My good friend, Cambridge University economics professor and celebrity Noreena Hertz, has given an interesting interview to German news service Spiegel Online in which she says capitalism is about to change:
Hertz: I am convinced that we are at a turning point in capitalism. The financial crisis could only come about because people were too focused on growth without asking where this growth comes from and at what cost. The crisis was a wake-up call for many people who accepted the rules of the old system. And many people — from policymakers to academics to economists to politicians, but also the man on the street — are starting to question whether the old rules were actually fair, just or right.
SPIEGEL ONLINE: You call it the switch from Gucci capitalism to cooperative capitalism.
Hertz: In Gucci capitalism, people believed that the markets were absolutely rational and reliable. Economists created models with cartoon-like assumptions about people as super-rational profit maximizers. They tried to describe a complex world without paying attention to politics, economics and history. They ignored all of that. But, now, these economists are starting to question all of this. It is interesting that the Nobel Prize was not given to a traditional economist but, rather, to Elinor Ostrom, who questions the fundamental assumptions of the classical economy.
SPIEGEL ONLINE: What form would companies take in cooperative capitalism?
Hertz: There are already companies that have a cooperative business model. Start-ups in Silicon Valley or the suppliers of open-source software are just some examples. These industries are not driven by Gucci capitalism. They work on principles that explicitly value collaboration, partnership, networking, relationships and social forces — values that were not really seen as having any economic worth. But we have seen that sometimes they can be far more successful than the old models.
SPIEGEL ONLINE: About a year ago, you wrote an essay about the change to a cooperative capitalism. But, since then, nothing has changed, and bankers are pulling in huge bonuses again.
Hertz: There are two parallel realities going on at the moment. The bankers, many of whom do not understand the concerns of ordinary people, live in one reality. The rest of the economy — the rest of us — lives in the other one. To say that nothing has changed underestimates the many new innovations we are seeing in thinking, doing and acting…
[continues at Spiegel Online]