During the winter term, we will focus on visions of the world economy and the role of economics. The Backhouse and Bateman book puts these topics in sharp relief. This discussion continues questions raised by Schumpeter, Hayek, Keynes and many others. In a recent Project Syndicate article, Kenneth Rogoff, co-author of This Time is Different, argues that some version of capitalism will continue to exist because there are few viable alternatives. Furthermore, he argues that European welfare state versions and the Chinese authoritarian version have yet to prove their sustainability. Of course, the contemporary version of capitalism will need to make some serious adjustments to be sustainable. Rogoff posits the following:
In principle, none of capitalism’s problems is insurmountable, and economists have offered a variety of market-based solutions. A high global price for carbon would induce firms and individuals to internalize the cost of their polluting activities. Tax systems can be designed to provide a greater measure of redistribution of income without necessarily involving crippling distortions, by minimizing non-transparent tax expenditures and keeping marginal rates low. Effective pricing of health care, including the pricing of waiting times, could encourage a better balance between equality and efficiency. Financial systems could be better regulated, with stricter attention to excessive accumulations of debt.