Capitalism’s social value may now be in question
Financial Times, May 20th, 2019
Ira Sohn’s letter yesterday pointed to the malign influence in modern economies of ‘monopolistic’ sectors of industry and government generating the inequality which is the focus of the new inquiry by the Institute for Fiscal Studies (‘Inequality in America offers lessons for Britain’, FT, May 15th).
Professor Angus Deaton’s inquiry into the origins of inequality might usefully also address the accelerating erosion of the hitherto steady and positive nexus between industrial production/growth and employment. Since the Industrial Revolution, until about 20 years ago, this correlation operated with broadly adaptable reliability, generating the creation and growth of substantial middle classes in developed economies – a process recently reproduced in developing economies. The strong socially beneficial consequences of this nexus – spreading wealth, economic mobility and stability – have served as the core ethical justification for capitalism.
This desirable relationship is now being severely, even perhaps terminally, undermined by the global adoption of comprehensively automated methods of production and services enhanced by artificial intelligence. Occupations which formerly provided secure and stable livelihoods no longer do so and, if the hitherto reliable process of ever-improving productivity is reaching its end, secure employment will not recover. If this is indeed a significant cause of the growth in inequality a fundamental question mark is raised over the social value of capitalism.