Capitalism has lost its appeal all of a sudden among younger Americans, and even some of the staunchest free market evangelists understand why.
Angus Deaton, the 2015 Nobel laureate in economics, looks at recent books for Project Syndicate by a pair of prominent economists that critique capitalism and prescribe new solutions to reduce wealth inequality.
Raghuram Rajan, a former governor of the Reserve Bank of India who teaches at the University of Chicago Booth School of Business, argues that communities no longer are capable of holding the state or market in check.
Rajan traces that unraveling to around 1970, after the global recovery from World War II began to wind down and governments had little to offer but vague promises that resulted in additional borrowing.
That left governments in Europe and North America too weak to deal with the information and communication revolutions, and they were unable to help workers manage the disruption, Rajan argued, and corporations exploited that employee vulnerability to enrich shareholders and managers.
Oxford University economist Paul Collier traces a similar pattern in Britain by focusing on Imperial Chemical Industries, which altered its mission in the 1990s from being “the finest chemical company in the world” to extracting shareholder value.
Collier finds that Britain’s talent and income became increasingly concentrated in London, which leaves behind angry and gutted communities, and Rajan also argued that the elite minority had wrecked communities by gobbling up the market and the state to enrich themselves.
“Behind today’s populist upheavals is a widespread recognition that the economy no longer serves the public good or even the interests of most of its participants,” Deaton concluded. “To understand why, one must identify what has been lost amid so much material technological gain.”