I am enjoying my Fall reading. The Great Equalizer by David Smick has been an incredible source of ideas. Also, Entrepreneurship as Social Change has been a wonderful source of theoretical elements that I am adding as a foundation for my understanding of Entrepreneurship and Main-Street Capitalism.
I will, at a later date, explore the concepts of modernization and dependency perspectives, as associated with indigenous entrepreneurship, but as I was reading this morning I ran across the concept of Regulation Theory. According to the author, “Recognizing the increasing flexibility of modern economic systems. Regulation theory analyzes the global economy in terms of a series of modes of development based on combinations of the currently ascendant regime of accumulation and a variety of modes of social regulation.” The author continues this thought by defining terms. The regime of accumulation describes the production possibility of an economy. When there is great possibility there is a greater opportunity for both growth and redeployment of profit to meet various social needs. However, regulation will occur when the system goes through a change.
Regulation Theory posits something similar to a thermostat in an automobile. The “stability of the economy is dependent on the emergence of a further set of social relations that preserve it.” This sounds very similar to Democratic Capitalism. However, what intrigues me about this theory is its relation to history. It seems that we can see this dialectic occur in the evolution of our US economy. “Another aspect of regulation theory – its historicity – adds further strength to the argument of modes of social regulation, therefore modes of development differing considerably one from another.”
This argument is another way of looking at the evolution of our economy from agrarian, to unfettered industrial opportunity, to government regulation, and now to a new version of market stability, whatever it may be.
Some have called Regulation Theory a “currently-fashionable type of Marxist economic theory. I think this in conjunction with Marx’s dialectic of thesis – antithesis, and synthesis. Some have described this regulatory theory as medieval economic naivety resulting from feudal dominance (regulation). However, within the urban settings feudal regulation was weaker, leading to a more capitalist outcome. However, social regulation occurred through “rules about market days, and locations, who could sell what and when” (Fainatein and Campbell (2001). This illustrates the strong connection between economic freedom and the ability of people to regulate its expression.
There is a question why Regulation Theory was developed? Some would argue that it was developed by “Old-line Marxists” who “had gotten themselves into a lot of theoretical trouble on the issue of reproduction and the question of the social and cultural side of capitalism” (Fainstein and Campbell, 2001). From this I see two things. First, history has proven the bankruptcy of centrally planned socialist economies. Our current lesson is in Venezuela where we can see the results of a regime and its ability to destroy hope, initiative and innovation.
Second, this theory makes sense to me. The connection of the economy and society is strongly correlated. And as we can currently see, Corporate Capitalism is experiencing a strong social regulation. All of us are tired of the system being stacked against the people. This is why I am a strong Democratic-Capitalist. We the people have the ability to regulate our economic system. However, we the people also like our freedoms, and the freedom to own our property, and when we take a risk to reap the reward. If we lose that freedom we will lose our country, as we know it.
And that is my thought for the day!