Some food for thought by Martin Wolf, chief economics commentator for the Financial Times and author of The Crisis of Democratic Capitalism, in interview with Yascha Mounk.
Wolf: It was pretty obvious that something had happened in recent years which undermined the confidence of a broad part of our population in the economic and political systems together, leading them to listen to [populist] voices which I simply hadn’t expected to be listened to, particularly in sophisticated, advanced democracies like the U.S. and U.K. …
[Back when industrial capitalism emerged, the working class was] too important and too potent in society to be ignored. They couldn’t be forever repressed or suppressed. They had to be bought out, as it were … They wanted to get more prosperous. They wanted welfare. But they didn’t want revolution. That created the welfare democracies of the mid-20th century. It was a solution to the conflict that Marx had described but a solution that he didn’t envisage. And they became incredibly prosperous by historical standards.
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[But] the technological and economic forces that created this widely-shared prosperity were, I think, temporary. [Look at] the difference between Apple and General Motors, for example, the two most valuable companies of their age. In the United States, Apple basically doesn’t invest anything in physical terms. It doesn’t employ many people. It’s a tiny labor force compared with what GM had. All the people it does employ are very skilled university graduates. It is a completely different sort of business. Finance is the same … [and] it doesn’t look as though the economy is going to go back.
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Mounk: For listeners who agree with you about the crisis of democratic capitalism, what can we do in order to maximize the likelihood that democratic capitalism may survive?
Wolf: We should try, so far as we can, to have a politics that focuses on broadly-shared welfare rather than fundamentally divisive cultural issues. The big problem with cultural issues is they really are zero-sum; they’re war to the death, as it were. And that’s not necessarily true if you focus on giving people opportunities for a better life. You have to pay more tax—that I accept. But if you give people childcare, better education, better chances, greater equality of opportunity, better health care in the U.S. (which is crucial) … greater involvement of workers in corporate governance … If you combine it with training, people who you wouldn’t think you could get to do completely different jobs actually learn how to do so. This all requires, of course, an active state with some greater level of tax support. But it seems to me that those things … are things that most people will recognize as worth doing if the alternative is a political breakdown.
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