- +10
Rosa Balfour, Frances Z. Brown, Yasmine Farouk, …
{
"authors": [
"Moisés Naím"
],
"type": "legacyinthemedia",
"centerAffiliationAll": "",
"centers": [
"Carnegie Endowment for International Peace"
],
"collections": [],
"englishNewsletterAll": "",
"nonEnglishNewsletterAll": "",
"primaryCenter": "Carnegie Endowment for International Peace",
"programAffiliation": "",
"programs": [],
"projects": [],
"regions": [
"North America",
"United States"
],
"topics": [
"Economy",
"Foreign Policy"
]
}Source: Getty
Economic Inequality: What’s New?
Bashing capitalism and the inequality it generates and perpetuates is as old as Karl Marx. The businessmen want to repair it, while radical critics want it replaced.
Source: El País
"I’m a capitalist, and even I think capitalism is broken,” said Ray Dalio, the founder of Bridgewater, one of the largest private investment funds in the world. According to Forbes, Dalio ranks 60th on the list of richest people on the planet. “I believe that all good things taken to an extreme become self-destructive and that everything must evolve or die,” he said. “This is now true for capitalism.”
Jamie Dimon, the head of JPMorganChase, is also concerned about the health of capitalism. Dimon, whose salary last year was $30 million, says: "[Capitalism] has helped lift billions of people out of poverty… This is not to say that capitalism does not have flaws, that it isn’t leaving people behind and that it shouldn’t be improved.”
The lack of consensus has a lot to do with differing opinions about the root causes of inequality
This is something new. Bashing capitalism and the inequality it generates and perpetuates is as old as Karl Marx. What’s new is that the titans of industry, whose interests are intricately tied to capitalism, are criticizing it as fiercely as the most aggrieved left-wing activists. The businessmen want to repair it, while radical critics want it replaced.
Big business leaders are not the only ones newly critical. According to a recent Gallup Poll, the share of Americans between 18 and 29 who have a favorable view of capitalism has fallen from 68% in 2010 to 45%. Today, 51% of them have a positive opinion of socialism. This is also new.
In the academic world there are the same concerns. Paul Collier, for example, is a renowned economist and professor at the University of Oxford who published The Future of Capitalism last year. In his book he warns that modern capitalism has the potential to lift us all to an unprecedented level of prosperity, but nowadays it is morally bankrupt and is heading toward a tragedy.
Criticisms of capitalism are many and varied and, most of them, very old. The most common is that capitalism condemns the masses to poverty and concentrates income and wealth in a small elite. This criticism was temporarily tempered by the success of countries such as China, India, and others in reducing poverty. This was due, to a large extent, on the adoption of liberalizing reforms that stimulated growth, employment, and increased incomes, creating the largest middle class in history… another novelty.
But the financial crash of 2008 brought back concerns about inequality and revived people’s skepticism against capitalism. For countries like Brazil and South Africa, economic inequality had been the norm, but for others it meant the return of a painful reality that many thought had been overcome. Several European countries as well as the United States joined the group of nations that saw inequality grow.
Criticisms of capitalism are many and varied and, most of them, very old
With the recent eruptions of populism and political instability, a widespread sense of urgency over the need to reduce inequality became a fixture of national conversations in many countries. But the agreement on the need to intervene has not been matched by agreement on how to do it. The lack of consensus has a lot to do with differing opinions about the root causes of inequality. For Donald Trump there is no doubt: China’s imports and illegal immigrants are the reasons for the economic suffering of those “left behind” and also the explanation of why so many Americans can’t reach the American Dream.
But that’s not true. Studies show that the main drivers of inequality are the new technologies that destroy jobs and keep salaries low for blue-collar jobs. A variant of this theory is that a growing number of sectors are dominated by a small number of very successful, large companies whose business strategies inhibit wage increases, inflation, and economic growth. In the United States, the financial and health sectors – with their disproportionate economic weight and political influence – are often cited as examples. For economists such as Thomas Piketty, Emmanuel Sáenz and others, economic inequality is mainly caused by the unequal ownership of capital, both private and public.
But these generalizations are deceptive. The causes of the increase in inequality in India are different from those of the United States, and the culprits in Russia are different from those in Chile or China. In some countries, the main cause of inequality is corruption, in others it is not.
Most likely we are simply re-fighting the ideological wars of the last century and these new challenges will require new ideas. The impact of Artificial Intelligence on inequality, for example, is still uncertain, but there’s good reason to believe it will be large. And this one innovation can make all our received ideas about the causes of inequality and its consequences obsolete. This and other changes of the 21st century will create new and powerful sources of inequality that will require new and equally unprecedented policies to close the gap between rich and poor.
About the Author
Distinguished Fellow
Moisés Naím is a distinguished fellow at the Carnegie Endowment for International Peace, a best-selling author, and an internationally syndicated columnist.
- The World Reacts to Biden’s First 100 DaysResearch
- View From Latin AmericaCommentary
Moisés Naím
Recent Work
Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.
More Work from Carnegie China
- China’s Energy Security Doesn’t Run Through Hormuz but Through the Electrification of EverythingCommentary
Across Asia, China is better positioned to withstand energy shocks from the fallout of the Iran war. Its abundant coal capacity can ensure stability in the near term. Yet at the same time, the country’s energy transition away from coal will make it even less vulnerable during the next shock.
Damien Ma
- The Xi Doctrine Zeros in on “High-Quality Development” for China’s Economic FutureCommentary
In the latest Five-Year Plan, the Chinese president cements the shift to an innovation-driven economy over a consumption-driven one.
Damien Ma
- Malaysia’s Year as ASEAN Chair: Managing DisorderCommentary
Malaysia’s chairmanship sought to fend off short-term challenges while laying the groundwork for minimizing ASEAN’s longer-term exposure to external stresses.
Elina Noor
- When It Comes to Superpower Geopolitics, Malaysia Is Staunchly NonpartisanCommentary
For Malaysia, the conjunction that works is “and” not “or” when it comes to the United States and China.
Elina Noor
- Neither Comrade nor Ally: Decoding Vietnam’s First Army Drill with ChinaCommentary
In July 2025, Vietnam and China held their first joint army drill, a modest but symbolic move reflecting Hanoi’s strategic hedging amid U.S.–China rivalry.
Nguyễn Khắc Giang