Yes, capitalism is broken. To recover, liberals must eat humble pie

Richard Reeves in The Guardian:

Capitalism reigns. But capitalism is in trouble. Therein lies the paradox of our age. For the first time in human history, a single economic system spans the globe. Of course there are differences between capitalism Chinese-style, American-style and Swedish-style. Close up, these differences can seem significant. But viewed through a wider lens, the distinctions blur. As the economist Branco Milanovic writes in his new book, Capitalism Alone, “the entire globe now operates according to the same economic principles – production organized for profit using legally free wage labor and mostly privately owned capital, with decentralized coordination”. After the fall of Soviet communism in 1989, and China’s embrace of the market, crowned by the nation’s entry into the World Trade Organization in 2001, it seemed, for a brief flicker of human history, that the world was converging on a political economy of free markets in liberal democracies. As it turned out, markets spread, but without necessarily bringing more democracy or liberalism along with them.

Capitalism without democracy was assumed to be at most a passing phase. Eventually, so western liberal thinking went, China and other Asian nations adopting what Milanovic calls “political capitalism” – free markets, but authoritarian politics – would have to adopt liberal political institutions, too. But, so far, the liberalization thesis remains unproven. China has successfully adopted a market system – and, even more importantly, a market culture – without liberal democratic institutions.

More here.