On Capitalism and Inequality: Progress and Poverty Revisited

Capitalism is under attack, with defenders arguing that it has raised billions of people from poverty. Skeptics argue that it has redistributed the wealth of the planet in favor of a few, leaving the planet in bad shape and leaving billions of people out in the cold. The evidence is mixed, with capitalism emphasizing competition as a driver of innovation and economic growth. Neoclassical economic theory posits that self-interest is the primary motive for all economic decisions, leaving little room for cooperation and altruism. Real humans are not rational utility maximizers and often do things that are not in their own personal best interests. A viable social system must not allow "winner takes all" and must reallocate some of the societal wealth being created by competitive activities to support the young, the old and the weak. A hybrid capitalism involving both competition and cooperation is the only viable solution, and the book ends with a specific suggestion, namely Universal Basic Income, or UBI.

Format: Paperback / softback
Length: 235 pages
Publication date: 30 May 2021
Publisher: Springer Nature Switzerland AG

Capitalism faces mounting criticism, with its defenders asserting that it has lifted billions out of poverty. However, a prevalent aspect of capitalism today, reminiscent of Wall Street practices, involves speculation, gambling with other people's funds, and privatizing profits while socializing debts. Skeptics argue that capitalism has led to a skewed distribution of wealth, with a small elite benefiting at the expense of the majority, leaving the planet in poor condition and leaving billions behind. The current state of wealth distribution is highly unequal, opportunities are far from equal, and social mobility has significantly declined in recent decades.

This book delves into a comprehensive review of the evidence and arguments on both sides of the debate. The evidence presented is multifaceted, with some suggesting that capitalism's emphasis on competition drives innovation and economic growth. It is true that economic progress has accelerated in recent centuries, and billions of people have been lifted out of poverty. However, it is not necessarily true that intense "winner-take-all" competition in the marketplace is the sole factor behind this growth.

Neoclassical economic theory, which posits self-interest as the primary driver of economic decisions, fails to account for the complex behavior of real humans. Humans are not rational utility maximizers, and their actions are often influenced by various factors beyond personal gain. This can lead to actions that may not align with their self-interest, such as cooperation or altruism.

The inclusion of the adjective "social" in terms such as socialism, social service, and social democracy serves a crucial purpose. It challenges the fundamental assumptions of standard economic theory, which often portrays humans as purely self-interested entities. In reality, humans are complex beings with social and emotional dimensions that shape their decisions and actions.

Socialism, for example, seeks to distribute wealth and resources more equitably, aiming to reduce poverty and inequality. It recognizes the importance of collective action and government intervention to address social and economic challenges. Social service programs and social welfare policies aim to provide support and assistance to those in need, promoting social cohesion and well-being.

Social democracy, on the other hand, combines elements of capitalism and socialism to create a more balanced economic system. It seeks to promote economic growth and social welfare, while also ensuring that the benefits of economic progress are shared by all members of society. Social democracy emphasizes the importance of worker rights, social safety nets, and public ownership of key industries.

In conclusion, capitalism faces ongoing criticism due to its perceived negative effects on wealth distribution, opportunity equality, and social mobility. While capitalism has brought about economic growth and poverty reduction, its emphasis on competition and self-interest may not fully explain the complex dynamics of human behavior and the broader societal challenges we face. Socialism, social service, and social democracy offer alternative approaches that prioritize social welfare, collective action, and equity. It is essential to engage in informed discussions and consider the evidence and arguments on both sides of the debate to shape a more inclusive and sustainable economic system.

Weight: 454g
Dimension: 235 x 155 (mm)
ISBN-13: 9783030396534
Edition number: 1st ed. 2020