The Case Against Free-Market Capitalism
In the United Kingdom and around the world, neoliberalism is on trial, and the orthodoxy established by Margaret Thatcher and Ronald Reagan in the 1980s – to roll back the state and let the market work its magic – may indeed be guilty as charged. But will governments be given the tools and support they need to rehabilitate the defendant?
OXFORD – Free-market capitalism is on trial. In the United Kingdom, Labour Party leader Jeremy Corbyn accuses neoliberalism of increasing homelessness, throwing children into poverty, and causing wages to fall below subsistence level. For the defense, Conservative Prime Minister Theresa May cites the immense potential of an open, innovative, free-market economy. Similar “proceedings” are taking place around the world.
Just a quarter-century ago, the debate about economic systems – state-managed socialism or liberal democracy and capitalism – seemed to have been settled. With the Soviet Union’s collapse, the case was closed – or so it seemed.
Since then, the rise of China has belied the view that a state-led strategy will always fail, and the global financial crisis exposed the perils of inadequately regulated markets. In 2017, few of the world’s fastest-growing economies (Ethiopia, Uzbekistan, Nepal, India, Tanzania, Djibouti, Laos, Cambodia, Myanmar, and the Philippines) have free markets. And many free-market economies are suffering from growth slowdowns and rapidly rising inequality.