Progressive Capitalism: An Enabler of 21st Century Economic System?
If studied, understood, and applied correctly, progressive capitalism holds the potential to transform the way we approach our economic and political policies.
If I were to build a new nation from scratch at this moment, what would be my first considerations? Before delving into the complexities of the population, the nation’s geographical location, or the available natural resources, I would first focus on determining the economic and social systems. These systems would guide my choices and decisions regarding the population and infrastructure.
Many contemporary thinkers tend to limit themselves to two primary economic structures: capitalism and socialism. Communism, like the other two, has experienced periods of rise and fall. Today, many countries adopt a mix of capitalism and socialism, rarely committing entirely to one system. However, there is another structure that I believe holds the potential to transform national progress: progressive capitalism.
I am particularly influenced by Joseph Stiglitz’s (winner of the Nobel Prize in Economics for the year 2001) concept of progressive capitalism. This approach strikes a balance between the extremes of capitalism and socialism, promising a future that mitigates the selfishness often associated with modern capitalism. To quote him;
Progressive capitalism could be an alternative to neo-liberal capitalism (Joseph Stiglitz, LSE Public events 2024)
Progressive Capitalism incorporates the three defining beliefs of progressive thinking; which are the crucial role of institutions, the need for the state to be involved in their design to resolve conflicting interests, and the use of social justice as an important measure of a country’s economic performance (Lord Sainsbury, LSE, Public events 2013).
While it advocates a mixed approach, it fundamentally relies on capitalism as a means to achieve broad-based prosperity. It is not just about applauding the profit-making belief of a pure capitalist structure but rather putting that to use to bring equity. All forms of inequality in society are interconnected, so addressing one requires serious action on the others as well. This structure equally recognizes the role of government intervention and regulation, which is necessary for a society to progress.
A classic example of what progressive capitalism can achieve is seen in the concept of positive externalities. Market failures are often not adequately addressed by the “invisible hand” of the market, which is supposed to correct itself over time. However, positive externalities can be actively leveraged to bring about socialist prosperity. This concept doesn’t apply to all market goods, but with the help of different branches of economics, it can effectively be used to understand and improve the relationship between governments and markets. This kind of system emphasizes that wealth creation is just as important as job creation in the 21st-century economic society.
Much more research, discussion, debate, and agreement are needed to fully develop this new economic system, but for now, it is a promising candidate for solving modern societal problems while maintaining a welfare-oriented essence.
