Capitalism, Alone: The Future of the System that Rules the World

Capitalism is alone, is the sole socio-economic system in the world. Mostly everywhere, production is organized for profit using legally free wage labor and privately-owned capital, with decentralized coordination. However, there are two distinct and competing types of capitalism: the liberal meritocratic capitalism developed in the West over the last two hundred years and the authoritarian political capitalism, which China and Russia best exemplify. These two types differ not only in the political but also in the economic and social spheres. While the Industrial Revolution has marked the rise of the West and its liberal capitalism, the Information and Communication Technologies Revolution and the rise of China and the East have marked the rise of authoritarian capitalism. The economic rebalancing of the world is not only geographical but also political. The vital link between capitalism and liberal democracy is currently questioned by China’s economic success and by the populist and plutocratic challenges to liberal democracy and globalization. The persistent increase in the economic divide between successful elites and the stagnating rest in western countries is the disease that currently threatens the long-term viability of liberal capitalism. Political capitalism is attractive also to western elites because it grants greater autonomy to them. But, it is only liberal capitalism that gives democratic institutions, rules of law, and freedom to the majority of citizens. What is ahead of this competition? It is unlikely only one will survive. Still, the survival of liberal democracies is anything but assured.