- Wealth needs to be more broadly redistributed.
- Governments will need to intervene more to ensure better and fairer outcomes from private sector investments.
- New institutions need to incorporate profound reforms to ensure better racial integration.
Capitalism as we know it needs to be reformed. The growing discontent at the ideology that has created so much wealth and progress on the one hand, and yet so much inequality and instability on the other hand, is causing increasingly frequent social disruptions across the world. The COVID-19 crisis has laid bare most of these dysfunctions, ranging from uneven access to healthcare, education, economic opportunities, and social progress, to growing inequality among and within nations and racial and ethnic groups. At the centre of these multiple crises lies the tension between privilege and meritocracy.
From a global economic perspective, capitalism, as the dominant economic system since the end of World War II, has played a substantial part in fueling inequalities within and across nations.
After decades of austerity policy imposed by the World Bank and the International Monetary Fund (IMF) on Latin American, African and other lower-income economies as a false cure for recessionary cycles, rich countries’ responses to the macro-economic effects of the COVID-19 crisis have spectacularly rejected the public sector restraint sold to developing countries as foundational to post-war capitalism.
Indeed, advanced economies have resorted to unprecedented unconventional and counter-cyclical policies to boost economic growth through public spending, leaving the balanced budget approach as an afterthought.
According to the IMF, G20 countries have collectively spent $9 trillion on stimulus in the first half of 2020 – more than 10% of the world’s GDP. Government leaders argue that this approach was essential in maintaining economic and social stability and yet, not all countries had the privilege of fiscal and monetary policy space required to emulate this response.
Read the rest of Mark Doumba’s article here at World Economic Forum