Capitalism and Inequality: Jerry Muller on what the Right and the Left get wrong

Capitalism, while building prosperity, is also creating a widening economic gap. Photo: CP/Ryan Remiorz

Capitalism, while building prosperity, is also creating a widening economic gap. Photo: CP/Ryan Remiorz

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In the battle between capitalism and socialism, we can safely say capitalism won. Even the membership of the federal NDP voted overwhelmingly to remove references to socialism from the party's constitution two weeks ago.

Not to mention the fact that the ostensibly communist redoubt of China has loosed the reins on a particularly energetic form of capitalism. 

But while few would argue anymore that capitalism is not the best way to build prosperity, the steadily worsening side effect of capitalism unbound is economic inequality. The gap between the rich and everyone else has gaped ever wider over the past three decades. 

The effect is perhaps most pronounced in the US, where capitalism is an article of faith of the republic.
 
The Pew Research Center in Washington reported last Tuesday that between 2009 and 2011, the top seven percent of Americans had their net worth increase by 28 percent. Meanwhile, the other 93 percent saw their wealth actually go down.

It's happening in Canada, too. Over the past 30 years, according to Conference Board of Canada, the top 10 percent of Canadians have enjoyed a 34 percent increase in average income, compared to a meagre 11 percent rise for the bottom 10 percent.

Economists like the Nobel Prize-winning Joseph Stiglitz and global bodies like the World Bank warn of the dangers of inequality to social and economic stability.
 
The left responds to the widening chasm between the rich and the poor with outrage. Elements of the right respond with something more akin to a shrug. 

But Michael's guest, Jerry Muller suggests that neither the right nor the left really know how to respond effectively to inequality. 

Jerry Muller is a Professor of History at the Catholic University of America in Washington, and his books include The Mind and the Market: Capitalism in Western Thought and  the author of the lead essay in the current issue of "Foreign Affairs", Capitalism and Inequality: What the Right and the Left Get Wrong

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