The Great Recession was supposed to be the end of the Anglo-American capitalist model which had dominated the world economy for more than a century. To hear the doomsayers from a few years back tell it, this competitive capitalist model was inherently unstable and prone to collapse; the recession was just the final nail in the coffin.Four years later, these predictions are looking rather silly. A Wall Street Journal analysis of the American marketplace shows that, rather than falling apart under the weight of the recession, large firms are doing extremely well and have taken advantage of the recession to streamline their operations. Hiring has fallen, but everywhere else firms are seeing gains: productivity is way up, indebtedness is falling, and profits are now higher than they were in 2007. This new success has led companies to begin a new wave of capital investments—which had largely tapered off during the crisis—which in turn could lead to further upticks in profits and productivity down the line:
Deep cost cutting during the downturn and caution during the recovery put the companies on firmer financial footing, helping them to outperform the rest of the economy and gather a greater share of the nation’s income. The rebound is reflected in the stock market, with the Dow Jones Industrial Average at a four-year high. […]Overall, though, the Journal found that S&P 500 companies have become more efficient—and more productive. In 2007, the companies generated an average of $378,000 in revenue for every employee on their payrolls. Last year, that figure rose to $420,000.
The Angl0-American model of competitive capitalism’s strongest point is its adaptability to new situations; this is what has allowed it to thrive during a recession that many believed would crush it. We’re not saying things are perfect; small companies, in particular, have not done quite as well at revitalizing themselves. But the American system as a whole has weathered the crisis rather well. Those hoping for the end of Western capitalism may have a bit longer to wait.