Capital strike
Encyclopedia
Capital strike refers to the withholding of new investment
in an economy
. A capital strike can occur when banks decide to raise lending standards or minimum loan requirements to individuals and business entities, and decide to sit on cash reserves, rather than take many loan risks, until a later point in time. A capital strike can occur when governments pursue policies that investors consider "unfriendly" or "inflexible." A capital strike can refer to a single investor or a large group such as those who refused to invest in the United States in 1937. A capital strike was the premise of the popular novel Atlas Shrugged
by Ayn Rand
.
In response, governments sometimes act to appease investors; however, governments committed to endogenous
development (recently, in Latin America
) occasionally refuse to capitulate and instead pursue economic development
plans which utilize other resources.
Investment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...
in an economy
Economic system
An economic system is the combination of the various agencies, entities that provide the economic structure that defines the social community. These agencies are joined by lines of trade and exchange along which goods, money etc. are continuously flowing. An example of such a system for a closed...
. A capital strike can occur when banks decide to raise lending standards or minimum loan requirements to individuals and business entities, and decide to sit on cash reserves, rather than take many loan risks, until a later point in time. A capital strike can occur when governments pursue policies that investors consider "unfriendly" or "inflexible." A capital strike can refer to a single investor or a large group such as those who refused to invest in the United States in 1937. A capital strike was the premise of the popular novel Atlas Shrugged
Atlas Shrugged
Atlas Shrugged is a novel by Ayn Rand, first published in 1957 in the United States. Rand's fourth and last novel, it was also her longest, and the one she considered to be her magnum opus in the realm of fiction writing...
by Ayn Rand
Ayn Rand
Ayn Rand was a Russian-American novelist, philosopher, playwright, and screenwriter. She is known for her two best-selling novels The Fountainhead and Atlas Shrugged and for developing a philosophical system she called Objectivism....
.
In response, governments sometimes act to appease investors; however, governments committed to endogenous
Endogenous
Endogenous substances are those that originate from within an organism, tissue, or cell. Endogenous retroviruses are caused by ancient infections of germ cells in humans, mammals and other vertebrates...
development (recently, in Latin America
Latin America
Latin America is a region of the Americas where Romance languages – particularly Spanish and Portuguese, and variably French – are primarily spoken. Latin America has an area of approximately 21,069,500 km² , almost 3.9% of the Earth's surface or 14.1% of its land surface area...
) occasionally refuse to capitulate and instead pursue economic development
Economic development
Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...
plans which utilize other resources.
External links
- Employers Threaten Walkout Chosun Ilbo February 9, 2006