Is Capitalism Obsolete ? - Giacomo Corneo

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Is Capitalism Obsolete ?

by
Giacomo Corneo

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Title:	Is Capitalism Obsolete ?
Author:	Giacomo Corneo
Genre:	Non-fiction
Written:	2014 (Eng. 2017)
Length:	284 pages
Original in:	German
Availability:	Is Capitalism Obsolete ? - US
	Is Capitalism Obsolete ? - UK
	Is Capitalism Obsolete ? - Canada
	Bessere Welt - Deutschland

A Journey through Alternative Economic Systems
German title: Bessere Welt: Hat der Kapitalismus ausgedient ? Eine Reise durch alternative Wirtschaftssysteme
Translated by Daniel Steuer

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Our Assessment:

B+ : solid overview; useful comparisons

See our review for fuller assessment.

Review Summaries
Source	Rating	Date	Reviewer
Falter	.	19/8/2014	Josef Gepp
Foreign Affairs	.	3-4/2018	Richard N. Cooper
Handelszeitung	.	11/11/2014	.
Rev. of Austrian Economics	.	29(1) (2016)	Petrik Runst

From the Reviews:

"Corneo durchleuchtete die Vor- und Nachteile sämtlicher Marktsysteme. Hier wird sein Buch stellenweise etwas technisch, schließlich sind die Unterschiede nicht allzu groß. Doch es mangelt Corneo niemals an Verständlichkeit und wissenschaftlicher Redlichkeit. (...) Man mag seine Meinung teilen oder nicht, jedenfalls war Corneos Weg zu diesem Ziel ein höchst aufschluss- und lehrreicher." - Josef Gepp, Falter

"Corneo takes seriously the many criticisms of capitalism as it is practiced today but insists that detractors must confront the question of which alternative systems could realistically meet contemporary society’s economic needs. In this sweeping and informative discussion of the role of economy in society, he explores alternative systems, both hypothetical and real, and finds them all inferior to capitalism." - Richard N. Cooper, Foreign Affairs

"Keine leichte Lektüre, aber mit viel Stoff zum Nachdenken." - Handelszeitung

Please note that these ratings solely represent the complete review's biased interpretation and subjective opinion of the actual reviews and do not claim to accurately reflect or represent the views of the reviewers. Similarly the illustrative quotes chosen here are merely those the complete review subjectively believes represent the tenor and judgment of the review as a whole. We acknowledge (and remind and warn you) that they may, in fact, be entirely unrepresentative of the actual reviews by any other measure.

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The complete review's Review:

Giacomo Corneo bookends (more or less) Is Capitalism Obsolete ? with a Prologue and Epilogue of exchanges between a Father and Daughter -- the Prologue an e-mail exchange, the Epilogue an in-person dialogue. ['More or less' because the Prologue is in fact preceded by a short Preface, the Epilogue followed by a twenty-page essay-as-Appendix.] The Daughter argues that capitalism -- the term she prefers to 'the market economy' ("At least that makes clear in whose interest the system operates: in the interest of capital") -- is an economic system that is: "wasteful, unjust, and alienating". The Father doesn't entirely agree -- yes, there are problems with it, but ... -- and makes the useful point that even:

An imperfect system should only be abolished if there is another system that one can put in its place -- one that we have strong confidence will, indeed, be superior to the old one.

So he proposes:

We should do a rational analysis of all the serious suggestions for alternative economic systems our species has managed to formulate so far.

