Ruchir Sharma, chair of Rockefeller International, has voiced concerns about the current state of capitalism, describing it as being in crisis. In his recent article for the Financial Times, Sharma points out that overactive government intervention is exacerbating the inherent flaws of modern capitalism, leading to slower economic growth and increasingly unequal wealth distribution.
Sharma argues that the foundational premise of capitalism—that limited government is essential for individual liberty and opportunity—has been neglected for decades. He emphasizes the need for a level playing field where small and emerging businesses can compete with established giants, a balance that is currently disrupted as industries become more concentrated.
The investor highlights that the mobility within the U.S. workforce has significantly declined since before 1980. Back then, Americans were twice as likely to move between states and 25% more likely to switch jobs within the same industry compared to today. This stagnation contributes to the reliance of many U.S. towns and counties on a single major employer, creating economic vulnerability.
Income inequality has been on the rise, a trend Sharma notes is now driven less by the disparities in executive compensation and more by the dominance of superstar companies like Google. These firms pay their employees significantly more than their counterparts in weaker companies, widening the economic gap.
Sharma also draws comparisons with Europe, where increased state intervention has led to slower productivity growth and stagnant average incomes. He suggests that the United States may be following a similar path under President Joe Biden, with rising deficits and debt outpacing those of its global peers. Sharma criticizes current policymakers for adhering to outdated strategies of rescue, regulation, and increased spending, which he believes will continue to benefit markets and billionaires rather than society as a whole.
As capitalism faces these challenges, Sharma’s insights call for a reevaluation of governmental roles and a renewed focus on creating opportunities for equitable economic growth.
Reference(s):
Rockefeller International chair Sharma: capitalism is in crisis
cgtn.com
