Econ model project
saizo0816
ModelsofCapitalismFall18.pptxModels of Capitalism
Anglo-Saxon Model
Historical Great Britain
Natural law philosophies of Adam Smith and John Locke
Minimal state with freedom of choice in social and economic affairs
European Model
France and Germany 19th century
Consideration of Hobbes and Marx
Greater state involvement in economic affairs
Asian Model
Japan, 19th century
Greater state involvement in economic affairs with emphasis on high rates of state induced capital formation to grow the economy.
Capitalist Clusters
Asian Cluster
Four Tigers
Hong Kong, Singapore, South Korea, and Taiwan
Grew rapidly from 1970s and are relatively affluent now
Mini Dragons
Thailand, Indonesia, Malaysia, and Philippines
Growing rapidly now but are still relatively poor
| Capitalist Countries | |||
| Anglo Saxon | N. European | S. European | Asian |
| United States | Germany | Spain | Thailand |
| United Kingdom | Sweden | Portugal | Taiwan |
| Switzerland | Norway | Italy | South Korea |
| New Zealand | Netherlands | Greece | Malaysia |
| Ireland | France | Philippines | |
| Canada | Finland | Indonesia | |
| Australia | Denmark | Singapore | |
| Belgium | Hong Kong | ||
| Austria | Japan* |
| Per Capita GDP (2014) | Percent Growth Rate (2014) | |
| Hong Kong | $55,200 | 3 |
| Indonesia | $10,200 | 5.2 |
| Taiwan | $43,600 | 3.5 |
| Malaysia | $24,500 | 5.9 |
| Philippines | $7,000 | 6.2 |
| Singapore | $81,300 | 3 |
| Thailand | $14,400 | 1 |
| S. Korea | $35,400 | 3.3 |
| Source: CIA Factbook |
Institutions
Property rights
Primarily individual
Decision-making Structure
Primarily private in an organizational structure (corporation or family)
Mechanism for Coordination
Markets and price signals guide information and resource allocation.
Incentives
Material incentives dominate.
Public Choices
Primarily representative democracy.
Capitalist Characteristics
Company Ownership
Types
Widely held
Large number of owners (shareholders)
No controlling owner.
Family
Family members own and operate the business.
State
State owns and operates the business.
| Number of Asian Billionaires, Specific countries, 2011 | |
| Hong Kong | 25 |
| Japan | 22 |
| Indonesia | 22 |
| Taiwan | 18 |
| Malaysia | 9 |
| Philippine | 5 |
| Singapore | 4 |
| Thailand | 3 |
| Source: Forbes Magazine, The World’s Billionaires |
Ownership Patterns (percent of total)
Raising of Capital
Bank Loans, Corporate Bonds and/or Stock
Impersonal Capital Market:
Capital is supplied by entities outside of the enterprise.
Bank Loans
Local ties may allow banks to make loans based on personal and political relations rather than impersonal financial metrics.
Bank assesses credit worthiness
Corporate Bonds
Investor’s assess credit worthiness
Corporate Stock
Investor’s assess company value
Market Capitalization
Market value of all outstanding shares of stock at a given point in time.
Higher stock-market capitalization suggest investor preference for stock over bonds or bank loans.
Venture Capital
New business investment with considerable risk.
Higher venture capital levels increase funding of high risk /reward ventures and encourages technological innovation.
Capitalist Characteristics
Size of State
May be measured by:
Spending relative to GDP
Taxation relative to GDP
Regulatory environment (e.g. ease of entering an occupation or starting a business)
Spending is often a preferred indicator since funding it can be accomplished without taxes but still represent public, rather than private, resource allocation (crowding out effect).
Economic Freedom
The degree to which participants in the economy are free to make economic decisions unconstrained by state intervention or corruption.
Heritage Foundations Index of Economic Freedom
Highest in Anglo model
Exceptions: Denmark, Netherlands, Hong Kong, and Singapore.
Subcategories of trade and business freedom are similar across all three models.
Subcategory of corruption freedom is lower in Asian model.
Capitalist Characteristics
Index of trade freedom is fairly similar across all countries
Freedom from corruption index is lower in middle income and poorer Asian countries.
Legal Systems
Common Law
Originated in medieval England (circa 1200) and spread to British colonies.
Based on custom and precedents rather than a written legal code.
“Judge-made Law”
Determined and enforced by “common sense” lay judges to create a legal system with predictable outcomes.
Principle of Judicial Precedent
Court decisions should be consistent with past decisions.
Superior and Appellate courts evolved to bind lower courts to rulings and create consistency across the different parts of an economy.
Spontaneous order suggests inferior laws will eventually disappear.
Civil Law
Originated in Roman era to create consistency across kingdoms.
Emperor Justinian and the Justinian Code 534AD
Napoleon Bonaparte and the Napoleonic Code 1804
Based on written and codified laws rather than custom or precedent.
“Government-made Law”
Determined by leaders (kings, emperors) and enforced by professional judges trained in the civil code.
Religious Law
Based on a theological document
Islamic (Sharia) Law: based on the Koran as interpreted by senior religious figures.
Capitalist Characteristics
Anglo Saxon
New Zealand—Common
Switzerland—Civil
Canada—Common
U.S.—Common
U.K.—Common
European
Denmark—Civil
Netherlands—Civil
Germany—Civil
Spain—Civil
Belgium—Civil
Norway—Civil
France—Civil
Italy—Civil
Asian
Hong Kong—Common
Singapore—Common
Japan—Civil
Taiwan—Civil
South Korea—Civil
Malaysia—Common and Islamic
Thailand—Civil, Common, and Islamic
Philippines—Mixed Civil and Common
Indonesia—Mixed Civil and Islamic
India—Common
China—Civil
Religious
Afghanistan—Islamic (Sharia)
Iran—Islamic
Libya—Islamic
Nigeria—Islamic
Yemen—Islamic
Saudi Arabia—Islamic
Egypt—Islamic
Syria—Islamic
Legal Systems
