What Went Wrong with Capitalism
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- Pre-Order
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- Expected Jun 11, 2024
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- $14.99
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- Pre-Order
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- $14.99
Publisher Description
A century of expanding government has distorted financial markets, stoked massive inequality, and soaked America in debt.
Capitalism didn’t fail, it was ruined...
What went wrong with capitalism? Ruchir Sharma’s account is not like any you will have heard before. He says progressives are right, in part, when they mock modern capitalism as “socialism for the rich.” For a century, governments have expanded in just about every measurable dimension, from spending to regulation and the scale of financial rescues when the economy wobbles. The result is expensive state guarantees for everyone—bailouts for the rich, entitlements for the middle class, welfare for the poor.
Taking you back to the 19th century, Sharma shows how completely the reflexes of government have changed: from hands-off to hands-on, from doing too little to help anyone in hard times to today trying to prevent anyone suffering any economic pain, ever. Trading sins of omission and indifference for excesses of spending and meddling, governments from the United States to Europe and Japan have pumped so much money into their economies that financial markets can no longer invest all that capital efficiently.
Inadvertently, they have fueled the rise of monopolies, “zombie” firms, and billionaires. They have made capitalism less fair and less efficient, which is slowing economic growth and fueling popular anger. The first step to a cure is a correct diagnose of the problem. Capitalism has been badly distorted by constant government intervention and the relentless spread of a bailout culture. Building an even bigger state will only double down on what ruined capitalism in the first place.
PUBLISHERS WEEKLY
"By smothering capitalism's competitive fire, big government is slowing productivity growth," according to this unpersuasive treatise. Sharma (The 10 Rules of Successful Nations), founder of the investment firm Breakout Capital, argues that the U.S. government's reliance on "easy money"—a catchall term for state interventions, including lowering interest rates, buying bonds, and bailing out corporations—is driving wealth inequality, the proliferation of monopolies, and the ballooning of the national debt. According to Sharma, central banks that lend money on generous terms to struggling companies stymie competition and compound market inefficiencies, contributing to losses in national economic production. Because wage growth depends on productivity increases, Sharma contends, these irresponsible lending habits, paired with bailouts for the wealthy, are widening the gap between rich and poor. Unfortunately, the proposed solutions are less than inspiring. He argues that doing away with market interventions will allow companies to rise and fall on their own merit, with the most productive outfits coming out on top. However, the implication that increased productivity will lead to higher worker wages doesn't address the possibility that executives could simply pocket the gains for themselves. To Sharma's credit, he's astonishingly forthright about the downsides of less intervention, admitting somewhat glibly that more frequent downturns are the price society pays for "economic freedom" ("Some degree of suffering is a given in life"). This is unlikely to sway readers who don't already share its conservative fiscal outlook.
