Question

What role does capitalism play in the proliferation of inequality here and abroad?

Answer 1

As the 2012 U.S. presidential election and the "fiscal cliff" battles have shown, the centerpiece of the left today is to increase government taxation and spending, primarily to reverse the growing stratification of society, while the centerpiece of the right is to reduce taxation and spending, primarily to ensure economic dynamism. Each side minimizes the other's concerns, and each seems to believe that their desired policies are enough to ensure prosperity and social stability. They're both wrong.

Nevertheless, in the post-industrial capitalist world, poverty is that almost everywhere. But this is not the result of politics, despite what many on the left think, nor is politics likely to reverse it, because the problem is more deeply rooted and intractable than it is generally recognized. Inequality is an inevitable product of capitalist activity, and expanding equal opportunities only increases it— because some individuals and communities are simply better able to exploit the development and advancement opportunities that capitalism offers than others.

Nonetheless, given what many on the right say, this is a problem for everyone, not just those who do poorly or those who are ideologically committed to egalitarianism— because if left unaddressed, rising inequality and economic insecurity will erode social order and generate a populist backlash against the capitalist system as a whole. The spread of capitalism has created a monumental leap in human progress over the last few decades, leading to both previously unimaginable rises in material living standards and unparalleled exploitation of all kinds of human potential.

One of the arguments in favor of capitalism that is less known is that future generations should be counted as winners. That is, because of the proportion of capitalism's winners and losers in say 1800 in America, since then economic growth has made modern Americans winners. Capitalism's dynamics are such that the proportion of economic growth winners exceeds 100 percent, looking forward to a few decades, and the proportion of losers approaches zero. That is, from now on, economic growth would make almost everyone better off several generations than they would be without any economic growth.