Power, Control, Inequality, and Democracy in the Twenty-First Century

It is a signal honor—indeed, something so precious as to be almost terrifying—to be asked to deliver a lecture in memory of Robert Heilbroner. Like so many of my generation, his book The Worldly Philosophers served as one of my first introductions to the ideas of economics and, since then, my reading of his many (always pithy and elegant but also profound and incisive) works has remained essential to my own education and understanding. I cannot claim to approach anything like the long historical sweep, wide breadth, and great depth of his analysis. But his example has inspired me to be ambitious, if only in terms of the questions to ask, and I can only hope that my attempt at the answers provides some marginal insights.

My questions are: What is the nature of the capitalism we are experiencing today, and how does it relate to democracy? How much of this can be traced to purely market forces, and how do these interact with power?

It is not generally considered effective to provide the punchline first, but even so, let me outline my basic answer in broad strokes. I believe that capitalism relies on—and has always relied on—the state. Yet, it is fundamentally antithetical to democracy, understood broadly not just as electoral majoritarianism but as the ability of the people in general to express themselves freely and have a voice in all decisions in which they have a stake. This is an evolutionary process in which the very logic of capitalism undermines democracy. So substantive democracy can only survive in any meaningful sense to the extent that it successfully controls and regulates capitalist processes in the larger social interest.

Such control and regulation have become much more difficult now because the combination of monopoly power with state actions and control increasingly generates vast economic rents for a tiny but privileged and powerful section of large capital. In consequence, capitalism has mutated into a form in which the drive for appropriating economic rents dominates over the pursuit of profits per se, which has generally been seen as the driving force of capitalism. This process has many expressions and implications, which I will try to elaborate further in this lecture. It leads to rising inequality, stagnating investment and innovation, sluggish growth, and the erosion of democratic rights, with associated social polarization.

This perspective suggests that the legal and regulatory processes of states are absolutely central to the development and unfolding of capitalism, which is not and has never been about only “free markets.” Rather, as Katharina Pistor has argued, it is essentially through legal codes that capitalism came to exist at all, and it has evolved over time in different locations and internationally as legal codes have changed.¹ In our times, this means that it is wrong to see neoliberalism as constituting a “withdrawal of the state” from economic activity; rather, the role of the state remains central, just as it has been in every historical phase of capitalism. So, while capital—and therefore capitalism—has always existed because of the state, there are stages of this interaction: from private capital being enabled by the state since its inception, to the state becoming responsible for shoring up profits in the monopoly phase, to the state being captured in the Age of Finance.

Let us consider the defining features of capitalism. It is generally recognized to be an economic system based on markets for goods, services, and labor, in which workers typically do not own the means of production and economic activity is driven by the profit motive of the owners of capital. Commodification and commercialization and profit orientation are seen to be the basic features. As Heilbroner pointed out exactly forty years ago, the single most important element in capitalism is “the driving need to extract wealth from the productive activities of society, in the form of capital.” Extraction of surplus by itself is obviously not specific to capitalism; rather, what is specific is “the use of wealth, in various concrete forms, not as an end in itself but as a means for gathering more wealth.”² Capital is not a material thing but a process of accumulation that uses material things as moments in its continuously dynamic existence.

Yet, none of this would be possible without the ability to attribute wealth to particular owners through the recognition and enforcement of private property: the right to claim ownership of assets and to exchange or sell them and keep the proceeds of such transactions. This is, obviously, critically dependent upon the state. So, capitalism cannot exist without the state, from its very origins and throughout its evolution. Therefore, the state is ever-present, not only in the legal codes but also in the entire framework, regulations, institutions, and mechanisms for recognizing and enforcing private property.

But the state can and does do much more than simply provide the preconditions for capitalist market economies to function. It can set the terms and conditions of production, exchange, profitability, and accumulation in all activities, as well as for human labor when it is exchanged. It can create new commodities to be exchanged and profited from, which need not be material at all, but exist as “financial claims” of various kinds, or “intellectual property,” or “cyberspace.” Changing terms of extraction and exchange, as well as defining new forms of property, thereby enable even more enrichment of those who hold wealth.

Many analysts, from Karl Marx to Heilbroner himself, have noted that there is an inherent tendency toward greater concentration and centralization within and across capitalist markets, and that in turn brings in other aspects of the relationship between capital and the state. The processes of accumulation and concentration mean that “capital, which arises within the state and which exists originally only at the pleasure of the state, becomes increasingly capable of defying or of existing ‘above’ the state.”³ My focus here is not necessarily on the internationalization of capital, which obviously is a central modality of this process of existing above the state, but on the ability of large capital to influence state actions and affect and determine the laws and regulations that add to its expansion. Wealth brings power, particularly power over the decisions of states, and this intermingling of economic and regulatory power has been the catalyst for the rent-mutated capitalism that we now experience.

