Wednesday, October 15, 2008

Advanced Capitalism

My main line of research as a sociologist is the study of 'advanced capitalism.' What I am working on right now is linking the advancement of capitalism -- i.e. changes to the structural DNA, so to speak, of that we call capitalism -- to consumer and worker sentiment.

So what is advanced capitalism? While my research and analysis is still being worked out, I cautiously characterize advanced capitalism two ways.

1. In the most fundamental sense, I connect the advancement of capitalism to the de-linking of the dollar from gold in 1971. While this transformation is profoundly complex, the change can be boiled down in the following way: The value of the dollar currency after 1971 is no longer limited by the gold or commodity value that it reflects. Instead, America's monetary authorities can print dollars at their behest, and indeed they have. Central banks manage economic growth through the expansion of money supply and the flow of credit. This 'credit economy' means that the value of wealth has changed from the production of goods to a system of legitimacy, in which wealth is what an actor or an institution gets away with arguing it is. I don't mean 'get away with' in a pejorative sense. Rather, the notion of 'legitimate wealth' means that an actor or an institution must argue their position rather than simply show the goods, or the gold, they have in hand.

2. The second characterization of advanced capitalism is the extent to which economic markets play out within a system of communications media and immediate behavioral, interpretive, and informational contexts. This changes markets in the way that 'fundamentals' are dependent upon expections, confidence, trust, rumors, networks, and the informational norms that communications media create out of thin air.

It is my contention that, along with the traditional supply-and-demand and equilibrium models that economists have long associated with capitalism, analyses of capitalism today must take these two contexts into mind when studying why and how observable economic outcomes like the current financial collapse come to be.

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