concentrate on direct interventions to
help improve people’s lives.
Joseph Stiglitz, Todd Tucker, and
Gabriel Zucman argue that capitalism is
in crisis thanks to a lack of revenue,
which has come about because plutocratic
elites have gamed the system to protect
their interests, hoarding their resources
and starving the state. The authors’
solution to the problem is dramatically
increased taxation.
Miatta Fahnbulleh goes further,
claiming that stagnating incomes, concen-
trated wealth, and looming environmen-
tal catastrophe show that capitalism has
reached its limits. A new economic model
is needed, one that adapts traditional
socialist ideals to contemporary realities,
empowering people and communities
rather than the state. Jerry Muller begs
to differ. The neosocialist boomlet is a
joke, wealth taxes would be a nightmare,
and the real work of handling climate
change will be driven by entrepreneurial
innovation—unless today’s Jacobins get
control of the economy and shut it down.
The bottom line? Two and a half
centuries later, we’re still trying to figure
out how to reap the upsides of markets
while protecting ourselves from the
downsides. The benefits outweigh the
costs, so capitalism keeps moving for-
ward. But the more the system seems to
work only for those at the top, the more
it will have trouble sustaining demo-
cratic legitimacy.
—Gideon Rose, EditorC
apitalism has been quite suc-
cessful as a system of political
economy. It emerged in the
eighteenth century, took off in the nine-
teenth, and dominated the world in the
twentieth. The Faustian bargain it
offers—riches and freedoms, at the price
of stability, tradition, and community—
has proved so attractive that ever more
societies keep making it. Now, having left
its ideological competitors in the dust,
the system is confronting its own flaws,
and the reckoning is not always pretty.
Yet so far, all the talk about moving on
to something new and better remains
just that.
Branko Milanovic notes that the
triumph of markets is unique in human
history; never before has a single mode
of production become universal. Schism
often follows triumph, however, and
today, two capitalist camps are battling
for supremacy: a liberal meritocratic one,
led by the advanced industrial democra-
cies, and a state-led, political one, headed
by China. Each has major problems
looming ahead.
Abhijit Banerjee and Esther Duflo—
who won the Nobel Prize last fall for their
research—note that market-led eco-
nomic growth over the last half century
has lifted more people out of poverty
faster than ever before, particularly in
China and India. But nobody has been
able to find a reliable formula for eco-
nomic success. Instead of chasing grand
theories, therefore, governments shouldTHE FUTURE OF CAPITALISM