ECONOMIC ISSUES, PROBLEMS AND PERSPECTIVES CAPITALISM IN BUSINESS, POLITICS AND SOCIETY No part of this digital document may be reproduced, stored in a retrieval system or transmitted in any form or by any means. The publisher has taken reasonable care in the preparation of this digital document, but makes no expressed or implied warranty of any kind and assumes no responsibility for any errors or omissions. No liability is assumed for incidental or consequential damages in connection with or arising out of information contained herein. This digital document is sold with the clear understanding that the publisher is not engaged in rendering legal, medical or any other professional services. ECONOMIC ISSUES, PROBLEMS AND PERSPECTIVES Additional books in this series can be found on Nova‘s website under the Series tab. Additional E-books in this series can be found on Nova‘s website under the E-book tab. BUSINESS ISSUES, COMPETITION AND ENTREPRENEURSHIP Additional books in this series can be found on Nova‘s website under the Series tab. Additional E-books in this series can be found on Nova‘s website under the E-book tab. ECONOMIC ISSUES, PROBLEMS AND PERSPECTIVES CAPITALISM IN BUSINESS, POLITICS AND SOCIETY EUGENE N. SHELTON EDITOR Nova Science Publishers, Inc. New York Copyright © 2011 by Nova Science Publishers, Inc. All rights reserved. No part of this book may be reproduced, stored in a retrieval system or transmitted in any form or by any means: electronic, electrostatic, magnetic, tape, mechanical photocopying, recording or otherwise without the written permission of the Publisher. 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Shelton, Eugene N. HB501.C242453 2010 330.12'2--dc22 2010041344 Published by Nova Science Publishers, Inc. † New York CONTENTS Preface vii Chapter 1 Experimental Capitalism in the Former USSR: Bitter Lessons 1 Soltan Dzarasov Chapter 2 Reflections on the Structural Function of Industrial Design in Capitalism through Development Experiences of NICs 59 Ju-Joan Wong Chapter 3 Who was the White Collar Criminal? White Collar Criminals in Sweden, 1865-1912 77 Tage Alalehto and Daniel Larsson Chapter 4 Work and War in the Evolution of Capitalism 93 Wilson de Campos Vieira Chapter 5 Political Action Committees and the Expropriation of the Common 105 Charles H. Cho and Crawford Spence Chapter 6 Dysmorphic Capitalism and the Aberrant Development of Creative Intelligence 119 Don Ambrose Chapter 7 Social Status, the Spirit of Capitalism, and the Term Structure of Interest Rates in Stochastic Production Economies 131 Liutang Gong, Yulei Luo and Heng-fu Zou Chapter 8 Surplus Allocation and Development under Global Capitalism 153 Cem Somel Index 177 PREFACE The iconic economist-philosopher Adam Smith lauded capitalism as a system for distributing opportunity and prosperity widely, and for freeing populations from the oppression they suffered under the European aristocracy of his time. This book presents current research in the study of capitalism and its relation to business, politics and society. Topics discussed herein include experimental capitalism in the former USSR; industrial design in capitalism through development experiences of newly industrializing countries; dysmorphic capitalism and the aberrant development of creative intelligence; capital accumulation and equilibrium interest rates in stochastic production economies with the concern of social status; and surplus allocation and development under global capitalism. Chapter 1 - In all the post-Soviet states, the transition in the early 1990s from a planned to a market economy proceeded with enormous pomp. It was accompanied by noisy propaganda depicting the huge promise of the market and private property. Meanwhile, the planned economy and socially-owned property were given very low marks, as the main cause of our misfortunes and suffering. While requiring great expenditures of labour, materials and organisational effort, we were told, planning yielded meagre results, while the market possessed such an ideal mechanism of self-regulation that at minimal expense it permitted spectacular outcomes. The situation justified the use of shock therapy (free price formation and the rapid privatisation of property) to introduce free market entrepreneurship, since we would soon find ourselves in paradise, achieving the heights of prosperity of the developed countries. Many of us knew, however, that the source of this developed status lay not so much in private property as in a different culture and civilisation, and that the problem could not be solved simply by substituting one form of property for another. The reason for the different levels of development of the countries of North and South America lay not in the existence of the market and private property in one case and not the other, but in the position which the US and Canada occupied within the world economic system compared to the countries of Latin America. The reason why many of us at that time reacted with caution to the urgings of the IMF and the World Bank that we adopt a neoclassical model of the market was not because we were retrograde Marxists, but quite different. For decades we had studied and taught the history and theory of capitalism not only according to Marx and Lenin, but also according to Smith, Ricardo, Mill, the Austrian school, Weber, Keynes, Samuelson and many other Western economists. Their works had been translated into Russian and were well known to Soviet scholars. From them it was clear that the market and capitalism were the viii Eugene N. Shelton very complex outcome of prolonged historical development. To retrace this path in a few days, as we were urged at that time to do, was impossible. It required no great wisdom to grasp that in a country without traditions of private entrepreneurship, there was no way that skilled, efficient property-owners would appear in the blink of an eyelid and quickly raise our economy to the level of more developed countries. This was especially evident since from the heights of the Marxist vision of capitalism it was clear that the system was sliding into something like a rerun of the Great Depression. It was no secret that speculation in securities had taken on vast proportions. True, no-one at that time knew precisely when or how this would end. But such expert observers of capitalism as John Kenneth Galbraith (1961) and Hyman Minsky (1986) spoke of ―financial instability hypotheses‖ very remote from the alluring pictures we were being presented with. Moreover, the Reaganomics and Thatcherism which were then in vogue, and which promised to remove all bounds to the expansion of capital and of its manoeuvrings, seemed to us to contain the seeds of future problems in each country and internationally. In the circumstances, any unprejudiced individual should have been wary of the journey we were about to take into uncharted territory. Sober reflection on the situation, however, was not in fashion at the time. Speculative profits were seen as a mark of healthy success, and capitalism was presented to us as the way to escape from the hell of shortages into the heaven of abundance. To this end, a system of total brainwashing was applied. With the help of propaganda on a massive scale, it was now possible to convince people that black was white, and the reverse. This was done, and large numbers of people came to believe that once we had surrendered our right to property and our accumulated savings to individuals who had appeared as if from nowhere, we would start to live better. Twenty years have passed since those days, and our grasp of reality has improved no end. The lessons we have learned have been bitter, but instructive, and deserve to be paid wide attention. It is on the basis of these experiences that the present arguments are set forward. Never before in history has there been anything along the lines of what has happened to us. In the first place, capitalism has never before been established on the basis of preconceived plans.