oligopoly in which working together was better than when alone. The big businesses were seeking big labor cooperation in labor markets. Truman panel investigated how the labor markets and made some recommendation. Creation of job stability, middle income earning families, and enhancement income distribution given the rising economic living standards through business-labor interaction has not yet been obtained.
The Golden Age
The presence of democratic capitalism characterized by government, business, and labor unions will be a golden age. The emphasis of corporate statesmanship by business leaders, promotion of public goods and enhanced efficiency as well as innovation will give birth to golden age.
Road to supercapitalism
The great innovations and technological improvement has lead to supercapitalism. Military innovations of cold war have been adapted to commercial use. The improvement in transport and communication has lead to increased trade and the easy carrying out global transactions through the World Wide Web. U.S. corporations have been in forefront posing great competition even to the oligopolies. Technology has caused major changes. Deregulations have been made possible. It leads to low cost in production and consequently low prices to consumers -an illustration, Ma Bell major air carriers producer has reduced price due to technology induced low production cost. Financial deregulation has also occurred. The savers have also been recognized as investors. The maximization of shareholders wealth also became a major objective of the corporation C.E.Os. - employing cost cutting strategy to maximize profits.
The environment of high competition and cost cutting on unions caused decline in the union membership which occurred in many nations with U.S. included. The oligopolistic structure was then broken. Labor unions say has become limited.