The Future of Capitalism

Capitalism creates prosperity. By channeling energies into production and innovation, it has enabled billions of ordinary people to live better than the royalty of old. But capitalism puts power into the hands of owners, including hard-to-love billionaires and multinational corporations. It’s blamed for widening the gap between rich and poor. Many people equate it with cronyism and the capture of government by special interests. One camp says the solution is to clean up capitalism: End subsidies and protections for businesses, dismantle monopolies and unwind red tape. Another camp says government needs to play a bigger role because the profit motive of capitalists can’t be relied upon to meet society’s needs.

Inequality has gotten both better and worse. Inequality between nations has diminished with the rise of China, India and other nations that have turned to capitalism and free markets. At the same time, inequality between rich and poor within nations has gotten worse. Overall, the bottom half of the world owns less than 1% of the world’s wealth, while the top 1% of adults own 47%. Capitalism and free markets are being challenged by both the left and the right. Two U.S. senators campaigning to become the Democratic Party’s presidential candidate, Bernie Sanders and Elizabeth Warren, argue that the economic system is “rigged” to benefit the wealthy. On the right, President Donald Trump has labeled himself “Tariff Man” and moved to restrict immigration, even though the free flow of goods and people is fuel for growth in capitalist economies. Ray Dalio, the billionaire founder of Bridgewater Associates, the world’s biggest hedge fund, says discontent with disparities in wealth could boil over into revolution.