Is capitalism the only system that works? On the one hand, capitalism promotes innovation and economic prosperity and has lifted over a billion people out of extreme poverty since 1990. On the other hand, the relentless pursuit of economic growth is trashing our environment and leading to a growing gap between rich and poor.

What do our readers think? We’ve had thousands of comments over the years from readers who are convinced that capitalism is the only system that works in practice and that there are no viable alternatives. Is this true?

To get an answer, we turned to Yanis Varoufakis, an economist, former Greek finance minister, and currently a member of the Greek parliament. In his new book, Another Now, he explains why he thinks capitalism doesn’t work and proposes alternatives for the future. What are those alternatives?

We are already living in an alternative to capitalism. I believe that capitalism has already evolved into something different, something that the historical defenders of capitalism would not recognise as capitalism. When I was growing up, there was the great clash between Left and Right, between those who believed in a decentralised, competitive market mechanism to organise the distribution of scarce resources among competing needs and those who believed in central planning or some kind of social democracy.

Since the crisis of 2008, we have a completely different situation, because financialised capitalism collapsed in 2008. Finance was refloated by central banks printing mountains of money, but market capitalism was not. We have lived in a state-financed economy for the past twelve years. Without the central banks – the European Central Bank, the Bank of England, the Bank of Japan, the Federal Reserve – the whole thing would collapse. So, it’s a mistake to think of the system we live in today as a market-based system.

It is a central bank-based system with a small number of companies doing remarkably well. The New York Stock Exchange is effectively propped up by 10 companies. And these are feudal fiefdoms. As soon as you enter Amazon, you leave capitalism, you leave the market, you are in a thing that is effectively owned by one person. So, we have a kind of techno-feudalism. The question is no longer whether there is an alternative to capitalism, because we already live in post-capitalist times. We had better choose the kind of post-capitalism that is compatible with the survival and flourishing of the species.

For a different perspective, we also turned to Fredrik Erixon, an economist and author from Sweden, and the director of ECIPE (the European Centre for International Political Economy), an independent think tank that supports the principles of free trade and economic freedom. What does he think?

Well, obviously there are a lot of countries in the world that practice a different form of economy than capitalism. That has also been true historically, so you don’t have to invent new systems to find alternatives to capitalism. I think what might be more useful is to talk about different variations of capitalism; the extent to which you want to have a free and open economy, the extent to which the government regulates the markets in which different companies operate.

Part of the definition of capitalism is a capitalist culture, and ‘capitalist culture’ basically goes back to this idea that the purpose of capitalism is to promote a lot of change. It’s there to promote innovation and technological change and to make sure that people’s wealth and quality of life improves over time.

Now, you can put a very big question mark behind the question of to what extent this capitalist culture is still alive today at all. People will say: ‘Well, you know, we probably live in the most innovative age ever. Just look at what we’ve done with the iPhone since it was introduced in 2007. Let’s look at the telecom revolution, since the early 1990s, etc.’ All of that may be true, but if you look at various indicators of capitalist culture, you find that the pace of innovation has slowed over a long period of time, that we have far too few industries, far too few companies out there to change markets, disrupt markets and basically try to end the lives of their competitors.

We have a much better organised competition, a kind of competition where companies don’t have to invest so much more in research and design, in innovation, in order to have a successful future and give a good profit to the shareholders. So, even if we have a system where many companies are privately owned, we can still say, and this is also true for countries like the United States, that the capitalist culture has eroded over the last 40-50 years, that we don’t produce as much change, which could lead to much more productivity, better use of resources and of course higher prosperity.

Are there alternatives to capitalism? Is capitalism the only system that works? Do we need to change our system to fight inequality and environmental degradation? What alternatives are there to capitalism? Let us know your thoughts and comments in the form below and we’ll take them to policymakers and experts for their reactions!

Image Credits: Photo by Koushik Chowdavarapu on Unsplash

18 comments Post a commentcomment

What do YOU think?

