Which economic system contributes the most to human well-being? This is the key question of our time, because after 40 years of neoliberalism in the US and other developed economies, we have determined that this recipe does not work.
The neoliberal experiment - lowering taxes for the rich, deregulation of labor and product markets, financialization and globalization - proved to be a spectacular failure. Growth is lower than it was in the two and a half decades after World War II, and its biggest gains are concentrated at the very top of the income ladder. After decades of stagnation and even declining incomes for everyone else, neoliberalism must be declared dead and buried.
At least three major political alternatives are competing today to take its place: extreme right-wing nationalism, center-left reformism, and the progressive left (the center-right that is the bearer of neoliberal failure is missing). And yet, with the exception of the progressive left, these alternatives remain obsessed with forms of neoliberal ideology that have expired (or should have).
The centrist left, for example, represents neoliberalism with a human face. Its goal is to transfer the policies of the former American president, Bill Clinton, and the former British prime minister, Tony Blair, into the XNUMXst century, with slight modifications in the dominant models of financialization and globalization. At the same time, the nationalist right renounces globalization and points the finger at migrants and foreigners as the cause of all today's problems.
However, as Trump's rule shows us, the nationalist right is also committed - at least in its American version - to lowering taxes for the rich, deregulation, and reducing or eliminating social programs. In contrast, the third camp advocates what I would call progressive capitalism, whose economic platform is based on four priorities. The first is the return of the balance between the market, the state and civil society. Problems such as slow economic growth, growing inequality, financial instability and environmental degradation emanate from the market and cannot be overcome by market means alone. States have a duty to limit and shape markets through regulations concerning ecology, health and employment security.
Also, the state's job is to do what the market cannot or does not want to do, for example to invest in basic scientific research and technology, as well as in the education and health of its citizens.
The second priority is accepting the knowledge that the so-called "wealth of nations" is based on the results of scientific research - the study of the world around us - and social organization that enables large groups of people to work together for the benefit of the common good. Markets have a key role in fostering social cooperation, but they only serve this purpose if they are subject to the rule of law and democratic control. Otherwise, individuals can become rich by exploiting others and extracting wealth from rent rather than creating wealth through authentic creativity. A large part of today's rich people owes their place at the top to exploitation.
Trump's policies, which encourage rentier behavior while simultaneously destroying the real sources of wealth creation, work in their favor. Progressive capitalism tries to do the exact opposite.
This brings us to the third priority: addressing the growing problem of concentrated market power. By exploiting informational advantages, buying out potential competitors, and raising barriers to market entry, dominant companies are able to engage in rentierism on a massive scale, to the detriment of everyone else. The rise of corporate market power, combined with the decline of workers' bargaining power, largely explains why inequality is so high and growth so slow. If the state does not assume a more active role than the one assigned to it by neoliberalism, these problems will become even more pronounced, primarily due to progress in the field of robotization and the development of artificial intelligence.
The fourth key item of the progressive platform is cutting the link between economic power and political influence. Economic power and political influence are mutually reinforcing and self-reproducing, especially in countries like the US, where wealthy individuals and corporations are allowed unlimited investment in election campaigns. As the US rapidly approaches a fundamentally undemocratic "one dollar, one vote" system, mechanisms of mutual control (checks and balances), necessary for the functioning of democracy, will apparently not survive: nothing will be able to limit the power of the rich. This is not just a moral and political problem: economies with less inequality are actually more successful. Progressive-capitalist reforms must therefore begin by abolishing the influence of money on politics and reducing wealth inequality. There is no magic wand that can undo the damage done by decades of neoliberalism, but the comprehensive platform I have outlined in this text can begin to do so. The only question is whether reformers will be as determined to confront problems like inequality and excessive market power as the private sector has been in creating these problems.
This platform should focus on education, scientific research and other real sources of wealth. It needs to protect the natural environment and confront climate change with the fervor of the Green Deal in the US and Extinction Rebellion in the UK. It should also provide state programs that will guarantee every citizen the basic conditions for a decent life: economic security, the possibility of employment and decent earnings, health insurance and appropriate housing, a secure pension and quality education for children.
This platform is quite affordable: in fact, we can't afford not to implement it. The alternatives offered by nationalists and neoliberals guarantee the continuation of economic stagnation, inequality, environmental degradation and political resentment, all of which lead to outcomes that are better not imagined.
Progressive capitalism is not an oxymoron. It is the most accessible and lively alternative to the neoliberal ideology that has clearly failed. He is our best chance for healing from the political and economic problems we are currently suffering from.
(The Guardian; Peščanik.net; translation: R. DINIĆ)
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