Capitalism 2.0 requires more social capital and trust in government
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London — If you think long and hard about the climate crisis, you may (a) get depressed and (b) agree with many activists who say the only solution to the problem is overthrowing capitalism. Or you may conclude, as Andrew McAfee does, that we don’t have the right kind of capitalism.
In his book More From Less: The Surprising Story of How We Learned to Prosper Using Fewer Resources — and What Happens Next, McAfee, a principal research scientist at the Massachusetts Institute of Technology, focuses on digital transformation and makes a case for the “four horsemen of the optimist” — capitalism, technological progress, public awareness and responsive government.
He doesn’t deny the problems of environmental degradation and growing inequality or the harms caused in the past by colonialism, but says they have come about because we’ve let one of these horsemen overpower the others.
It is in capitalism’s nature to increase inequality, McAfee believes, and it is a responsive government’s job to rein in that excess. Similarly, capitalists are incentivised to shape regulations to maximise their profits, but it is the job of the government to ensure a fair playing field for all. (McAfee uses mostly US data to make these arguments, though he strongly believes that the four horsemen theory could also help developing countries tackle the climate crisis.)
Ultimately, McAfee argues that the system we have today shouldn’t be replaced, but that it can be made better. Capitalism is running wild because capitalists have hobbled democracy, he says. Overcoming those challenges is going to require big changes, but perhaps not the extremes suggested by some who want to overthrow the system and start with something new — especially when the clock is running out on how quickly the world needs to cut emissions.
One place to start, McAfee suggests, is to increase the social capital that’s been depleted in many countries. Sociologist Robert Putnam defines social capital as “connections among individuals, social networks and the norms of reciprocity and trustworthiness that arise from them”.
In the early 1970s, about 60% of Americans said “most people can be trusted”. By 2010 only about 20% agreed, according to a report from the International Monetary Fund.
The value of social capital is not always easy to measure, but shows up in lowering what economists call “the cost of transactions”, said Dimitri Zenghelis, a researcher at the Grantham Research Institute on ...
In his book More From Less: The Surprising Story of How We Learned to Prosper Using Fewer Resources — and What Happens Next, McAfee, a principal research scientist at the Massachusetts Institute of Technology, focuses on digital transformation and makes a case for the “four horsemen of the optimist” — capitalism, technological progress, public awareness and responsive government.
He doesn’t deny the problems of environmental degradation and growing inequality or the harms caused in the past by colonialism, but says they have come about because we’ve let one of these horsemen overpower the others.
It is in capitalism’s nature to increase inequality, McAfee believes, and it is a responsive government’s job to rein in that excess. Similarly, capitalists are incentivised to shape regulations to maximise their profits, but it is the job of the government to ensure a fair playing field for all. (McAfee uses mostly US data to make these arguments, though he strongly believes that the four horsemen theory could also help developing countries tackle the climate crisis.)
Ultimately, McAfee argues that the system we have today shouldn’t be replaced, but that it can be made better. Capitalism is running wild because capitalists have hobbled democracy, he says. Overcoming those challenges is going to require big changes, but perhaps not the extremes suggested by some who want to overthrow the system and start with something new — especially when the clock is running out on how quickly the world needs to cut emissions.
One place to start, McAfee suggests, is to increase the social capital that’s been depleted in many countries. Sociologist Robert Putnam defines social capital as “connections among individuals, social networks and the norms of reciprocity and trustworthiness that arise from them”.
In the early 1970s, about 60% of Americans said “most people can be trusted”. By 2010 only about 20% agreed, according to a report from the International Monetary Fund.
The value of social capital is not always easy to measure, but shows up in lowering what economists call “the cost of transactions”, said Dimitri Zenghelis, a researcher at the Grantham Research Institute on ...