Progressive capitalism

Progressive capitalism is an economic framework that seeks to restore balance between markets, the state, and civil society to address societal challenges. It emphasizes government intervention to regulate markets, invest in public goods like education and infrastructure, and curb the influence of large corporations. Progressive capitalism aims to reduce inequality, promote sustainable development, and foster a more equitable distribution of wealth and power in society. It has most notably been championed by economist New Keynesian Nobel-winning economist Joseph Stiglitz.

Definition

As defined by economist Joseph Stiglitz, progressive capitalism is a form of capitalism that advocates for a new social contract that rebalances the roles of the market, the state, and civil society, leveraging market forces and entrepreneurship to enhance societal wellbeing. It involves rewriting economic rules to address issues like market dominance, ensuring globalization benefits all citizens, and implementing government investments in technology, education, and green infrastructure, alongside public options for essential services. Stiglitz has also described progressive capitalism as "a better balance of government, markets, and civil society".

Progressive capitalism is often presented as an economic approach that is in the middle between socialism and neoliberal market fundamentalism. Stiglitz has stated that progressive capitalism responds to the debate between capitalism and socialism by emphasizing reforms within the capitalist system. It contrasts with traditional socialism, which historically advocated for extensive government control of the means of production, a concept even in Europe with less support today. According to economist Mark Cooper, free market fundamentalism emerges as the key opponent to progressive capitalism. While progressive capitalism advocates for policies to correct market abuses and achieve socially beneficial outcomes, free market fundamentalism rejects such interventions, arguing that markets will self-correct and that regulation and antitrust enforcement only hinder business. Proponents of free market fundamentalism believe minimal government interference will lead to overall public benefit, despite the potential for worsening existing problems. Stiglitz argues that market fundamentalists wrongly label progressive capitalism as socialism, whereas it is distinctly neither socialism nor market socialism.

History

Mark Cooper categorizes US economic periods into two main models: free market fundamentalism and progressive capitalism. Free market fundamentalism includes the Gilded Age (1869-1886), the Post-WWI Roar (1917-1932), and Neoliberalism (1980-2008). Progressive capitalism encompasses the New Deal (1933-1946) and the Golden Age (1947-1970), with transitional periods including the Progressive Era (1887-1916), the Crisis (1970-1979), and the Obama administration (2009-2015).

Using econometric analysis, progressive capitalism has been shown to outperform neoliberalism across key economic indicators. During the progressive capitalism era (1933-1972), GDP growth surged by 2.78%, compared to a modest 1.51% under neoliberalism (1980-2008). Productivity growth also favored progressive capitalism, showing an increase of 2.597% versus 0.837% for neoliberalism. Private investment levels were higher under progressive capitalism at 1.66%, while neoliberalism saw only 0.29%. Unemployment rates improved more under progressive capitalism, decreasing by 2.62%, compared to a reduction of 1.08% under neoliberalism.

Overview

Progressive capitalism principles include recognizing excessive corporate power as oppressive, viewing government as a check on private excess, understanding diverse methods for distributing economic benefits, valuing secure and well-paid workers as capitalism's consumers, and rejecting a trade-off between fairness and economic growth, with reduced inequality potentially fostering greater prosperity. A central tenet of progressive capitalism is its focus on enhancing overall well-being, going beyond GDP metrics to ensure that the benefits of societal progress are widely and fairly distributed among all citizens.

Stiglitz delineates four key priorities of progressive capitalism. Firstly, it involves restoring equilibrium among markets, the state, and civil society to tackle issues like economic stagnation, rising inequality, and environmental degradation through government regulation and investment. Secondly, recognizing the pivotal role of scientific inquiry and social cooperation in wealth generation, emphasizing the need for markets governed by the rule of law and democratic oversight. Thirdly, addressing the problem of concentrated market power, which contributes to inequality and stifles economic growth, by curbing the dominance of large corporations. Finally, progressive capitalism seeks to sever the nexus between economic and political influence, advocating for reforms to reduce the sway of money in politics and mitigate wealth inequality, ultimately fostering a fairer and more prosperous society.

Progressive capitalism aims to enhance America's prosperity by facilitating the expansion of individual opportunity instead of nurturing perpetual reliance on an excessively intrusive government. Aligned with progressive capitalism are societal aims such as prioritizing education from K-12 to adapt to the evolving economy, ensuring relief from college and student debt, and offering comprehensive support for families, including access to healthcare. It also involves implementing a fairer tax system, strengthening the social safety net, combating workplace discrimination, addressing housing segregation and affordability, revitalizing national infrastructure, and fostering economic growth in stagnant communities where relocation is challenging.

