Global Thinkers: Martin Wolf 'A Crisis of Capitalism'
On 15 May, we welcomed Martin Wolf, Chief Economics Commentator of the Financial Times, to King’s Business School to deliver a speech answering the question “Is there a crisis of Capitalism’, the first in our ‘Global Thinkers’ Seminar Series. Global Thinkers is a new platform at King’s Business School. We will use it to showcase fascinating insights from eminent thinkers in business, society, policy and more.
Introduced by the Dean of the Business School, Professor Stephen Bach highlighted that alongside his long and accomplished career at the World Bank and financial journalism, Martin Wolf’s father had spent much of career working at Bush House, the new home of King’s Business School.
Wolf started by highlighting the triumphs of capitalism, citing open trade, overall reduction in global poverty, Asia's increased share of global GDP, global income distribution, and the rise of democracies.
Wolf then moved onto some of the failures of capitalism. In particular, Wolf highlighted the lost decade of US productivity (2004-14) and the rise of UK and US wealth inequality. Wolf also spoke about “secular stagnation”, stating that despite low interest rates housing markets have experienced no hyperinflation - "Not since the 1930s have we seen such a long period of real household income stagnation - 80% of US households and 70% of UK households, between 2005 and 2014". The UK and US also had the highest levels of fiscal tightening owing to their exceptional structural fiscal deficit and the contribution of financial services to their GDP. Finally, he highlighted the impact of these failures of capitalism on the political landscape of countries like the US, UK and Italy. Wolf explained that systemic failures in capitalism result in voters viewing the establishment as being incompetent at best, and crooked at worst. As a result, politicians will appeal to their need for a solution with brutal and simple solutions – resulting in outcomes like Brexit and the election of Donald Trump in the US.
“There is no doubt that one of the major contributing factors has been a significant change as a result of globalisation - the proportion of the population that is foreign-born” highlighted Wolf. “The political salience of this has been very big; countries like the UK and US have chosen policies that will make their economic fate worse”.
In summary, Wolf explained that whilst all this possess tremendous challenges, the answer may lie in the creation of supra-national regimes being underpinned by domestic, economic and political reforms that meet – and especially recognise - the need for global cooperation.
The Q&A that followed raised some interesting points about the relationship between low migration and consistent deflation in Japan, and the air-time provided to critics of capitalism over proponents of it.
The conversation continued at a drinks reception following the Q&A, launching the Global Thinkers series with aplomb.
Watch Martin Wolf’s talk on ‘The Crisis of Capitalism’
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