Abstract
This chapter observes that there is ample evidence of malfeasance both in finance and in the corporate sector of most capitalist economies in the world. Behavioural traits such as greed and hubris in finance are to the detriment of sustainable long-term growth. Another unwelcome development has been a reduction in the share of rewards going to labour in the distribution of added value by corporations in capitalist countries and these trends have aggravated the problem of inequality in many countries. In future, disruptive technology is likely to make these problems much worse and add both to social problems and to the uncertainties being generated by phenomena such as climate change. Senior managers of enterprises in financial services will have to confront a daunting array of issues in their work if they are to meaningfully support sustainable economic development.
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Notes
- 1.
By applying Samuelson’s factor price equalization theorem, it is possible to visualize how each factor of production would be compensated in conditions of perfect competition.
- 2.
In 2016, the incomes of 95% of US households were lower than in 2007. In the UK, real wages had fallen by 6% between 2009 and 2014.
- 3.
Eric Hobsbawm compared the 2007/08 financial crisis to the fall of the Berlin Wall in 1989.
- 4.
The experience of the UK with respect to the privatized and non-privatized water companies is particularly apt. Since privatization prices have gone up the most in the privatized companies as have complaints from the public.
- 5.
The Chinese call their economic model either ‘socialism with Chinese characteristics’ or a ‘socialist market economy’.
- 6.
The World Bank has estimated that the poverty rate fell from 85 to 15% between 1980 and 2005, equivalent to 600 million people, an achievement generally regarded as being without parallel in human history.
- 7.
See Jonathan Haskell and Stian Westlake’s Capitalism without Capital.
- 8.
And the future in which robots and AI are going to take over many tasks performed by humans is daunting.
Reference
Miller, S. M., & Upadhyay, M. P. (2000, December). The Effects of Openness, Trade Orientation and Human Capital on Total Factor Productivity. Journal of Development Economics, 63, 399–423.
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Ahmed, S. (2018). Financial Services and the Crisis of Capitalism. In: Ruling or Serving Society?. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-00521-4_4
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DOI: https://doi.org/10.1007/978-3-030-00521-4_4
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