Torben Iversen and David Soskice: Democracy and prosperity: reinventing capitalism through a turbulent century
Are modern doctors Pangloss right?
First, the internationalization of economies and the high capital mobility have caused a reduction in the bargaining power of labor and they are the source of an open conflict between capitalism, national sovereignty and democracy (Rodrik 2012).
Second, the fact that the rate of return on capital is now far superior to the growth rate implies a widening of income inequality in favor of a new class of rentiers (Piketty 2014).
Third, these two processes mean an emerging open conflict between economic dynamism and social justice, finally between a transnational capitalism and the political legitimacy of democratic principles, mainly organized at the National State level (Streeck 2017).
An alternative paradigm for the political economy of contemporary capitalism
JEL ClassificationA13 I25 O11 O33 P16
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