The Benefits of Progressive Capitalism

February 1, 2025: Promising Answers to Political Ills

When eating ice cream, I tend to eat too much of it. Fortunately, after several bowls, I am satiated. I no longer want ice cream. This is not true with the rich and powerful. Despite their impressive accumulations of wealth and power, corporations and the wealthy continue to crave more. Not surprisingly,

Leaving the economic and political agenda to be set by the corporate interests has led to more concentration of economic and political power and it will continue to do so.¹

The rescue squad tasked with stopping this runaway train of wealth inequality are our politicians, who can write economic policies and social policies to reverse this destructive trend. Unfortunately, politicians see the side of the bread where the butter can be found and choose instead to accelerate the train. The coal politicians are shoveling into the train’s boilers is neoliberal economic policy. That is to say what we have heard politicians saying for 40 years, “We need to reduce regulations on business, lower taxes on business, and that will create jobs and help the economy.” As laudable as this sounds, neoliberal economic policies have undesirable side effects: slower growth, anemic tax revenues, runaway wealth inequality mirrored by the reduction of worker incomes. Deregulation has also contributed to pollution, tax dodging, climate change, and corporate monopolies. Partial corporate monopolies, also called excessive market power, in turn contribute to inflation. Worse yet, Economist Milton Friedman set forth the principle that corporate managers should focus solely on maximizing shareholder value. There’s no responsibility to consider workers, customers, the community or the environment. This is called shareholder capitalism, which is interwoven with neoliberal capitalism.

Shareholder capitalism may have succeeded in enriching the owners of firms, but it didn’t lead to shared societal prosperity.²

Why do we keep practicing neoliberal capitalism for 50 years, if it doesn’t work? Because corporations and the wealthy like it. Of course, they appreciate lower taxes and reduced government oversight, but that doesn't mean such policies are beneficial to society as a whole. As an alternative to neoliberal capitalism, Economist Joseph Stiglitz proposes progressive capitalism.

I want to discuss an alternative framework, progressive capitalism (or a rejuvenated social democracy), which puts the well-being of all citizens at its center and goes beyond material goods to incorporate a sense of security and freedom. It takes human flourishing as the objective of our economic and social system, which includes citizens leading meaningful and creative lives. Good health, education and a certain level of material well-being and security are necessary but not sufficient for this. We sometimes forget, but the economy is supposed to serve society, not the other way around. ³

It makes sense. People who are healthy, flourishing and realizing their potential are going to contribute the most to the economy. And the economy will be performing at its highest rate when its citizens are fully contributing. But what, exactly, is Joesph Stiglitz suggesting?

Government investments in infrastructure, research, education, and healthcare. These are things that are recommended to directly stimulate the economy.
Infrastructure: Safe roads, bridges, airports, and railways attract and facilitate business activities.

Research: Scientific and technological advancements increase our standard of living. Most scientific discoveries come from government research.

Education: Education helps people increase their incomes and fulfill their potential.

Healthcare: Keeping people healthy and vibrant has economic benefits, and benefits to people’s quality of life.
Not less DEI, but more. More social justice initiatives and more racial justice initiatives. People who have been cheated out of realizing their potential, due to their race or gender, are suffering a cruel injustice, and they are not contributing fully to the economy. Reciprocally, we need to start measuring economic output based on the flourishing of our citizens.
More federal corporate oversight and more corporate social responsibility. Capitalism works best when it has appropriate guardrails to avoid abuses and the financial scandals we have seen vividly over the past few decades. When corporations skimp on their taxes and underpay workers, they may be lining their pockets, but the impact on the economy is negative and significant.

It is refreshing and exciting to see that Joesph Stiglitz has practical, promising answers to our nation’s economic and political ills. I enthusiastically support and encourage his sensible and hopeful policy suggestions.