Anglo-Saxon capitalism – definition and meaning
Anglo-Saxon Capitalism or the Anglo-Saxon Model is a form of free-market economy that exists in rich English-speaking nations. Namely, the advanced economies such as the United States, United Kingdom, Canada, Australia, Ireland, and New Zealand.
It is a free-market model that emerged from the Chicago School of Economics in the 1970s. Anglo-Saxon capitalism dates back to the ideas of classical economist Adam Smith (1723-1790). Economists today call Mr. Smith – a Scottish economist, philosopher, and author – the ‘father of modern economics.’
Anglo-Saxon capitalism contrasts with the Rhine capitalism of Germany (German Model) and the Nordic Model. The Scandinavian nations practice the Nordic Model. We also refer to the Rhine Capitalism of Germany as the German Model.
In English-speaking nations, levels of taxes and regulations are low. Additionally, the provision of services by the public sector is lower than in the other models.
Anglo-Saxon capitalism – fewer regulations
The Anglo-Saxon Model also has stronger property rights and contract enforcement. There are lower barriers to free trade.
In fact, many companies claim that doing business in the Anglo-Saxon Model nations is easier. There are also fewer regulations regarding labor markets.
There is strong rivalry between supporters of the Anglo-Saxon and European economic models.
In the German and Nordic Models, there is more focus on wealth distribution. Compared to the Anglo-Saxon economies, in the German Model there is more state control.
Economists also refer to the German and Nordic Models as the Continental Economic Model or European Model.
Opponents of Anglo-Saxon Capitalism
Opponents of the Anglo-Saxon model add that it neglects the interests of stakeholders. The term ‘Stakeholders’ refers people who may have worked for the company for a long time.
Additionally, those against Anglo-Saxon capitalism claim that stock markets, where emotions dominate, are too volatile.
Continental Model supporters prefer having knowledgeable bankers making decisions regarding investment financing.
Proponents of Anglo-Saxon capitalism say that banks can get too friendly with companies, and subsequently cannot be impartial. Capital markets punish companies that fail in their business plan, they add.
Anglo-Saxon capitalism – more innovation
Supporters of the Anglo-Saxon model argue that it is better at promoting innovation. Furthermore, the Anglo-Saxon model creates competitive advantages that result in greater overall wealth, they add.
Advocates of the continental model say their system has less inequality than Anglo-Saxon capitalism. Continental model supporters also claim that their system has lower levels of poverty.
The Financial Times Lexicon says the following about Anglo-Saxon capitalism:
“The “Anglo-Saxon” variant of capitalism is thought to be characterized, at the level of states, by lower taxes, looser regulation, a weaker social-safety net and greater ease for firms to hire and fire employees – and to take each other over.”
“At the level of individual firms and businesses, Anglo-Saxon capitalism is said to emphasize the interests of shareholders, rather than other stakeholders such as employees. Its critics say that it emphasizes short-term profits at the expense of long-term planning.”
In fact, there are several countries with Anglo-Saxon capitalist systems that are not native-English speaking nations. For example, in Spain, Greece, and some newer European Union members, Anglo-Saxon capitalism dominates.
The Asian model
The Asian model is more similar to the Continental Model than the Anglo-Saxon model. It focuses on greater rates of capital formation.
However, the Asian model exists in a variety of forms, rather than just one. Additionally, this model involves a significant amount of experimentation.
The Asian model typically emphasizes collaboration between government and industry to drive economic growth.
This approach often includes targeted support for strategic sectors considered vital for national development and global competition.
Examples of Asian models are the economies of Hong Kong, Taiwan, Japan, Singapore and South Korea.
“Anglo-Saxon Capitalism” in context
Below, there are seven sentences that incorporate the term “Anglo-Saxon Capitalism,” illustrating its use in various discussions and scenarios. These examples will help you recognize the term’s application in real-world contexts and deepen your understanding of its implications.
- “The rapid technological advancements in Silicon Valley are often attributed to the principles of Anglo-Saxon capitalism, which encourage entrepreneurial risk-taking.”
- “Critics of Anglo-Saxon capitalism argue that its focus on shareholder value sometimes undermines long-term corporate sustainability.”
- “During the economic summit, experts debated whether Anglo-Saxon capitalism would adapt to the increasing demands for corporate social responsibility.”
- “The government’s new policy on deregulation was seen as a move towards Anglo-Saxon capitalism, aiming to spur innovation and economic growth.”
- “Anglo-Saxon capitalism has been a subject of study in my business course, particularly its impact on global trade dynamics.”
- “After the financial crisis, some economists questioned whether the tenets of Anglo-Saxon capitalism would lead to a quicker recovery compared to other models.”
- “The merger was a classic example of Anglo-Saxon capitalism at work, emphasizing market freedom and competitive practices.”
Video – What is Anglo-Saxon Capitalism?
This educational video, from our sister channel on YouTube – Marketing Business Network, explains what ‘Anglo-Saxon Capitalism’ means using simple and easy-to-understand language and examples.