A better form of capitalism is possible


The quiet of the Christmas holiday period is a moment to remember how the Nativity story describes the family of Jesus: sent on the road by absurd administrative rules, left without accommodation, and going into labour in undignified conditions. We might note how well their precariousness could also describe an underclass in the wealthiest societies humanity has ever known.

The pandemic has shone a harsh light on the vulnerable parts of rich countries’ labour markets. Most of us depend — at times literally for our lives — on people stocking shelves, delivering food, cleaning hospitals, caring for the old and infirm. Yet many of these unsung heroes are underpaid, overworked, and suffer unpredictable work opportunities and insecurity while on the job. A neologism coined to describe them — the “precariat” — is apt.

Over the past four decades, work has failed to secure stable and adequate incomes for growing numbers of people. This shows up in stagnant wages, erratic incomes, non-existent financial buffers for emergencies, low job security and brutalised working conditions — to the point of such grotesque episodes as the woman giving birth in a toilet cubicle for fear of missing a shift. Many suffer a rising risk of homelessness and epidemics of drug and alcohol-related diseases. Benefit systems can help — but can also trap already vulnerable people in labyrinthine administrative Catch-22s.

This is a problem of longstanding, but it intensified sharply in 2020. Most jobs in the precariat require physical presence for manual service work, leaving workers more exposed both to coronavirus contagion and to income loss from lockdowns.

It is a moral imperative to help the neediest. But lifting people out of economic precariousness is also greatly in the self-interest of the better off.

Groups left behind by economic change are increasingly concluding that those in charge do not care about their predicament — or worse, have rigged the economy for their own benefit against those on the margins. Slowly but surely, that is putting capitalism and democracy in tension with one another.

Since the global financial crisis, this sense of betrayal has fuelled a political backlash against globalisation and the institutions of liberal democracy. Rightwing populism may thrive on this backlash while leaving capitalist markets in place. But as it cannot deliver on its promises to the economically frustrated, it is just a matter of time before the pitchforks come out for capitalism itself, and for the wealth of those who benefit from it. As Franklin Roosevelt, John Maynard Keynes, and other founders of the postwar order realised as early as the 1930s, capitalism’s political acceptability requires its adherents to polish off its rougher edges.

It is not just that the better off have the most to lose if continued economic polarisation leads to a rejection of capitalism. They also have much to gain from addressing it. The epidemic of low-paid, insecure jobs reflects a failure to spread the most advanced production methods from the economy’s frontier to its hinterland. The very existence of a precariat proves that resources — human, physical, and organisational — are being wasted. A polarised economy is not just unfair, but inefficient.

The winds are changing. Politicians from Joe Biden to Boris Johnson have mandates to “build back better”; the guardians of economic orthodoxy have jettisoned the view that inequality is the price of growth. Capitalism can be made to secure dignity to all; the alternatives are worse for everyone.


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