The presidential race has surfaced divisions among Democrats over progressive ideas such as a wealth tax, a Green New Deal and Medicare-for-all. The often-intense debates about these policies aren’t just important because they could reshape the U.S. economy. They also reflect a larger, more fundamental disagreement about capitalism itself.
Last week, as part of the Munk Debates series in Toronto, I had the opportunity to debate capitalism and the potential alternatives to it alongside Greek economist Yanis Varoufakis, former American Enterprise Institute president (and current Post contributor) Arthur C. Brooks and New York Times columnist David Brooks. I argued that the American system is broken in three ways.
First, it is fueling extreme inequality. Four decades of stagnant wages and upward flows of wealth in the United States have supercharged the existing wealth divide and other inequalities rooted in racial, gender and geographic differences. Productivity gains have flowed to the investor class, not to workers, and social mobility has declined. In his latest column (prepared for the debate), David Brooks countered that “capitalism has brought about the greatest reduction of poverty in human history.” But Oxfam International highlights a more nuanced reality: While there has been a meaningful decline in extreme poverty, hundreds of millions more people could have been lifted out of poverty if not for extreme inequalities within and across countries.
Second, capitalism is undermining democracy. In the Citizens United era, the amount of money in politics has exploded, resulting in elected officials from both parties who are more beholden to wealthy donors — and their business interests — than ever before. Corporate concentration is reducing competition and rendering both workers and consumers increasingly powerless against rising plutocracy. And this is happening as the forces of private equity and big tech conspire to annihilate the local and independent journalism that is vital to maintaining a democratic society.
It doesn’t take a socialist to see capitalism’s corrosive impact on democracy. In fact, South Bend, Ind., Mayor Pete Buttigieg, a former McKinsey consultant who was forced on Monday to finally agree to disclose his campaign bundlers, used to recognize it earlier in the campaign, saying, “There’s tension between capitalism and democracy, and negotiating that tension is probably the biggest challenge for America right now.”
And, third, capitalism is destroying nature. As corporate lobbyists work to dismantle the regulatory apparatus, the companies they represent are irrevocably harming our environment, our health and our collective future. In pursuit of profits at any cost, corporations continue to ravage public lands, demolishing ecosystems, and poisoning the water we drink and the air we breathe. Meanwhile, even as corporate America has become more vocal about the importance of sustainability and the perils of climate change, it has opposed the dramatic policy changes needed to prevent catastrophe.
American politics is finally having a long-overdue debate about how to respond to these trends. Many of the ideas being discussed in the presidential race are undoubtedly part of the solution. But tweaking around the economy’s edges won’t be enough. We need a deep, structural redesign of basic institutions and functions; we need a new system to better serve the common good.
In this system, there will continue to be individual freedoms, private enterprises and small businesses. But, unlike today, those businesses will be protected from monopoly power. There will be new models of corporate ownership and governance that protect workers’ rights and increase their power. There will be limits on excessive consumption. And there will be a “plutocracy prevention” program — not to be punitive, but to ensure that billionaires pay more in taxes than teachers and nurses, and that we have the revenue needed to rebuild decaying infrastructure, combat climate change, reverse declining social mobility and more.
Brooks writes that one of capitalism’s strengths is “creating a learning process to help people figure stuff out.” On that we agree. But I’ve learned over four decades of observing and writing about the economy that capitalism as we’ve known it doesn’t work. Time is of the essence. For the sake of our economic, democratic and ecological survival, it’s time for something better.
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