Capitalism Challenged

Unable to shake key issues like inequality, capitalist societies face cries for change, structural challenges and technology enabled freedoms. Together these re-write the rules and propose a more participative, collaborative landscape of all working together.

Capitalism is under siege from the likes of a sharing economy, a connected world, a slowdown in the take up of democracy, and intractable problems such as inequality and climate change. Many believe capitalism contributed to the global crisis, while providing no solution, and desire to see a fairer system take its place.

It is inequality that is at the heart of this backlash. President Obama calls income inequality the “defining challenge of our times”, Pope Francis says “inequality is the roots of social ills” and in the order of 80% of Britons today now think the income gap is too large. Thomas Piketty, author of Capital in the Twenty-First Century, is convinced that rising inequality is a nut that will never be cracked by capitalism. His particular emphasis is on wealth inequality. Wealth inequality in Europe and the US is roughly twice that of income – the top 10% possess between 60% and 70% of wealth but only 25% to 35% of income and that the western growth in equality in the 60 years or so that preceded the 1970s is a one-off, and this is very unlikely to occur again. So, with no resolution for inequality in sight, Piketty’s dark prediction is social unrest – lots of it. As such, tackling wealth inequality makes good economic sense; Wilkinson and Pickett say that economies with greater inequality suffer adverse consequences in areas like health, violence, drug addiction and lifespan.

Evidence for a shift towards more egalitarian societies, or perhaps, social democracies is political news – Justin Trudeau in office in Canada, hopefuls Bernie Sanders in the US and Jeremy Corbyn in the UK – all high profile cases in point. That they are enjoying the limelight is testament to the strength of the questions being asked of capitalism.

Coming at the issue from another direction is economic and social theorist, Jeremy Rifkin, who focuses instead on near-zero marginal cost, the by-product of a connected, sharing world. ‘A growing legion of prosumers is producing and sharing information, not only knowledge, news and entertainment, but also renewable energy, 3D printed products and online college courses at near-zero marginal cost on the collaborative commons. They are even sharing cars, homes, clothes and tools, entirely bypassing the conventional capitalist market.’ In effect, we’re seeing what looks like capitalism doing itself out of a job.