Martin Wolf in the Financial Times:
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Democracy is egalitarian. Capitalism is inegalitarian, at least in terms of outcomes. If the economy flounders, the majority might choose authoritarianism, as in the 1930s. If economic outcomes become too unequal, the rich might turn democracy into plutocracy.
Historically, the rise of capitalism and the pressure for an ever- broader suffrage went together. This is why the richest countries are liberal democracies with, more or less, capitalist economies. Widely shared increases in real incomes played a vital part in legitimising capitalism and stabilising democracy. Today, however, capitalism is finding it far more difficult to generate such improvements in prosperity. On the contrary, the evidence is of growing inequality and slowing productivity growth. This poisonous brew makes democracy intolerant and capitalism illegitimate.
Today’s capitalism is global. This, too, can be regarded as natural. Left to themselves, capitalists will not limit their activities to any given jurisdiction. If opportunities are global so, too, will be their activities. So, as a result, are economic organisations, particularly big companies.
Yet, as Professor Dani Rodrik of Harvard University has noted, globalisation constrains national autonomy. He writes that “democracy, national sovereignty and global economic integration are mutually incompatible: we can combine any two of the three but never have all three simultaneously and in full”.