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The Limits of the MarketThe Pendulum Between Government and Market$
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Paul De Grauwe

Print publication date: 2017

Print ISBN-13: 9780198784289

Published to Oxford Scholarship Online: January 2017

DOI: 10.1093/acprof:oso/9780198784289.001.0001

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Internal Limits of Capitalism

Internal Limits of Capitalism

(p.39) Chapter 4 Internal Limits of Capitalism
The Limits of the Market

Paul De Grauwe

Oxford University Press

This chapter shows how expansion of the market system brings it to its internal limits. These relate to the fact that the market system appeals to the rational, calculating capacities of individuals, responding to financial stimuli and competition. When the free market system grows in importance these capacities become more important, but characteristics which belong to the emotional System I are suppressed. These individual qualities count less and less towards determining success. For people who care about fair income distribution, intrinsic motivation, and cooperation, this leads to a lack of fulfilment. The market system produces great material prosperity, but many people are dissatisfied because individual happiness is not achieved. A discrepancy arises between individual and collective well-being, which can in turn lead to the rejection of the system, which is felt to be hard, cold, and unfair. So the social consensus in favour of the free market system is undermined.

Keywords:   inequality, intrinsic motivation, extrinsic motivation, cooperation, competition

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