{"id":134115,"date":"2014-07-30T13:39:46","date_gmt":"2014-07-30T13:39:46","guid":{"rendered":"http:\/\/rinf.com\/alt-news\/?p=134115"},"modified":"2014-07-30T13:40:12","modified_gmt":"2014-07-30T13:40:12","slug":"134115","status":"publish","type":"post","link":"http:\/\/rinf.com\/alt-news\/money\/134115\/","title":{"rendered":"Corporatism Stifles Innovation"},"content":{"rendered":"

James Hall
\nRINF Alternative News<\/a><\/span><\/em><\/p>\n

For an economy to grow and create actual wealth, innovation is a bedrock component in the development of enhanced prosperity. Prosperity is an intriguing concept. Simply making and accumulating money falls short of establishing a successful economic model. This recent report illustrates a prime example.\u00a0Facebook stock soars, as company briefly passes IBM in market value<\/a>. “By most measures, Facebook is dwarfed by IBM: With about 7,000 employees, ten-year-old Facebook is on track to garner $12 billion in sales this year. The 103-year-old IBM has more than 400,000 workers and sold almost $100 billion of computer hardware and software in 2013.”<\/span><\/p>\n

Is Facebook a shining star of innovation? Or is it the product of a society, which has given up on working towards a successful economy, whereby a prosperous middle class partakes in the engine of continued and shared affluence? Conversely, is IBM an innovated inventor, or is it a dinosaur of a previous era?<\/span><\/p>\n

However, you answer such questions, Edmund Phelps in an opinion article,\u00a0Corporatism not capitalism is to blame for inequality<\/a>\u00a0argues that tangible innovation is in decline.<\/span><\/p>\n

“Innovation tailed off between 1940 and about 1970, while the top decile\u2019s share of wealth and income began rising in the 1970s.<\/span><\/p>\n

The causation runs the other way: losses of dynamism have tended to sharpen wealth inequality because it hits workers of modest means more than it hurts the wealthy. Developing new products is labour-intensive. So is producing the capital goods needed to make them. These jobs disappear when innovation stalls.”<\/span><\/p>\n

An explanation of\u00a0The Rise and Fall of Western Innovation<\/a>, addresses the plight of economic reality. “It is undeniable that the U.S. economy is not delivering the steadily improving wages and living standards the nation\u2019s residents expect.”<\/span><\/p>\n

“Mass Flourishing<\/a>\u00a0is meant to be Edmund Phelps\u2019s chef d\u2019oeuvre, the capstone to a half century of research into the sources of national wealth.<\/span><\/p>\n

A decline in the pace of innovation threatens prosperity, in the U.S. and everywhere else.<\/span><\/p>\n

The main cause of this decline, according to Phelps, is corporatism\u2013the inevitable tendency of businesses, workers, and other interests to band together to protect what they have. In modern economies, he says, corporations, unions, and other interests turn government into an agency for forestalling change and preserving the status quo.”<\/span><\/p>\n

The noted economic expert and academic Robert J. Shiller, in his article,\u00a0Why Innovation Is Still Capitalism\u2019s Star<\/a>, provides a critique of “Mass Flourishing<\/a>: How Grassroots Innovation Created Jobs, Challenge and Change”.<\/span><\/p>\n

“Professor Phelps discerns a troubling trend in many countries, however, even the United States. He is worried about corporatism, a political philosophy in which economic activity is controlled by large interest groups or the government. Once corporatism takes hold in a society, he says, people don\u2019t adequately appreciate the contributions and the travails of individuals who create and innovate. An economy with a corporatist culture can copy and even outgrow others for a while, he says, but, in the end, it will always be left behind. Only an entrepreneurial culture can lead.”<\/span><\/p>\n

Jared Bernstein does not agree as stated in a response to Professor Shiller in\u00a0‘Does the Government Stifle Innovation? I Don\u2019t See It (To the Contrary\u2026)’<\/a>. “My points are that a) many important innovations have involved government support somewhere along the way, and b) while one could and should worry about waste in this area, I\u2019ve not seen evidence, nor does Shiller provide any, of stifling. …”.<\/span><\/p>\n

Well, that viewpoint sure sound like Obama\u2019s infamous endorsement of a government corporatism model,\u00a0“If you\u2019ve got a business \u2013 you didn\u2019t build that. Somebody else made that happen.”<\/em><\/span><\/p>\n

When examining the way corporate transnational businesses operate in the real world, their lack of internal in-house innovation is notorious. These gigantic corporatist carnivores excel at mergers and accusations in the quest of monopolization of markets. In these endeavors, their best friend is government cronyism and favoritism.<\/span><\/p>\n

The essay,\u00a0Blaming Capitalism for Corporatism<\/a>, makes an important point.<\/span><\/p>\n

“In various ways, corporatism chokes off the dynamism that makes for engaging work, faster economic growth, and greater opportunity and inclusiveness. It maintains lethargic, wasteful, unproductive, and well-connected firms at the expense of dynamic newcomers and outsiders, and favors declared goals such as industrialization, economic development, and national greatness over individuals\u2019 economic freedom and responsibility. Today, airlines, auto manufacturers, agricultural companies, media, investment banks, hedge funds, and much more has at some point been deemed too important to weather the free market on its own, receiving a helping hand from government in the name of the “public good.”<\/span><\/p>\n

Here within dwells the essential dilemma, defining the genuine “Public Good<\/em>“. Government often acts according to Mr. Bernstein\u2019s idea of progress, especially in technological terms. Focus on the notion \u2014 “economically important<\/em>” \u2014 and the language filter that translates into a benefit for the Corporatocracy matrix.<\/span><\/p>\n

“While “entrepreneurial culture” will always be essential, many innovations that turned out to be economically important in the US have government fingerprints all over them. From machine tools, to railroads, transistors, radar, lasers, computing, the internet, GPS, fracking, biotech, nanotech\u2013from the days of the Revolutionary War to today\u2013the federal government has supported innovation often well before private capital would risk the investment.”<\/span><\/p>\n

Corporatism invents methods of greater control and market dominance for select elitist beneficiaries. When government provides seed money to fund research projects, pure science is seldom the objective. As examined in the essay,\u00a0How Government Did (and Didn\u2019t) Invent the Internet<\/a>, Harry McCracken writes: (I\u2019m even prepared to believe that if the Internet hadn\u2019t been invented at DARPA, the private sector would have stepped in and done the job. But we\u2019ll never know for sure, since it was invented at DARPA.)<\/span><\/p>\n

Thus, the paradox most people are unable to see beyond the guise of “so called” progress. Is government involvement or outright development of transhumanist futuristic technology a valid form of innovation or is it the terminal scourge of central planning and a controlled economy? Surely, under such a system, the “Mass Flourishing” of sharing the wealth, will no longer be an issue among the “useless eaters”, designated for extinction.<\/span><\/p>\n

James Hall runs the BATR<\/a> website.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

James Hall RINF Alternative News For an economy to grow and create actual wealth, innovation is a bedrock component in the development of enhanced prosperity. Prosperity is an intriguing concept. Simply making and accumulating money falls short of establishing a successful economic model. This recent report illustrates a prime example.\u00a0Facebook stock soars, as company briefly […]<\/p>\n","protected":false},"author":1,"featured_media":108951,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[487,461,52],"tags":[],"class_list":{"0":"post-134115","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-breaking-news","8":"category-editorials","9":"category-money"},"_links":{"self":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/134115","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/comments?post=134115"}],"version-history":[{"count":0,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/134115\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media\/108951"}],"wp:attachment":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media?parent=134115"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/categories?post=134115"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/tags?post=134115"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}