Stiglitz has emphasized that progressive capitalism is not "anti-market," Progressive capitalism embraces markets while recognizing the necessity of diverse institutions including government, civil society, and non-profit entities like universities. It emphasizes that a thriving economy requires a balanced approach, integrating these various elements effectively. Progressive capitalism underscores the importance of corporations, small businesses, and profit-making firms, while also advocating for a robust array of institutions, particularly government involvement in regulation and investment. The framework advocates for regulation and antitrust measures to ensure competition, countering neoliberal claims that such policies are unnecessary. Evidence shows that under progressive capitalism, the financial sector operates more efficiently and competitively, addressing market power issues and outperforming neoliberalism in reducing market abuses and enhancing performance.

The Brandeis-Stiglitz model of progressive capitalism posits that capitalism thrives when it equally supports capital—through profit linked to investment—and labor—through productivity linked to wages. Evidence of this effectiveness includes high economic growth, low unemployment, and reduced inequality. This success is achieved by balancing benefits between capital and labor and and implementing socially determined redistribution of surplus to address market-produced inequalities. A strong entrepreneurial state plays a vital role by supporting capital with high-risk projects, infrastructure, and creating new markets, and aiding labor through education, skill training, childcare and housing.

Progressive capitalism reimagines the social contract between voters, elected officials, workers, and corporations, aiming to address disparities. Stiglitz advocates for expanding public options in critical areas currently dominated by private entities or lacking sufficient provision. He highlights the missed opportunity of not including a public option in Obamacare, which could have increased choices and competition, ultimately lowering costs. By implementing such measures across sectors like retirement and mortgages, he envisions restoring a middle-class standard of living for most Americans.

In the Brandeis-Stiglitz model of progressive capitalism, the banking and finance sectors are crucial. Brandeis and Stiglitz criticize the harmful effects of finance capital when banks exceed their roles, such as by engaging in management or complex tasks beyond assessing and holding loans, leading to conflicts of interest and inefficiencies. This model also seeks to address contemporary challenges in the digital communications sector by applying foundational principles similar to those that guided the success of the second industrial revolution in America. It advocates for creating regulatory frameworks and guidance that foster competition and innovation within decentralized markets while furthering the broadly applied economic, social, and political views of society. It emphasizes the need for adaptable and expert-driven policy implementation to reflect the dynamic nature of the economy and calls for democratic and participatory political processes to support evolving economic structures.

Progressive capitalism is currently being popularized by American congress member Ro Khanna, who believes free enterprise rewards hard work and innovation and is not just for the privileged and connected few. Progressive capitalists believe that a partnership among the private business sector, federal government and research universities fuels growth and that strategic investments will increase both the demand and supply of well-paying jobs in the 21st century. The partnership generates new technology and builds the launch pads for new and growing businesses.

Criticism

Economist Max B. Sawicky critiques Joseph Stiglitz’s progressive capitalism for its focus on incremental reforms rather than addressing fundamental market issues. While Stiglitz's proposals, like enhanced Social Security and public mortgage options, aim to improve existing systems and reduce exploitation, Sawicky argues they do not confront the deeper structural problems of capitalism. He suggests that Stiglitz’s approach remains within social-democratic reform and overlooks the potential for more radical solutions, such as social ownership and comprehensive economic planning, which he believes could more effectively address systemic issues and leverage public sector capabilities.

The World Socialist Web Site criticizes the concept of "progressive capitalism," arguing it as a deceptive framework propagated by figures like Joseph Stiglitz, who contend that it can mitigate inequality and enhance societal well-being through government interventions like taxation and regulation. The WSWS dismisses this as a false narrative, asserting that such reforms are incapable of addressing the inherent contradictions and exploitative nature of capitalism. They argue that historical and economic realities demonstrate capitalism's dependence on profit accumulation at the expense of working-class interests, despite temporary reforms. The WSWS advocates for a socialist revolution as the only viable solution to fundamentally transform society and empower the working class against entrenched financial oligarchies.

See also

• Binary economics
• Community capitalism
• Corporate social responsibility
• Creating shared value
• Humanistic capitalism
• Inclusive capitalism
• Inclusive growth
• Neo-Capitalism
• Redwashing
• Green capitalism
• Pink capitalism
• Purple capitalism