Explained Snippets: Fixing modern capitalism

A celebrated economist seeks a return to ethics and morality

The Future of Capitalism: Facing the New Anxieties, the latest from Sir Paul Collier, one of the best known and most influential development economists of our times.

Over the last few years, the rise of Donald Trump in the United States, the vote in Britain to leave the European Union, and the coming to power of authoritarian, far right figures in Eastern Europe and, most recently, Brazil, have given rise to much soul-searching on the course capitalism has taken in democratic set-ups. A large number of progressive/liberal economists, journalists and commentators have asked whether “democracy [can] survive global capitalism” with its “winner takes all” society and “populist temptations”. In many countries, including India, grave concerns have been expressed over the rise of economic inequity, with relentless fattening of a creamy layer at society’s very top, and no commensurate trickle-down to the vast majority below.

This is the starting point of The Future of Capitalism: Facing the New Anxieties, the latest from Sir Paul Collier, one of the best known and most influential development economists of our times.

“Deep rifts are tearing apart the fabric of our societies. They are bringing new anxieties and new anger to our people, and new passions to our politics,” begins the book. “It is the regions rebelling against the metropolis, the heartlands versus the coasts, the less educated against the more educated, the struggling workers against the ‘scroungers’ and ‘rent-seekers’… the toiling provincial has replaced the working class as the revolutionary force in society: the sans culottes replaced by the sans cool.” So, asks Collier, “what are these people angry about?”

The reason, as Martin Wolf, chief economics commentator at the Financial Times, sums up in his review of Collier’s book, lies in the sustained undermining of the ethic of “reciprocal obligation” — the basis for a co-operative world, civilised society, ethical businesses, functional families, and most fruitful social arrangements — by a coalition of extreme libertarians, utilitarians, and Rawlsians (intellectual adherents of the American philosopher John Rawls). Also, globalisation and tech innovations have led to the creation of more metropolitan agglomerations with highly educated populations, and the decline of industrial cities/towns. Educational inequality has made class advantage more inheritable. Finally, Wolf writes, “today’s capitalism has bred pathologies: unshackled finance, unpaid taxes, unmoored business and unmanaged migration.”

Collier’s solution lies in a return to the “centrist communitarianism” of the years immediately following the end of World War II, with a renewed stress on shared prosperity and the re-establishment of the fundamental ethic of mutual/reciprocal obligation at the international, national, corporate, and familial levels.

Alongside, he advocates certain “technical reforms” that include “Georgeism” — more aggressive taxation of the undeserved benefits of modern capitalism, including of high-value land in metropolitan agglomerations, and of high-income individuals living in those aggomerations.

Population falling in many states, including Andhra Pradesh

Since at least 2015, Andhra Pradesh Chief Minister N Chandrababu Naidu has been asking people to have more children in order to ensure that his state does not suffer a “demographic crisis” like Japan, and continues to have a sufficiently young population. He repeated his call most recently on December 28.

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Andhra Pradesh is among several Indian states where the fertility rate has fallen below the replacement level of 2.1. India’s overall fertility rate is 2.18, according to National Family Health Survey (NFHS) 4 (2015-16) data presented in Lok Sabha Friday by MoS, Health and Family Welfare Ashwini Kumar Choubey.

India’s total fertility rate (TFR) was 3.39 in NFHS-1 (1992-93). The TFR for Andhra Pradesh fell from 2.59 in NFHS-1 to 2.25 in NFHS-2 (1998-99) and to 1.79 in NFHS-3 (2005-06) before rising to 1.83 in NFHS-4 (2015-16). Bihar (3.41) and Uttar Pradesh (2.74) have the highest TFR among major states, the data show.