Pranab Bardhan in Boston Review:
Martin Wolf is one of the most influential economic journalists in the world today, and he is unhappy—to use his frequent metaphor in his new book, The Crisis of Democratic Capitalism—that the traditional marriage between capitalism and democracy in rich countries is on the rocks.
Wolf thinks that “democratic capitalism” is the best system for fostering general welfare. But it has begun to fray, he argues, because capitalism has not been productive enough for high growth, and widening inequality has generated widespread misery and distrust in the basic institutions of liberal democracy. While plutocrats hoard wealth and dismantle policies meant to promote inclusive prosperity, a segment of the middle and working classes have revolted by embracing ethno-nationalist demagogues with seductive but ultimately vacuous promises, who in turn are destroying due process and political rights. Wolf thinks that restoring a general sense of citizenship, with shared interest and loyalty to the common good, is the only way out, but he is not very hopeful that the United States will remain democratic by the end of this decade.
There are valuable lessons to be drawn from Wolf’s rich and nuanced analysis, but overall the book has some serious weaknesses in both diagnosis and prescription. He tends to underemphasize the cultural factors fueling the rise of right-wing populism, and his proposals for reform are too timidly and thinly conceived. Along with economic precarity, it is cultural status anxiety and resentment that may best explain the embrace of anti-democratic figures in high-income countries. This is not a reason to condone economic inequality—on the contrary, we should do far more than Wolf proposes to combat it—but it is a reason to doubt that democracy will be saved so long as capitalism prospers and economic gains are somewhat more equitably distributed.
More here.