       Which is what he then proceeds to do; that's what the bulk of the book consists of. Leaving aside this somewhat awkward (or at least awkwardly presented) framing device, it is an interesting exercise -- and well-executed by Corneo. Chapter by chapter he explores historical and theoretical models, as well as then devoting a chapter to the ideas of a 'universal basic income' and 'basic capital', and a final one in which (along with the Epilogue) he suggests a viable preferable alternative (or at least variation) on present-day systems and how it might be brought about.
       Corneo does go back to fundamentals: his first chapter considers Plato's Republican fantasy, the second Thomas More's Utopian one. Even as, for example, Plato's separation of ruling class and market and More's embrace of common ownership (and, in a later chapter, Kropotkin's anarchism) are entirely unrealistic -- and certainly not modern-day, modern-world options -- Corneo's closer examination proves fruitful, as the extreme positions shine a useful light on some of the fundamental issues, including (political) governance and property rights, that need to be considered in every case.
       In moving on to considering centrally-planned economies ("likely to appear alien to today's readers, it is a strikingly commonsense idea"), he concludes with the same argument that worked for Friedrich von Hayek: there's just too little information to base planning on. (This seems an under-explored area however -- almost excusable in that this book does date, after all, from all the way back in ... 2014 -- since contemporary data-processing capabilities (both in terms of collection and number-crunching) have expanded exponentially more quickly than seems to have been thought possible even just a few years ago. With computer programs already easily conquering the game of Go -- something that seemed like a much more distinct prospect even recently -- and the incredible amounts of personal (meaning also consumer) information available to sites such as Google, Amazon, and Facebook, the informational objection to planned economies would appear to be on much shakier ground already, and will certainly have to be reëvaluated in (possibly already the near-)future.)
       The real-life examples of planned economies also remind of the system's other weakness, that planning becomes politically coöpted, decision-making not based on fundamentals -- information -- but rather as part of a political process and personal/group power-plays. (This problem, of course, extends to all systems, including market systems, where (lobbied-for-)regulation and other (personally/ideologically influenced ...) statist interference often undermines some/much of the 'freedom' of free markets.)
       Corneo also considers various forms of socialism, including with a market-oriented framework -- 'shareholder socialism', for example. And his proposal for an alternative to present-day capitalism does, indeed, see a greater role for the state -- specifically, public capital. His Epilogue-conversation and Appendix even suggest how to approach the transition towards such a system -- cautiously, for one.
       If Corneo's analysis and suggested path forward -- away from capitalism's undeniable weaknesses -- are well-presented and certainly thought-provoking, they're also distinctly European-flavored. Written in German, by a professor teaching at a German university, it's unsurprising he would lean most strongly on the German model -- already considerably closer to his ideals than, for example, the American one -- and specifically politically he seems to underestimate the willingness of citizens to make the necessary sacrifices that allow for the "generous welfare state" that he believes should be a universal goal. So, for example, his recipe for election-success stands at (complete ?) odds with what recent American election-results suggest -- indeed, reading this passage in the United States, it's hard not to guffaw:

The stabilization of the political basis for the welfare state requires the lasting and comprehensive support of the middle class. The foolproof recipe for achieving this support is to provide high-quality services by the state, especially in the areas of education and health, and to minimize the wasting of taxpayers' money. If a government efficiently spends money on high-quality services, the middle-class voters will respond with skepticism to any rival political parties trying to garner votes with promises of tax reduction.

       This idealized vision might be plausible in the abstract, but points to what is arguably the book's biggest weakness, which is not taking political science (and (so easily manipulable) human psychology ...) into proper and adequate account. Corneo does note many of the problems that can and do arise in various systems, as people take advantage of what there is to take advantage of, but needs to examine his suggested solution under a harsher light too. Not that he's necessarily on the wrong path -- it's an interesting idea -- but there is more to consider, too, and the hurdles to implementation, especially outside continental Europe, likely considerably greater.
       Regardless of Corneo's own conclusions and suggestions -- though these too are worth engaging with --, Is Capitalism Obsolete ? is worthwhile for its examination (and dismissal ...) of many of the alternatives to capitalism. Corneo does a fine job of presenting these and the problems with them -- and even the most obvious examples, like the extreme one of Plato's Republic, are helpful in considering issues facing any plausible real-life alternatives.
       With his focus very much on the economics, Corneo doesn't fully grapple with the necessary political (and resulting legal) framework, and the many pressures on it. While strongly supportive of democratic engagement and involvement in process and decision-making, Corneo seems to underestimate the complexities of it, and the possibilities for abuse of the/any system. The border-issue -- that business can only be insulated so far from competing foreign interests (and that there are generally (large) costs and drawbacks to a lack of openness) -- is also addressed to some extent, but again this is a much more complicated issue, varying also depending on what frameworks a nation-state is working in (from within the European Union, or outside it, for one obvious example).
       Is Capitalism Obsolete ? is usefully thought-provoking, and its examples and arguments well presented. The debate about economic systems is one that will and must continue, and while the focus is often elsewhere, and more specific -- income inequality, for example -- Corneo's more fundamental (re)assessment, and even his suggestion as to one possible path forward, deserve to be part of the debate as well.

- M.A.Orthofer, 23 November 2017

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Links:

Is Capitalism Obsolete ?:

Harvard University Press publicity page
Goldegg Verlag publicity page

Reviews:

Giacomo Corneo:

Faculty page

Other books of interest under review:

See Index of books dealing with Business and Economics

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About the Author:

Giacomo Corneo was born in 1963. He teaches at the Freie Universität Berlin.

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