  1. avatar

    Capitalism exists for 200 years which is exactly 0.1% of history of Homo Sapiens. Does this answer your question?

    • avatar

      Крис Караджов And how did that work out for humanity?

    • avatar

      John MT bad, as we all know

  2. avatar

    There are proposed alternatives, but nothing remarkable. Capitalism with social welfare programs seems to be the best way to go.

    • avatar

      John MT Indeed, but with a legitimated organisation, that is nothing else than the Nation State protecting individual freedom. Capitalism should be limited to the nation’s interests !!! A sovereign state, whatever regime it has, cares more for the social organisation of its citiezens. A technocratic organisation focusing on the fierce concurrence of the market, only cares for the return on investment. The collective limit should be legitimated by history and not legalised by international technocratic treaties ! The New World Order, technocratic totalitarism, the stakeholders’ society is a the worst invasion !!!

  3. avatar

    Capitalism is ok within clear boundaries. There needs to be an equal level playing field at global scale so that social and environmental externalities of capitalism are kept in check. Otherwise it’s too easy for some to enjoy a free lunch. The alternative is what the ‘doughnut’ of sustainability requires: there must be a social floor and an environmental ceiling to capitalism. Free-for-all capitalism is too dangerous otherwise.

  4. avatar

    In case we really wanted it the very first step should be to leave the UE, this economic association binded to NATO ! Otherwise you are calling for TRANSHUMANISM and the New World Order !!!! EU should split up into sovereign states in case we really wished to see a better world… So far geopolitic is the main purpose of the USA and the EU Treaty is bindig us to NATO … and this is extremely well explained in a nutshell: In-Depth International Relations Analysis : The European Migration Movement 25:060:28​ – Description of the European Refugee Crisis0:52​ – Origin of the Migrants / How did they enter Europe (Routes)?3:50​ – War affected regions in the Middle East4:57​ – Causes of Migration5:56​ – What is the real reason behind European Migration8:09​ – How USA uses Liberalism & Democracy to gain control (Indian Example)12:20​ – Rise of the Neo-Conservatives in the American Politics14:22​ – Iraq invasion and Syrian invasion17:14​ – Sudden incoming of Migrants in Europe caused serious problem20:13​ – Explained the Insider – Outsider theory22:03​ – Summary of the European Migration Crisis23:06​ – Difference in Eastern & Western culture / value / philosophy24:21​ – Final thoughts & conclusion!

  5. avatar
    EU Reform Proactive

    Interesting what our learned economy professors and the many think tanks have to say!

    More importantly and interesting to know is what our learned national & supranational representatives think & would propose to us.

    If some unlearned representatives don’t know- why appoint any of them in the first place? Why pay ‘Agent fees’ for acting as a go-between of the learned and the unlearned?

    There is a limited group of national taxpayers (justifiably) financing their national parliaments and they are the same poor buggers who also fund another 705 EP members, from 27 EU countries, split into 7 political groups, representing 447 million EU people out of 748 million Europeans or ~60%!

    This different ‘feudal fiefdom’ calls itself a supranational democratic Union- celebrating with Ode to Joy for given permission paying through the noses for indirectly elected bureoucrats.

    Please cut spending on all feudal fiefdoms, like a wasteful bureaucracy and ‘parliamentarian capitalism’. Rather switch to a virtual, less expensive, lean, and mean democratic model- like ‘direct democracy’.

    For starters, move the comma of 705 one digit to the left & reduce the EP to 71. That will do! The learned are very good at juggling the figures.

    Please EU work it out & present your plan for approval to the voters- online! Thank you kindly!

  6. avatar

    lets stop with the bs ok, we dont have true capitalism, especially not in europe. unfollowing this page

  7. avatar

    It works great ; climate crisis, chronical unemployment and global inequality.

  8. avatar

    is that the reason that the EU is supporting Agenda2030 of the UN moving towards marxism?

    • avatar

      Guzt Flater Capitalism, marxism … people are always losing …

  9. avatar

    The il le gal EU doesn’t work :) GAME OVER

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