Capitalism and the Challenge of Inequality
8 Pages Posted: 31 Jul 2024
Date Written: July 31, 2024
Abstract
Rapidly rising income and wealth inequality in the United States and other Western countries has been commonly identified as an inherent and nefarious feature of the capitalist system. In fact, however, rising inequality within the economically advanced countries has been accompanied by both a significant relative improvement of the economic and social position of the previously disadvantaged groups, such as women and ethnic minorities. This change is largely due to the phenomenon of globalization that brought the advantages of the capitalist economic system to the developing world. Rising inequality is also an effect of the deep technological transformation of Western economies in which an increasing share of national wealth is produced by a much smaller number of highly skilled and educated people than had ever been the case in the past. To be sure, the growing inequality may call for some counteracting redistributive measures. But the most important condition of all such measures is not to base them on a theory that might undermine the legitimacy and the effectiveness of the capitalist market economy. A program of restituting to the descendants of American slaves the value of the labor unjustly taken from their ancestors might both alleviate some of the existing inequalities and reduce racial animosities. A provision of a certain amount of capital to each high-school-graduating student might widen and equalize their opportunities.
Keywords: inequality, capitalism, liberalism, globalization, technology, restitution, stakeholder society
JEL Classification: D63, H53, P10, P11, P17, F60
Suggested Citation: Suggested Citation