Steven Pearlstein’s “Can American Capitalism Survive?”
In Broad Critique of Inequality in the United States, Pearlstein Proposes Systematic Change
In his book, Steven Pearlstein proposes a more egalitarian form of American capitalism.
March 30, 2019
Falcon rating: 5/5
Capitalism in the US isn’t working for ordinary people. The richest 10% of Americans have received almost all of the benefits of economic growth while living standards for the average household have stagnated. In response to this extreme inequality, critiques of capitalism are becoming more mainstream. Alexandria Ocasio-Cortez and Elizabeth Warren are proposing drastic changes to the core of American capitalism, and a growing group of authors have published books suggesting their own systemic changes as well. Among these authors is the longtime business journalist for The Washington Post, Steven Pearlstein.
In his book, Can American Capitalism Survive? Why Greed is Not Good, Opportunity is Not Equal, and Fairness Won’t Make Us Poor, Pearlstein proposes a broad vision of what a better capitalism could look like, examining the time period between 1945 and 1970 when capitalism worked for more people. His argument and proposals are part of a refreshing intellectual and political movement that is moving beyond simply complaining about inequality to proposing changes that could fundamentally alter the system and make the US a more equitable place.
Pearlstein’s broader argument centers on challenging the mentalities that have caused capitalism in America to become so morally offensive: that high taxes hinder growth (supply-side economics), that the sole purpose of a business is to maximize profits for its shareholders, and that moral concerns about capitalism are naive and counterproductive, as the market is inherently just. He argues that the reason why inequality has increased so dramatically in the past few decades is because Americans have lost the balance between “selfish individualism” and “cooperative altruism.” There has been a steep decline in social capital, and companies no longer see themselves as being responsible to their customers, their workers, or their host countries in addition to their shareholders. To create a more egalitarian capitalism, Pearlstein argues that we need to embrace a somewhat more communitarian and reciprocal society.
The most exciting part of the book is the last chapter, “A Better Capitalism,” where Pearlstein proposes a series of policies to make capitalism work as it did between 1945 and 1970. His proposals range from implementing profit-sharing for all employees to creating school districts that put kids of different socioeconomic backgrounds together, to stronger antitrust law enforcement to creating a required year of national service in exchange for a guaranteed basic income. As I was reading this chapter, I was struck by the boldness of his proposals, as they would fundamentally change business and government in the US in a way that few people have been willing to call for.
One thing that Pearlstein does not do, however, is show how we can realize his ideas. In particular, I think political parties, think tanks, and other political organizing groups could play an important role in encouraging Americans to embrace these policies and to shift their mindsets to be less individualistic. These leaders could emphasize the period of time between WWII and 1970, when capitalism in the US was more focused on the common good and not just on individual success. This criticism aside, Can American Capitalism Survive is written in a journalistic, accessible way and is a must-read for anyone who has bemoaned inequality in the US or has doubts about the efficacy of American capitalism.
This piece also appears in our March 2019 print edition.
