Neocapitalism is a mixture of various elements of capitalism with other economic systems. It is a new type of capitalism that emphasizes government intervention in the country’s economy to restructure and save various large companies that are considered too big to fail. The failure of these companies represents a huge risk to the economy. Neocapitalism is a new type of capitalism compared to capitalism before the Second World War.
Neocapitalism is an economic ideology that corrects its excesses by applying various measures that help protect the social welfare of the country. Ideology advocates a balance between good public governance, social assistance, good working conditions, low levels of unemployment, lower inflation and economic growth across the nation. It was introduced by technology companies that were rebuilt during the post-war era.
Origin of the term neo-capitalism
The phrase neocapitalism was used for the first time during the late 1950s by Belgium and by French leftist writers such as Leo Michielsen and Andre Gorz. The Marxist Mandel helped popularize the term in English in some of his works, including the introduction to the theory of Marxist economics. Michael Miller used the term neocapitalism during the 1970s to refer to the European mix of vast social assistance programs, selective government interventions and large private enterprises. Miller focused on how organized labor worked with private and governmental industries in negotiating and implementing pay levels and government spending to avoid strikes.
Characteristics of neocapitalism
Neocapitalism is a new method of capitalism whose characteristics derive from the need for capital and its attempt to respond to the challenge of the colonial revolution and the Soviet bloc. Some of the characteristics of neocapitalism include:
1) Accelerated speed of technological innovation
Historians consider that the times of neocapitalism lasted from 1954 to 1964. During this time the various developed nations experienced an exceptionally high growth rate. The rapid growth after the Second World War can be attributed to the successions of technological innovations developed during this period. Before neocapitalism was adopted, technological changes were introduced in clusters and they were allowed to remain latent until the current process was completely exploited.
2) Reduction of the lifespan of a fixed capital
Previously, the life of the fixed assets was between eight and ten years. So a new technological innovation has had to wait until the end of life before being adopted by the economy. Later, after the Second World War, the lifespan of fixed assets was reduced to around five years and this required accurate obsolescence and depreciation calculations, as well as adequate long-term planning.
3) Increase in production volumes
The third industrial revolution saw the introduction of a new contradiction between the limits of actual market demands and the unlimited productive capacities. The difficulty in realizing the surplus resulted in a constant increase in the selling price. Neocapitalism saw the introduction of marketing techniques, the calculation of demand elasticity, advertising and market research. All these features led to the gradual introduction of various planning techniques into the economy. These were integrated forecasts of demand and output by all employer associations based on projections of future trends. Neocapitalism has helped to rationalize capital investments.