International Regulatory Competition and Coordination: Perspectives on Economic Regulation in Europe and the United States

By William W. Bratton; Joseph McCahery et al. | Go to book overview

6
European Capitalism: Between Freedom and Social Justice

PROF. DR. H. W. DE JONG


1. INTRODUCTION: A PLURALISTIC SYSTEM

Capitalism is the economic system in which firms, privately owned, produce goods and services for markets where consumers spend their incomes in accordance with their own free choices. The goal of the system is, to quote Marx ( 1890: 138, 149, 295), the generation of surplus value: 'The production of surplus value, . . ., is the specific end and aim, the sum and substance, of capitalist production'. The quotation, as given above,1 is, I think, one which deserves general acclaim, for it denotes the essential features of capitalism to bring forth goods and services valued in and by markets and to do so on a progressive basis. Capitalism--or the free market economy, if one prefers a less ideologically oriented term--is not a system which is static or stagnant, but something which grows and develops, be it with ups and downs. Its fluctuations manifest leaps forward and crises of adaptation, but always and in the long run, like the Echternach procession: two steps forward and one backwards.

Both features also indicate the limitations of capitalism. The market economy produces only market values, and thus does not bring forth the values from outside the market system without which no society can be sustained. Justice, social companionship, sympathy and love, honesty, and other values which make society worthwhile and desirable are not produced by the market system itself. There is a lively debate whether capitalism contributes to or distracts from these extra-market values or just relates to them in a neutral way. It is a debate which is as old as capitalism itself.2 In my view, the extra-market values derive from religion, human ideals as

____________________
1
The sentence quoted omits a part which does not command widespread agreement, viz. 'The production of surplus value, or the extraction of surplus labour, is the specific end and aim, . . .'. In Socialist theory surplus value results form the exploitation of labour; other theories may ascribe the surplus value to entrepreneurial innovations or to the conversion of lower valued goods and services into higher ones as a result of the combined activities of firms or to the (efficient) organizational structures and decisions which meet the fundamental uncertainties prevailing in market economies.
2
Some of the recent discussions about the 'ethics of capitalism' can be found in Strain ( 1989), Puel ( 1989), and Biskup ( 1990).

-185-

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