That’s what people keep asking former IMF Chief Economist Ken Rogoff, apparently. But, he observes,
It is a curious question, because it seems to presume that there is a viable replacement waiting in the wings. The truth of the matter is that, for now at least, the only serious alternatives to today’s dominant Anglo-American paradigm are other forms of capitalism.
Continental European capitalism, which combines generous health and social benefits with reasonable working hours, long vacation periods, early retirement, and relatively equal income distributions, would seem to have everything to recommend it – except sustainability. China’s Darwinian capitalism, with its fierce competition among export firms, a weak social-safety net, and widespread government intervention, is widely touted as the inevitable heir to Western capitalism, if only because of China’s huge size and consistent outsize growth rate. Yet China’s economic system is continually evolving.
Indeed, it is far from clear how far China’s political, economic, and financial structures will continue to transform themselves, and whether China will eventually morph into capitalism’s new exemplar. In any case, China is still encumbered by the usual social, economic, and financial vulnerabilities of a rapidly growing lower-income country.
Perhaps the real point is that, in the broad sweep of history, all current forms of capitalism are ultimately transitional.
So what are the key stresses that may push us on to the next transitional form[s] of capitalism? Five, reckons Rogoff: (1) failing to price public goods properly – like clean air, water or a stable climate; (2) inequality; (3) market failures on medical care; (4) failing to value the wellbeing of future generations, including through resource depletion; and (5) financial crises. Hard to disagree with any of those…
