Ruchir Sharma, chair of Rockefeller International, has issued a stark warning about the state of global capitalism. In a recent commentary, Sharma emphasized that capitalism is facing a clear and present crisis, exacerbated by overactive governments widening the key flaws of modern capitalism—namely, slower economic growth and increasing inequality.
Sharma argues that the fundamental premise of capitalism—that limited government is essential for individual liberty and opportunity—has not been effectively practiced for decades. He highlights that for capitalism to function properly, there must be a level playing field where new and small enterprises can challenge established concentrations of wealth and power. However, industries are becoming more concentrated, leading to a decay that forces many towns and counties, particularly in the United States, to rely on a single large employer.
He notes that societal mobility has declined, with Americans now less likely to move between states or switch jobs compared to the pre-1980 era. This stagnation contributes to widening income inequality. Since the year 2000, this inequality is no longer primarily due to executives earning significantly more than their employees but is fueled by the emergence of “superstar” companies. Employees at these dominant firms, such as Google, earn more than their counterparts at weaker companies, further expanding the economic divide.
Sharma also points out that capitalism has faltered more noticeably in Europe, where governmental intervention through rescues and regulations has been more aggressive, resulting in slower growth in productivity and average incomes compared to the United States. However, he suggests that the U.S. may be following a similar path under current policies. With unprecedented deficits and debt levels under President Joe Biden’s administration, the U.S. is becoming an outlier among its peers.
“Today’s policymakers are status quoists,” Sharma asserts. They continue to “rescue, regulate, and spend,” hoping for better outcomes but often yielding the same results: prosperity for markets and billionaires, but not for society as a whole. Sharma’s critique serves as a call to reevaluate the role of government in capitalism to ensure it fosters fair competition and broad-based economic opportunity.
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Rockefeller International chair Sharma: capitalism is in crisis
cgtn.com
