As part of the Legatum Institute's 'Morality and Capitalism' series, commentator, educator and George Mason University professor, Steven Pearlstein, shared his views on why it may be necessary to re-examine the concept of capitalism and markets.
Earlier this year, Professor Pearlstein stirred debate and discussion with a Washington Post commentary piece entitled “Is Capitalism Moral?”.
While establishing that socialism and communism have been thoroughly discredited since the Cold War, he indicates that stagnant incomes, growing economic inequality, and the recent financial crisis is beginning to force us all to re-examine the functioning of capitalism and markets.
As part of the Legatum Institute's 'Morality and Capitalism' series, Pearlstein discussed his views on the current financial and political stagnation we face globally, offering many original and thought-provoking insights into how to move forward. He was critical of the current policy prescriptions being offered on both the left and the right in the United States and Europe as being insufficient and backward-looking. The left, he explained, were too quick to point to old ideas regarding redistributive social policy as a solution to growing income inequalities, without reference to how much money would be required and where revenues could be responsibly raised from. He was equally critical of those on the right that insist markets can fully and fairly solve all aspects of economic inequality, without regard to the culture and values that shape markets.
Pearlstein reminded us of how much corporate conduct has altered in an increasingly globalized and competitive economic environment, with increasingly short-term thinking, focus on quick profits, and a loss of stewardship amongst industry leaders. Perhaps most interestingly, he pointed to how ideas of stewardship, shared enterprise and reward, and ultimately trust have eroded since the 1950s and 60s in business culture. This, according to Pearlstein, endangers social capital, and proves counter-productive to innovation and growth by creating a business and social environment where workers, entrepreneurs, and citizens cannot trust one another. While not giving specific policy prescriptions, he helped to identify complex values that create the trust and social cohesion that make a free market economy possible, and helped to shift our thinking in a new direction.
The discussion was hosted by Legatum Institute Senior Programme Director and Fellow, Zachary Courser.
About the Speaker
Steven Pearlstein joined the GMU faculty as Robinson Professor of Public and International Affairs in the fall of 2011, and is a business and economics columnist for the Washington Post. He joined the Post in 1988 as deputy business editor, and has been defense industry reporter, economic correspondent and Canadian correspondent. Professor Pearlstein was awarded the Gerald R. Loeb Award for commentary in 2007 and the Pulitzer Prize for commentary in 2008 for columns the previous year anticipating and explaining the recent financial crisis and global economic downturn. In 2011 he won the Gerald R. Loeb Award for lifetime achievement in business and financial journalism.
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