The Crisis of Democratic Capitalism

I, like I’m sure many others, have a growing unease when reading the newspapers where we are seeing catastrophic political and economic events play out around the world.

Martin Wolf gives me a sense of relief that there are intelligent, calm voices out there. But even he seems to be shaken in this book. It is a prescription for restoring order to democratic capitalism and a beacon of hope when that sense of unease sets in.  

After the fall of the Berlin Wall and the collapse of the Soviet Union, the 1990s saw the model of democratic capitalism prevail. Thirty years later, democracy is being questioned, and capitalism has been threatened by growing inequality.

Martin Wolf’s book provides a deep study of the underlying causes of this worrying development, something I very much appreciate. For all its flaws, Wolf argues that democratic capitalism remains the most promising economic model to provide individual freedom and shared prosperity, but it will require a revisiting of the concept of citizenship to foster a shared belief in the common good.

Wolf, chief economics commentator for The Financial Times, asks, “What do democratic capitalism, the global order, and the global environment have in common? The answer is ‘fragility’.”

Wolf sees democracy and capitalism as “symbiotic twins” that have developed together but that can, in the wrong conditions, threaten each other.

The threats today come from within and from outside – from plutocratic populism in advanced democracies and from the obvious external challenges of a rising China, a vengeful and rogue Russia, and from climate change.

He explains how to repair capitalism, strengthen democracy, and manage global tensions.

What system is best suited to deal with all of the challenges that we face? The frustration and anger with Democratic capitalism are understandable. Democratic capitalism remains the best system for human flourishing. But something has gone seriously awry: the growth of prosperity has slowed, and the division of the fruits between the hyper-successful few and the rest has become more unequal.

But citizenship is not just a slogan or a romantic idea; it’s the only force that can save us, Wolf argues. Nothing has ever harmonized political and economic freedom better than a shared faith in the common good.… show more.