CAN AMERICAN CAPITALISM SURVIVE?

Pulitzer Prize–winning Washington Post economics journalist Pearlstein examines our dominant economic system and finds it sorely wanting.

It is a foundational myth that anyone with a good idea and a strong will can make it in America, that one generation will do better than the next. If that were ever true, writes the author, then it is true no longer, not given the evolution of our peculiar form of capitalism with American characteristics, a spectacularly dog-eat-dog system. “The only thing exceptional about America,” he writes, “is that it is now less mobile than many other societies with long histories of rigid social and class structures.” Thomas Piketty has already told us as much, but not in prose so crisp and accessible. Pearlstein traces that evolution to the convergence of three related axioms 30-odd years ago: the notion that government is the problem and not the solution; that corporations have no responsibility other than increasing their shareholders’ wealth; and that morality doesn’t really enter into questions of the purse, “no matter how unequal the distribution of income and wealth might become.” These three ideas have yielded a scenario in which Republicans are now abandoning long-nurtured ideals of a balanced budget and investment in public goods in favor of a no-tax, laissez-faire economics in which the big ones eat the little ones. Pearlstein explodes supply-side assumptions, showing that present inequalities are yielding stagnation—why work when you can’t get ahead, as is the case for most workers today? Instead, he notes, studies have shown that the most productive economy balances egalitarian and meritocratic reward systems: Everyone shares to some extent, with incentives for those who do more. The author closes by proposing numerous systemic reforms, including profit-sharing, renewed antitrust legislation and enforcement, and limiting special-interest money in politics, all with an eye to "replenishing our stock of social capital.”

A provocative pulse-reading, the answer to whose title is probably yes—but at what cost?