The Future of Capitalism | Paul Collier

Summary of: The Future of Capitalism: Facing the New Anxieties
By: Paul Collier

Introduction

In recent times, capitalism and its effects on society have been heavily debated. The book summary of ‘The Future of Capitalism: Facing the New Anxieties’ by Paul Collier delves into the challenges facing capitalism today, and the need to return to a more communitarian and ethical system. The summary highlights the fractures in social democracy and the conflicting ideologies that have led to our current state. As you read through the book summary, you’ll discover the importance of rebuilding ethical capitalism through social maternalism, implementing pragmatic policies, and fixing broken families. This will give you an understanding of the transformations needed for capitalism to benefit everyone involved.

The Fracturing of Social Democracy

In the post-World War II era, social democracy and its communitarian ideals were embraced across political parties and class boundaries, leading to substantial economic growth and a shared national identity. However, over time, the rise of a highly educated class pursuing individualism and the adoption of Utilitarianism transformed social democracy into social paternalism. This, along with widening wage differences, has left many feeling marginalized and has led to the current crisis in social democracy. To create a better system, we need to find our way back toward communitarianism and cultivate a sense of patriotism.

Social Maternalism: A New Vision for Capitalism

The author argues that while capitalism is necessary for mass prosperity, it should not be guided solely by greed. Social maternalism, which fosters a true patriotic community and pragmatic policy choices, should replace top-down paternalism. This system encourages a seamless chain of moral support for citizens from childhood to young adulthood, and takes moral responsibility out of the hands of a few. To create a moral capitalism that works for everyone, policies based on pragmatism should be implemented, rather than ideologies. The author cites Singapore’s first prime minister, Lee Kwan Yew, as an example of pragmatism leading to prosperity. By focusing on specific contexts and finding solutions upon which everyone can agree, leaders can ensure that communitarian values return to capitalism.

Ethical Capitalism

In the 1970s, Milton Friedman popularized the notion that the only purpose of a company is to maximize profits, leading to most employees having no representation on company boards or direct benefit from a company’s success. However, in the UK, until the 1980s, many companies were collectively owned by employees or customers rather than shareholders. The concept of demutualization changed this trend, but some companies like John Lewis Partnership stayed true to their values of being communitarian firms. Incentivizing ethical capitalism can be achieved by taxation and mandating companies to incorporate public interests into their boards. Public participation in holding firms accountable for ethical behavior will be critical for the adoption of ethical capitalism.

Fixing Broken Capitalism

The author discusses the detrimental impact of broken families, how it relates to the current state of capitalism, and proposes a solution through social maternalism.

Growing up in a working-class family in Sheffield, the author was exposed to the negative effects of broken families from a young age. While the author was able to attend Oxford University on a scholarship, his cousin’s father passed away, and she gave birth as a teenager.

This anecdote serves as an example of how broken families disrupt the lives of children, making it harder for them to find their place in society and contribute to a functioning workforce. The trend of lower-income families in less educated groups falling apart is particularly concerning, as two-thirds of children in the lower 50 percentile of education in America are raised by a single parent or no parent at all.

Western societies have responded to this issue by taking on child rearing responsibilities through foster care and children’s homes. However, this has led to an increase of 70,000 children in foster care in Britain alone, and a lack of support for parents looking to adopt.

To address this issue, the author suggests a solution through social maternalism- keeping families together by incentivizing young parents to stay together. Tax-credit bonuses could be offered to parents living in the same house, which has been shown to result in more productive and content members of society.

Additionally, social maternalism would offer relief to young parents through mentorship and support programs. The Dundee Project in the United Kingdom is an example of a successful initiative that provided detached support, enabling trust between the parents and social workers.

By focusing on fixing broken families, social maternalism could create a hospitable society that nurtures the growth of children. The families aided by social maternalism would likely perpetuate the system through their own election choices, leading to a more prosperous capitalist society for all.

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