Is Capitalism in Crisis?
As we enter year five of the global economic recession, is it fair to say that capitalism is in crisis? What, if any, are the alternatives? A Nobel laureate and a federal judge weigh in.
What's the Latest Development?
Nobel laureate in economics and professor at the University of Chicago, Gary Becker does not agree that capitalism is in crisis. Rather, he says, government is in crisis. Despite the existence of regulatory agencies, banks and mortgage lenders ran amok. Now, says Becker, the government must double down on regulation, insisting that banks hold more cash as a buffer against future crises and that mortgage lenders require a larger down payment so that borrowers have more 'skin in the game'.
What's the Big Idea?
Jurist and U of Chicago lecturer, Richard Posner agrees with Becker but takes a wider view of the future of capitalism. He worries that the pace of technological advance will continue to aggravate wealth inequality, since technology concentrates wealth in the hands of those who own the technology, while workers replaced by machines lose their income. Posner thinks capitalism parallels the competition inherent in Darwinian biology and would lament government policy that, by leveling the playing field, would reduce the economy's efficiency.
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