Shrinking capitalism: Components of a new political economy paradigm

Wendy Carlin () and Samuel Bowles

No 16515, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The climate emergency, rising inequality, and pandemic diffusion have raised the question: for what purpose is capitalism fit? Implementing new policies and institutions to meet these challenges will require a realignment of political forces on a scale similar to that achieved by neoliberal policies and ideas over the past four decades. We suggest that a successful new paradigm must provide the basis of a dynamic and sustainable economy and be constituted by a synergistic set of ethical commitments, economic models, emblematic policies, and a new vernacular economics by which people understand and seek to improve their livelihoods and futures. We illustrate these four components by reference to the classical liberal, Keynesian-social democratic, and neoliberal paradigms. Using an expanded space for policies and institutions that integrates markets, states, and civil society, we propose elements of a new paradigm, including diminished space for capitalism and greater equality not only of economic endowments but also of dignity and voice.

Keywords: Inequality; Power; Paradigm; Principal-agent model; Classical liberalism; Keynesian social democracy; Neoliberalism; Ethics; Civil society (search for similar items in EconPapers)
JEL-codes: B1 D01 D02 D21 D31 D82 D86 D90 O31 (search for similar items in EconPapers)
Date: 2021-09
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