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The Many Faces Of Free Enterprise


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THE MANY FACES OF FREE ENTERPRISE

CAPITALISM VS. CAPITALISM

By Michel Albert

Four Walls Eight Windows x 260pp x $25.95

STRATEGIC CAPITALISM

By Kent E. Calder

Princeton x 373pp x $35

BEYOND CAPITALISM

By Eisuke Sakakibara

University Press of America x 162pp x $46.50/18.50 paper

THE SEVEN CULTURES OF CAPITALISM

By Charles Hampden-Turner and Alfons Trompenaars

Doubleday x 405pp x $25

Now that capitalism has triumphed over communism, more and more analysts are noticing that capitalism isn't a monolith--any more than communism was. And with their common enemy consigned to history, capitalist countries are starting to skirmish over the relative merits of their systems. Already, they're jockeying to sell their particular model to the emerging economies of Russia, Eastern Europe, Latin America, and Asia.

Reflecting this preoccupation, four new books set out to explain and compare capitalism's various forms, and in some cases, to advocate one. Taken together, they debunk the belief of many Americans that their form of capitalism is somehow the most legitimate and should be embraced by everyone.

Putting the debate in sharpest focus is Michel Albert's Capitalism vs. Capitalism: How America's Obsession with Individual Achievement and Short-Term Profit Has Led it to the Brink of Collapse. Albert, an economist, is president of Assurances G n rales de France, his country's largest insurer. His book was published in French in 1991.

Albert's simple taxonomy of capitalism recognizes two species, one with a subspecies. And to Albert, it's clear that "neo-American" capitalism, as practiced in the U.S., Canada, Britain, Australia, and elsewhere, is inferior. Its managers are shortsighted, profit-mad, and grotesquely overpaid. Its "almost dictatorial" financial markets deny managers the patient capital needed to implement long-term strategy and divert their attention from running their businesses to protecting their backsides. "Shareholder kings"--corporate raiders--treat companies and employees like "disposable

merchandise."

Worse yet, to Albert, is the blind pursuit of profit. How curious, he writes, "to discover that America--capitalism's adopted homeland--should now provide a new object lesson...namely, that profit can also weaken free enterprise; it can be damaging to the economy; it can hinder development." To his dismay, Albert thinks greed is driving most of the world toward this form.

In stark contrast, Albert extols the "Rhine model" exemplified by Germany and, in modified form, by Japan. He sees this breed of capitalism, also practiced in Sweden, the Netherlands, and Switzerland, as kinder, gentler, yet "more efficient." In Albert's view, it offers the proper balance between a company's rights and duties.

As a "social market economy," the Rhine model provides workers with greater security than the neo-American form, Albert says, and views companies "not just as a heap of capital but as a group of people." Corporate funding comes more from banks than from securities markets, which means more patient capital. Trade unions are reasonable. Stable home markets let companies compete more easily abroad. Germany offers the shortest workweek and best pay in the capitalist world.

How quickly times change! Since Albert wrote his book, German competitiveness has seriously deteriorated, thanks to these perks and a strong mark. Germany is now the world's highest-cost producer of many items. Since 1991, German interest rates have risen, and Japan's economy has lost steam, while the U.S. is on the rise.

Capitalism vs. Capitalism is further marred by the French predilection to trash the U.S. Albert rails against France's "Americanization," as evidenced by new ostentation among the wealthy and the triumph of individualism over communitarianism. At the same time, he gives Japan's fascinating economic model short shrift. Still, for easy, provocative reading, his book is worth a look.

More evenhanded but also more ponderous is The Seven Cultures of Capitalism: Value Systems for Creating Wealth in the United States, Japan, Germany, France, Britain, Sweden, and the Netherlands by Charles Hampden-Turner and Alfons Trompenaars, European professors and management consultants. By administering questionnaires to 15,000 managers around the world, the authors have identified a set of value differences that distinguish practitioners of capitalism in numerous lands. These diverging values, they argue, lead to different systems and behavior. And if we ignore them, "we will be forever trapped by our own prejudices and unable to learn the important lessons available through calm observation of our competition."

A typical insight is the authors' conclusion that the American and British tendencies to codify, or spell out rules, and to reduce everything to basics are at once strengths and weaknesses. On the plus side, the former trait led to firm, clear economic guidelines that helped draw entrepreneurial immigrants, while the latter helped the U.S. excel in the Machine Age. But codification, the authors argue, leads to dominance by easily quantifiable fields, such as finance, law, and economics, to the detriment of areas such as human resources, creativity, customer relations, and quality.

The authors' survey questions are clever and turn up fascinating insights. An example: "One of your subordinates, whom you know has trouble at home, is frequently coming in significantly late. What right has this colleague to be protected by you from others in the department?" Of U.S. respondents, 95% said "no right," compared with 43% from France and 56% from Japan.

Kent E. Calder, director of Princeton University's Program on U.S.-Japan Relations, is striving to replace Chalmers A. Johnson, recently retired from the University of California at San Diego, as America's premier scholar of Japan's political economy. In Strategic Capitalism: Private Business and Public Purpose in Japanese Industrial Finance, he challenges Johnson's depiction of Japan as a supremely successful government-command form of capitalism. Japan's private sector, he asserts, has been more independent and self-starting than the Johnson school would allow.

Dense but readable for an academic work, Strategic Capitalism is magnificently researched. Calder, however, fails to analyze adequately the remarkably intimate but subtle interconnections between government and business in Japan. He shows that key private financial institutions did more than government money to fund Japan's industrial resurgence. But he underestimates the influence government had through such practices as amakudari, or "descents from heaven"--the flow of powerful retired bureaucrats into these institutions--and the attention the private sector paid to "guidance" from the bureaucracy. As his subtitle suggests, private business contributes to public purpose in Japan.

On that score, Calder fails to distance himself from Johnson, though his analysis is more nuanced and adds important detail about the role of the private sector. For anyone seriously interested in the form and practice of Japanese capitalism, this is an important contribution.

Beyond Capitalism: The Japanese Model of Market Economics, co-published by Japan critic Clyde V. Prestowitz Jr.'s Economic Strategy Institute, is the work of Eisuke Sakakibara, a senior Finance Ministry official who is one of Japan's most outspoken bureaucrats and a proponent of Japanese-style capitalism.

His book delivers less than its provocative title promises. In an analysis reminiscent of Albert's, Sakakibara calls Japanese capitalism "peoplism." This "is eiven concrete expression in the form of employee sovereignty within the corporation, and an independent, land-owning farmer within agriculture," he writes. "This principle is clearly different from the ideological foundations of Western capitalism...."

Sakakibara offers many such sweeping statements, but he is weak on documentation and cogent analysis. Still, this is a rare English-language peep into the perceptions of a leading Japanese bureaucrat and valuable simply for that.

That four such books by authors from five nations would appear almost simultaneously in English suggests that the debate about capitalisms won't quickly die down. If you want to participate intelligently, you'll probably be best served by The Seven Cultures of Capitalism, the most comprehensive. To get your combative juices flowing, however, Albert's polemic would be the choice.ROBERT NEFF


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