State of global capitalism in 2014: The economics

  • Article by: FROM THE ECONOMIST
  • Updated: January 4, 2014 - 10:28 PM

The economics: The concentration of wealth may be the ‘normal’ condition.

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pumiceJan. 4, 14 8:02 PM

From the conclusion: "Amid a new burst of automation, wealth concentrations and inequality could reach unprecedented heights [Hurray???], putting a modern twist on a very 19th-century problem." Happily, The Economist mentions not-19th Century exceptions, instances when the "fruits of capitalism [were] more widely distributed": (1) the Great Compression of the mid-20th Century which followed the Great Depression's "capital losses and bankruptcy" and the Great War which "brought physical destruction of capital, nationalization, taxation and inflation" and (2) demographically challenged Japan and Italy--both of which "have managed to mitigate inequality through redistributive taxes and transfers."

But, we have choices: (A) Facilitate brisk economic growth which benefits everyone or continue the "lower economic growth rate [which] is conducive to higher concentrations of wealth"! (B) Share the fruits of capitalism equitably with the workers who produce the fruits or look to the 19th Century and allow "pre-existing wealth [to cast its long] economic and political shadow over the new income generated each year."

bearclaw500Jan. 4, 1410:35 PM

You fail to mention the role central banking has played in all this mess. Free market capitalism is not causing the great income inequality. The constant expansion of the money supply to paper over (bailout) every billionaire and his mistakes, and fight wars overseas is causing the income inequality. In free market capitalism, there are no bailouts, you go under and out of business if you fail. The constant debasement of the currency over the last ten years has decimated the working class in this country. The wealthy own stocks, real estate etc.. things that go up in value as the currency is debased. The working people have a high percentage of their income going to food, rent and energy (gas). Things that are going up faster than incomes. Read "America's Great Depression" by Murry Rothbard if you want to understand what is really happening.

elind56Jan. 5, 14 7:45 AM

Free market capitalism pulled more people out of poverty than any welfare program or private charity. But that was many decades ago. The U.S. has morphed into crony-capitalism which bears little resemblance to the free markets that, long ago, rocketed this country to the top of the heap in terms of productivity and standard of living. Free market capitalism cannot possibly be the reason for for any surge in income disparity because that economic model hasn't existed in the U.S. for a long time. Oh sure, there are some bare vestiges left of it here and there but even those are being rapidly regulated out of existence.

elind56Jan. 5, 14 8:54 AM

So, since a plan similar to Obamacare was first proposed by GOP'ers at the Heritage Foundation, it's somehow a good idea? And since some "Republican" governor named Romney helped put a form of it in place in his home state, I am supposed to embrace it? That's absurd! Over the last 50 years or so, the Republicans have been as much a part of the problem as anyone on the left in purging the health-care/health-insurance industries (along with a LOT of other areas of the economy) of anything resembling a free market. The horrific unintended consequences have now culminated in thousands of pages of unintelligible rules and regulations that nobody understands and will cost untold trillions if this chaotic mess is allowed to unfold in it's entirety. Those calling themselves fiscal conservatives and free marketeers need to take a real hard look at the "Republicans" you're voting for.

tuttifruttiJan. 5, 14 9:37 AM

Records go back to the 1920's which show the concentration of wealth has remained about the same since then. It has always been this way. It has only become an issue now because a group of people have decided that turning citizen against citizen with envy, greed, bitterness, jealousy and anger is the best way to gain a political advantage. And, it works. But, it also destroys a country as seen in Cuba, Venezuela, N. Korea and other places.

jdlellis1Jan. 5, 1411:28 AM

Critics of capitalism can only idealize other ideologies, (e.g. Fascism, Socialism, Communism, Surea Law, etc.), yet those systems do not have the legal framework to protect individual freedoms, property, etc. Americans hold dearly. Similar to piggyback Franklin's comment on this Representative Republic, capitalism may not be perfect but show (in depth) one system which is better Perfect, of course not but remember, prudent regulation is wise. However, capitalism has created a world that allows everyone reading this on their "device" to read this not to mention put the clothes on the backs of billions, feed billions, fly to Florida let alone the moon and beyond! (e.g. Individual innovation and creativity - Wright Borthers, Rhomas Edison, The Cargill's, Jobs & Gates, MLK, etc.

endothermJan. 5, 1412:16 PM

Communist China now has the world's second largest capitalist economy. The old communism vs. capitalism divide doesn't really make sense it today's world. Instead of rehashing old ideological fights, we should take a fresh look at how the world economy works, where it is healthy and sustainable, and where it is dysfunctional and destructive. The bigger problem we are all facing is that global capitalism today is driving us to produce mountains of pollution while burning through resources we can't replace. There is no future in this, at least not any future anybody would want to live in.

mlafleurJan. 5, 14 1:42 PM

We no longer have the cheap, abundant natural resources to sustain economic growth and unbridled capitalism. This will only become more problematic as water becomes the environmental issue of the 21st century. Mankind has yet to figure out an economic system that will take into account future generations. Trouble ahead!

boomerdudeJan. 5, 14 2:51 PM

I believe 100% in the power of the market place. I just don't believe in " free markets" any more than I believe in a free lunch. Any kid who has ever played pick up baseball, basketball, or football knows that there has to be rules, fair rules, agreed upon rules, to have a fair game. This applies to any economic system - there is always a market place.

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