Capitalism May Be Victim of Its Own Success

By Bremner, John | St Louis Post-Dispatch (MO), August 1, 1994 | Go to article overview

Capitalism May Be Victim of Its Own Success


Bremner, John, St Louis Post-Dispatch (MO)


On its 50th anniversary, the World Bank stands as both symbol and instrument of capitalism triumphant - over communism, indeed over all forms of command economies.

The free market principles the bank relentlessly pressed - sometimes simply forced - on the poor nations in the name of financial virtue appear to have been vindicated.

The economic aspect of the Cold War was won as decisively as the political or the military.

But there is another war capitalism must fight that will challenge its supremacy as vigorously as communism ever did - and which it may lose.

The conflict is between the efficiency and growth that free markets deliver, and the lack of equity they promise in a world increasingly concerned with fairness.

Any system based on competition is, of course, premised on producing winners and losers. By definition, competitive markets are not concerned with the problems of the losers. Politics, at least when free markets first developed, ignored their problems as well.

But as industrialism created great gaps between the few and the many, society edged toward establishing a floor below which the losers wouldn't be permitted to fall.

Lose they might, but they wouldn't be allowed to starve. This was the basis of the modern welfare state.

Ardent free market advocates claim it degrades economic growth, but events have proven that markets can live with a considerable social tax for those less well-off and still thrive.

In fact, it has been prudent for capitalism's supporters to accept some measure of the welfare state. Otherwise, losers might have attacked capitalism's very principle of winner-take-all.

But that is now an old threat, more serious in the depression and before than since. Too many are doing too well today to want to level society.

The new threat is different. It arises from those who would level upward, not downward.

The claimants aren't those at the bottom, but anyone who gets less than precisely whatever anyone else gets - except for earned income.

This isn't as easy to dismiss as the idea that there should be no rewards for ability and achievement. That would threaten the efforts of too many to be taken very seriously.

But society's penchant for equity conflicts with what markets achieve, and won't be easy for advocates of a competitive economy to get around.

For instance, whatever happens with health care, society has decided it is not only some kind of human right, but that everyone should receive the same level of benefits. …

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