„Capitalism: What Has Gone Wrong?“ Who Went Wrong? Capitalism? The Market Economy? Governments? “Neoliberal” Economics?

Martin Hellwig

No 2021_15, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: The paper contributes to a symposium of the Oxford Review of Economic Policy on “Capitalism: What has Gone Wrong, What Needs to Change, and How can it be Fixed?”. The analysis starts from the observation that, in the United States, the United Kingdom and continental Europe, widespread discontent has become an important political force. I attribute this discontent to a sense on unfairness in developments of the past few decades. I relate this sense of unfairness to: (i) negative effects of structural change, including joblessness and regional decline, (ii) the observation of extraordinary growth in executive remuneration and financial-sector remuneration, coupled with government bailouts in the global financial crisis, and (iii) changes in public policy and public discourse, with a retrenchment of public services and public investment, except for bailouts and a focus on “efficiency”, the meaning of which is driven by the perceptions of corporate executives rather than standard welfare economics. To capture these developments, one needs to think about “capitalism” in the sense of French “capitalism” or German “Kapitalismus”, with a focus on the symbiosis of wealth and power, including the elimination of competition, rather than the English sense of merely another term for the market economy.

Keywords: Efficient public-good provision; incomplete information; conditionally independent private values; macro uncertainty; budget balance; weakly robust incentive compatibility (search for similar items in EconPapers)
Date: 2021-08-11
New Economics Papers: this item is included in nep-pke and nep-reg
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Journal Article: ‘Capitalism: what has gone wrong?’: Who went wrong? Capitalism? The market economy? Governments? ‘Neoliberal’ economics? (2021)
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