The Future of Capitalism summary

According to Marxists, capitalism blocks mass prosperity. Yet the record shows that communism hasn’t actually lifted workforces out of poverty. North Korea’s Kim dynasty, for example, shows that communist regimes can be more corrupt than capitalist societies.

There’s no question for the author that we need decentralized, market-based competition for society to prosper. But we also need a capitalist system that isn’t guided by greed. 

In the 1970s, the Nobel laureate Milton Friedman famously disseminated the idea that a company’s only purpose is to maximize profits, suggesting that successful companies forgo any responsibility to their employees or customers. Since then, this idea has only grown stronger, and today most employees have neither representation on company boards nor any direct benefit from a company’s success, regardless of their contributions.

But this wasn’t always the case. In the United Kingdom up until the 1980s, many businesses called mutual companies were collectively owned by employees or customers rather than shareholders. Then, in 1986, regulation changes combined with cultural changes made it less ethically frowned upon to tear ownership away from the employees, in what was known as demutualization. 

Growing up in a working class family in Sheffield, the author became aware of the detrimental impact of broken families from an early age. While the author was accepted into a grammar school and ultimately earned a scholarship to attend Oxford University, his cousin – born on the same day – lived a different story: her father’s early death upended her education prospects and she gave birth to her first child as a teenager.

More than just an anecdote, the story of the author’s cousin holds wider truths for why capitalism is broken today. In recent years, lower income families of the less educated class have been increasingly falling apart, disrupting children’s lives so that it becomes difficult to find a meaningful place in the workforce or society at large. In the case of America, two-thirds of children from families in the lower 50 percentile of total education have been raised by a single parent or no parent at all.

We’ve now considered what states, firms and families would look like in a society of ethical capitalism. But what about an ethical world?

Today, over 65 million people around the world have abandoned their homes on account of famine or violence. In an ethical world, affluent nations with comparative advantages such as the United States would extend their solidarity to nations that border crisis states. This might be done not only by channeling money into these countries to supplement the costs of assisting refugees in rebuilding their lives, but also by international firms bringing jobs to those locations.

Sheffield, Lille and Detroit were once reputable cities known for their industrial production, but by the 1980s, each began to crumble as they were outcompeted by markets in faraway lands fueled by cheap labor. The same forces of globalization that transformed cities such as London or New York into centers of capital and culture have made provincial cities obsolete in today’s economic system. 

But is there any way we can fix the broken provincial cities and bridge the geographical divide? One option might be to tax the gains accrued by skilled workers in metropolitan cities.