A friend of mine passed along an article entitled “Capital is up for Scrutiny at Top Business Schools”. I started to write a post about the, let’s call it “the Elected curriculum”, seeping into business schools and evidently into medical and law schools as well.
Having taught introductory courses in Economics for some years now, sharing the concern that student miss what "market" means for the functioning of our economy, and having always spent some time in my classes trying to put things in perspective by comparing our market economy to a planned one (as well as our Italian market economy to the US one), I was surprised by finding relatively little areas of overlap between this article and what I do tell my students.
The article identifies the main benefit of capitalism in incentives. For me, it's prices. It's prices - I tell my students - that allow a market economy to self-organize without the need for a central planner to do it. And since an economic system is a complex beast, full of heterogeneity, changes and unobserved information, it will tend to self-organize more efficiently than a central planner would.
Sure, there are also incentives. But I'm sure the USSR also had a lot of individual incentives - maybe more often non-monetary, maybe more often punishments than prizes, maybe (?) less aligned with the common good, often perverse (because an economic system is a complex beast)... but incentives abounded, probably more loudly advertised than in a modern market economy.
Then, I do talk to my students about inequality (I avoid the term "equality" just because I think Soviet citizens were far from "equal", just possibly less unequal), but not about the ex ante vs. ex post contrast. While I see huge cross-country heterogeneity in inequality, my impression is that ex ante and ex post inequality tend to go together (maybe because the ex ante of kids is the ex post of their parents). And that the reduction of ex ante inequality is less and less a substitute for the reduction in ex post inequality, in a world where workers with assumingly good education can be replaced by AI and robots in a matter of years.
I do tell the students that the US are likely richer - on average - than Italy also because they focus more on fighting inefficiency than inequality. But to be honest I'm not surprised that many (young) Americans have a negative view of the current state of affairs; they probably suspect that some ultra-rich would have had sufficient incentives to work even if they had had one half, or one tenth, of what they have. And maybe they suspect that even with the best education, and the best incentives, in the world, not every kid could become Jeff Bezos.
There are different kinds of capitalism. There is the state capitalism of the USSR and market capitalism.
In the US, market capitalism comes in different kinds depending on the prevailing business culture under which it operates. Business culture evolves in response to changes in the economic environment, with the current "shareholder primacy" (SP) culture dominant today, while sixty years ago it was "stakeholder capitalism" (SC) that was dominant. Young people's discontent with capitalism is not with ALL capitalism, but rather, the SP variant we currently operate under. This is because we are in the midst of another Capitalist Crisis (link) like the last one (1907-41), the successful response to which produced SC.
Having taught introductory courses in Economics for some years now, sharing the concern that student miss what "market" means for the functioning of our economy, and having always spent some time in my classes trying to put things in perspective by comparing our market economy to a planned one (as well as our Italian market economy to the US one), I was surprised by finding relatively little areas of overlap between this article and what I do tell my students.
The article identifies the main benefit of capitalism in incentives. For me, it's prices. It's prices - I tell my students - that allow a market economy to self-organize without the need for a central planner to do it. And since an economic system is a complex beast, full of heterogeneity, changes and unobserved information, it will tend to self-organize more efficiently than a central planner would.
Sure, there are also incentives. But I'm sure the USSR also had a lot of individual incentives - maybe more often non-monetary, maybe more often punishments than prizes, maybe (?) less aligned with the common good, often perverse (because an economic system is a complex beast)... but incentives abounded, probably more loudly advertised than in a modern market economy.
Then, I do talk to my students about inequality (I avoid the term "equality" just because I think Soviet citizens were far from "equal", just possibly less unequal), but not about the ex ante vs. ex post contrast. While I see huge cross-country heterogeneity in inequality, my impression is that ex ante and ex post inequality tend to go together (maybe because the ex ante of kids is the ex post of their parents). And that the reduction of ex ante inequality is less and less a substitute for the reduction in ex post inequality, in a world where workers with assumingly good education can be replaced by AI and robots in a matter of years.
I do tell the students that the US are likely richer - on average - than Italy also because they focus more on fighting inefficiency than inequality. But to be honest I'm not surprised that many (young) Americans have a negative view of the current state of affairs; they probably suspect that some ultra-rich would have had sufficient incentives to work even if they had had one half, or one tenth, of what they have. And maybe they suspect that even with the best education, and the best incentives, in the world, not every kid could become Jeff Bezos.
There are different kinds of capitalism. There is the state capitalism of the USSR and market capitalism.
In the US, market capitalism comes in different kinds depending on the prevailing business culture under which it operates. Business culture evolves in response to changes in the economic environment, with the current "shareholder primacy" (SP) culture dominant today, while sixty years ago it was "stakeholder capitalism" (SC) that was dominant. Young people's discontent with capitalism is not with ALL capitalism, but rather, the SP variant we currently operate under. This is because we are in the midst of another Capitalist Crisis (link) like the last one (1907-41), the successful response to which produced SC.
https://mikealexander.substack.com/p/the-capitalist-crisis