Felistus Mbole a member of our Emerging Fellows program warns about the survival of capitalism in her third blog post. The views expressed are those of the author and not necessarily those of the APF or its other members.
Many believe that global inequality has been growing for decades. A month ago, the world’s elites - who comprise global political, business, advocacy, and activism leaders - gathered in Davos for the annual World Economic Forum. Inequality was a key topic in their discussions. It seems the issue is finally getting their attention. Is capitalism becoming a danger to itself?
Inequality is likely to continue to grow into the foreseeable future based on the present trajectory. The growing inequality could lead to the classing of society into a small wealthy elite and the rest of the people. This could pose a danger to capitalism if markets are perceived as benefitting the owners of capital at the expense of workers and the consumers of the goods and services they provide.
For long, most people believed in the Washington Consensus that the market economy was the best way to deliver long-term prosperity. According to the consensus, wealth would somehow trickle down to the rest of society through employment and other forms of economic engagements with markets. This has not happened. Globally, people are less optimistic about the future than they were at the turn of this century. They are discontented about stagnating standards of living as the wealthy around them attain increasing levels of affluence.
In wealthier economies, globalisation is becoming a chief agenda item for western populists. The opponents of globalisation dislike it for its power to potentially destabilise their status and sense of community economically and socially. Economically, it is perceived to cause economic losses through the loss of jobs and the imports of goods and services from other economies. Globalisation was effectively slowed down between the two world wars. This is unlikely to happen in future given the advancement in technology. Rather than fight globalisation, business owners and global leaders should ensure that it works for everyone.
Given prevailing rapid globalisation, it not surprising that there is a growing wave of populism especially in parts of America and Europe. Populists purport to speak for the average people - whom they position as different from those in authority - and as disadvantaged. They present themselves as having a solution to the problem and advocate for a change in the status quo. Populism is disruptive to society and to capitalism in particular.
This state of affairs is not sustainable. If the wealthy are seen as the elite within society who are driving a political agenda which is divergent from the will of the people, this can lead to populism. As inequality increases, the proportion of those feeling left behind is likely to increase. This could endanger capitalism. Rather than being a zero-sum game where the wealthy are perceived to take it all, capitalism could be made a win-win game for everybody. How could capitalism be transformed into a responsible system that benefits society as a whole?
© Felistus Mbole 2019