Reforming Capitalism?

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Theresa May wants to reform capitalism.

Despite May having not yet explicitly outlined her plans to reform capitalism, it is not a surprise that this is on the prime minister’s agenda.  With the rise of a shared economy due to technological advances, and the breadth of inequality that has stemmed from a widening income gap, capitalism is far from perfect.

Under a capitalist market we have seen inequality sky-rocket. French economist, Thomas Piketty, explains how the rate of return for owned capital is exceeding overall economic growth, meaning that the top 1% are accumulating wealth faster than the economy is producing it. This has led to people both at the bottom and middle of income distribution to fall behind. However, this is unsustainable. Research at the International Monetary Fund (IMF) shows that income inequality is slowing growth and the Organisation of Economic Cooperation and Development (OECD) has predicted suppressed growth for the next 50 years. Findings similar to these have become increasingly apparent over the past few years, forcing governments all over the globe to implement draconian austerity measures in attempts to recover the economy.

But, austerity is not working either: it has arguably done more harm than good by starving the welfare state at a time when people are most desperate for security. All across the globe, the people’s anger has been accumulating and they feel as though they have been ignored for too long. So, when given the opportunity it seems as though they have used democracy to try and dismantle the economic ecosystem that they feel has kicked them to the ground. This is why we are seeing the surge in anti-establishment politicians: Donald Trump, Marine Le Pen, Jeremy Corbyn and Bernie Sanders have all gained traction and power in the last year. Even though there is not a single, unifying explanation for their rise to power, it seems clear that voters are tired of the abundant inequalities within the current economic system and are using their votes to protest against it.

The rise of the shared economy is another challenge to capitalism. Technological advances have not only made transactions and trading cheaper, quicker, and thus more far-reaching, but they have also changed the dynamics of trading. This post-capitalist economic system has it’s own currency too; one not based on money, but instead free time, and free products.

An example of the biggest change brought about by the surge in technology is the increased availability of data and information about people and products that are free of charge. Wikipedia is one of the most notable information products: created by a huge sum of volunteers and easily edited by anyone with internet access. This ‘peer production’ has rapidly begun to dismantle key capitalistic industries. Wikipedia in particular has deprived the publishing and encyclopedia industries.

Companies like Uber and Airbnb have also utilised free information. They use data found on the internet to match up producers to consumers, and use online billing and banking services to make payments online much quicker. The economist Rachel Botsman suggests that this ‘collaborative consumption’ benefits all parties involved equally; as producers make money from renting out their underused products, and customers no longer need to purchase expensive products that they will likely only use once.

However, the rise in this alternative model has been met with a backlash,  as seen earlier this year when licensed taxi drivers began protesting in London and Paris over the unfair advantages Uber taxi drivers had due to a lack of enforced regulations within the Uber company.

In short, people’s dissatisfaction with capitalism has led to the development of alternative economic models. So, perhaps we don’t need Theresa May to reform capitalism; we just need her to manage the rapid changes already taking place.

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