Flexicurity Capitalism: Foundations, Problems, and Perspectives

Hardcover | April 25, 2012

byPeter Flaschel, Alfred Greiner

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An intense debate has played out in recent years regarding how to implement a so-called "flexicurity system"-a labor market reform that combines flexibility, particularly in the hiring and firing process of firms, with security in the employment and income of the workforce. In FlexicurityCapitalism, Flaschel and Greiner lay out the macroeconomic structure of this system, providing the detailed mathematical models necessary to ponder seriously how such a system can work. Their book rests on three pillars of thought: Marx, Kalecki-Keynes, and Schumpeter. The authors highlight the relevant contributions from the work of each and build upon it. They in turn provide a basic framework for flexicurity capitalism and then compare their economic system to pure capitalism to determine the best and most practical way forward. Their scope is ambitious: toaddress the shortcomings of a narrow focus on mass unemployment, selective-schooling systems, property rights based solely on ownership without qualified business decision-making expertise, financial markets that do not of channel savings properly into real investment, and innovations that ignorehuman rights or moral sentiments. Flaschel and Greiner's Flexicurity Capitalism provides serious discussion and feasible mathematical models necessary to consider moving in this direction.

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An intense debate has played out in recent years regarding how to implement a so-called "flexicurity system"-a labor market reform that combines flexibility, particularly in the hiring and firing process of firms, with security in the employment and income of the workforce. In FlexicurityCapitalism, Flaschel and Greiner lay out the mac...

Peter Flaschel is Professor Emeritus in the Department of Business Administration and Economics at the University of Bielefeld, Germany. Alfred Greiner is Professor of Economics in the Department of Business Administration and Economics at the University of Bielefeld, Germany.

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Format:HardcoverDimensions:240 pages, 9.25 × 6.12 × 0.98 inPublished:April 25, 2012Publisher:Oxford University PressLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:0199751587

ISBN - 13:9780199751587

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Table of Contents

NotationIntroduction1. Marx: Socially Acceptable Capitalism?1.1 Introduction1.2 Theminimum wage debate1.3 Sustainable social evolution through an unrestricted reserve army mechanism?1.4 Classical growth dynamics1.5 Hiring and firing, social security and restricted reserve army fluctuations1.5.1 Human rights: Basic income and minimum wages1.5.2 Capital's and labor's responsibility: Minimum wages and basic income needs1.5.3 Capital's and labor's responsibility: Upper bounds for real wage increases1.5.4 Automatic stabilizers: Blanchard and Katz error correction terms1.6 ConclusionsAppendix: Wage dynamics. A specific theoretical foundation2. Kalecki: Full Employment Welfare Capitalism?2.1 Introduction2.2 Economic and political aspects of full employment2.3 Themodel2.4 The implied laws ofmotion2.4.1 The DADmodule: multiplier and employment dynamics2.4.2 The DAS module: real wage dynamic and capital accumulation2.5 Steady state configurations and reduced-form3D dynamics2.5.1 Balanced growth in the 4D dynamics2.5.2 Reduced-form3D dynamics2.6 Feedback structures2.6.1 Feedback channels in KMGS growth2.6.2 The feedback structure of the KGR model of capital accumulation and employment dynamics2.6.3 A feedback-suggested local stability scenario2.6.4 Consensus-based economies: Attraction towards accepted steady state positions2.7 Local instability and global boundedness2.7.1 Conflict-driven economies: Repelling steady state configurations2.7.2 Kalecki-type upper turning points2.7.3 Goodwin-type upper turning points?2.7.4 Rose-type lower turning points2.7.5 Goodwin-type lower turning points?2.8 Numerical examples2.9 Political aspects of the Kaleckian investment and employment cycle2.9.1 Monetary policy2.9.2 Fiscal policy2.10 Conclusions3. Schumpeter: Capitalism, Flexicurity and Democracy?3.1 Introduction3.2 From Marxian reserve army to Schumpeter's competitive socialism and beyond3.3 Flexicurity capitalism: budget equations, consumption and investment3.3.1 Full-employment capitalism: Ideal, status-quo and compromises3.3.2 Basic principles and problems3.3.3 Sectoral accounts, consumption and investment3.4 Dynamics: Stability and sustainability issues3.4.1 Stability of balanced reproduction3.4.2 Sustainability of balanced reproduction3.5 Pension funds and credit3.6 Education and schooling3.6.1 The educational system: Basic structure and implications3.6.2 Equal opportunities and life-long learning3.7 Challenge I: Keynesian business fluctuations3.8 Challenge II: Schumpeterian processes of 'creative destruction'3.9 The future of capitalism: A brief appraisal3.10 Elites in flexicurity societies3.10.1 Basic aspects3.10.2 Elite groups and areas of operation3.10.3 Education: Foundation for administrative authority and social behavior3.10.4 Career advancement and decent paths3.10.5 Preferences, incentives and responsibilities3.10.6 Elite failures3.10.7 The remuneration of elites under flexicurity: A baseline proposal3.10.8 A summing up3.11 Price formation: Time dependent markup pricing around long-period prices of production3.12 Conclusions and outlookAppendix 1: Stability of Balanced ReproductionAppendix 2: Sustainability of Balanced Reproduction4. Unleashed Capitalism: The Starting Point for Societal Reform4.1 Introduction4.2 Real disequilibria, balanced portfolios and the real-financial markets interaction4.3 A portfolio approach to KMG growth dynamics4.3.1 Households4.3.2 Firms4.3.3 Fiscal and monetary authorities4.3.4 The wage-price spiral4.3.5 Capital markets: Gross substitutes and stability4.3.6 Cumulative processes in capital gains expectations: Chartists' behavior2514.4 A baseline stability scenario4.5 Likely outcomes of unleashed capitalism: Local instability and regime-switch induced viability4.6 A further risk-bearing asset: Long-termbonds4.6.1 Intensive form4.6.2 Steady state4.6.3 Comparative statics4.6.4 Stability4.6.5 Summary4.7 Interest rate policy in the KMG portfolio approach5. ConclusionsMathematical Appendix: Stability TheoremsNotesReferencesIndex