The Rise and Fall of Capitalism.

• Author: Dugger, William M.

The scope of this book is very broad. It covers the period from the end of European feudalism to the 1990s. The author, Professor of Economics at the University of Utrecht, provides us with a broad theory of how capitalism grows. Around his theory of growth, he skillfully weaves a whole series of explanations of social, political, religious, and intellectual changes. He concludes his history of capitalist development by arguing that capitalism has reached a crossroads. To resume growth in the 1990s and beyond, either capitalism must develop an egalitarian democracy in which social responsibility and public rationality can curb individual avarice, or capitalism must revive the fear of poverty and use the legal coercion of the state to impose a new form of economic discipline.

According to Professor Brenner's theory of capitalist growth, to continue growing capitalism requires two sets of elements. One set of elements is economic and political in nature, while the other set is social and moral in nature. Economically and politically, the bourgeoisie need both the ability to save and invest plus the wish to save and invest. The ability to save depends on the generation of an economic surplus. Such a surplus is necessary but not sufficient. More important and more difficult to maintain is the wish to save and invest. The wish to do so depends on brisk competition for market share at the micro level and sufficient growth in aggregate demand - consumer spending - at the macro level. Without state interference, growth in consumer spending is generated by competition between firms that passes on productivity increases to consumers through lower prices. Barring lower consumer prices that create the needed increases in consumer real income, competition between capital and labor can still maintain the needed growth in consumer spending if it results in the appropriate increases in wages. If competition between firms or between capital and labor does not generate the needed growth in consumer spending, then the state must intervene to redistribute income and maintain sufficient growth in aggregate demand. Without sufficient growth in aggregate demand, primarily consumer spending, the bourgeoisie's wish to save and invest will falter in the face of falling opportunities for profitable investment. Growth will end, even though the ability to save and invest continues.

For growth to continue, Brenner argues that not only must the economic and political...