The significance of regulation of capitalist economies has been extensively discussed by the French “Regulation School.”⁴ This approach goes beyond the role of governments in regulation, and is more about the set of institutional frameworks that stabilize and manage capitalist economies, seeing capitalist economies essentially as a function of social and institutional systems. This in turn recognizes different “regimes of accumulation” that emerge as a result of various modes of regulation. This is perfectly compatible with the idea that I present here, but the additional focus on rents could mean that it is not just the accumulation regime but the very form of capitalism that has changed.

It is worth clarifying how I am using the concept of economic rent. This draws on Marx’s concept of absolute ground rent, which is essentially related to landed property used for agriculture, but can be extended to other forms of property.⁵ Marx differed from the Ricardian formulation of differential ground rent, which relied on the idea of differing conditions of production in agriculture. For David Ricardo, rents arise because of diminishing returns to capital and labor from cultivation and scarcity of the best quality land relative to social demand. The need to cultivate poorer quality lands creates extensive differential rent, while intensive differential rent arises from more intensive cultivation of a given plot of land that yields diminishing returns (that is, less than proportionate returns to doses of capital and labor). In both cases rents on the various land and capital units are based on the differences between cost of production on these units and that on the least productive (marginal) one. Scarcity is therefore the determining principle for the emergence of rents in this conception.

By contrast, Marx emphasized the existence of another form of rent based not on scarcity, but on monopoly of land ownership—in other words, on private property rights that allow for an additional extraction of surplus. While the concept of absolute rent does experience some difficulties in the context of agriculture, the idea that monopoly ownership of some forms of property allows an extraction beyond that determined by scarcity per se is a powerful one and can be usefully applied in our current context. In markets, monopoly or oligopoly control is typically expressed as barriers to entry. It is necessary to further stretch the boundaries of this concept of economic rent to recognize that it may emerge not only from monopoly ownership, but also from power: not just market power, but the ability to affect and alter institutions and actions of the state.

This notion of rent goes beyond the idea of “excess profits.” It subsumes, but goes well beyond, the idea of “rentier capitalism,” which is largely based on giving primacy to financial returns and the push to increase those. The idea of “rent-seeking behavior,” which describes private investments designed not to increase productive capacity but to influence state decision-making, is similarly subsumed in this. This new rent-mutant capitalism is closer in some respects to the idea of technofeudalism described by Yanis Varoufakis, who argues that the owners of Big Tech are now effectively feudal overlords, replacing global capitalism with a new system that not only dominates markets and “data,” but controls and enslaves our minds, undoes democracy, and rewrites the rules of global power.⁶ In my own view, the new rent-mutant capitalism extends beyond the scope of digital-based rents and control, since it covers other economic activities and relies on the various ways that laws, rules, regulations, and state policies operate to generate excess profits (or rents) for not only digital capital but in a wide range of economic activities.

Profit Trends for Large Capital

That the world is increasingly unequal, in terms of incomes, wealth, and access to resources and services, requires little restatement. The falling shares of wage incomes in total national incomes in almost all capitalist economies have been widely noted and extensively documented. Work by Engelbert Stockhammer, Thomas Piketty, and others established this clearly for the past half century, further confirmed by the IMF data described in Chart 1.⁷

But while the decline of labor share is now well known, what may be even more startling is not just how inequalities have widened across nations—and between capital and labor within nations—but also within the capitalist class. This inequality is both across and within capitals of different countries. Regionally, U.S.-based corporations have the dominant share of global profits. Globally, the very largest multinational firms take the lion’s share of all corporate profits, and this concentration is evident even among the four thousand largest companies in the world. What is more, the profits of U.S. corporations have exploded in the period since 2000, despite periodic crises, even as companies from other countries and regions have fared less well in terms of profitability.

Chart 2 shows the total profits of all corporations in the United States. Increased profitability was particularly marked among nonfinancial firms, while the total profits of financial firms fluctuated more and did not increase as dramatically. Within nonfinancial firms in the most recent period of 2022–2024, Chart 3 shows that the bulk of profits come from manufacturing and trade, both wholesale and retail. (Note that in the case of trade, since many large firms are involved in both wholesale and retail trade, it is often hard to separate them.) Together, these two sectors accounted for half of total profits of companies in the United States. According to McKinsey Quarterly, “The technology and media industries accounted for only about 39 percent ($79 billion) of North America’s increase in economic profit [in the 2015–2019 period as compared to 2005–2009]. The advanced-industrial ($52 billion), pharmaceutical and medical-technology ($26 billion), air and travel ($22 billion), and consumer ($15 billion) sectors strongly contributed to the uplift. Telecommunications was the only large sector in North America in which economic profit declined (–$5 billion).”⁸

Another study of the top four thousand global corporations provides even more stark results (see Table 1).⁹ Within the top four thousand global companies, U.S. corporations not only dominated in profits, but also significantly increased their share of total profits of this group in the decade between 2005–2009 and 2015–2019. The profits of U.S. companies nearly doubled to $417 billion, while their share of total profits increased from 50 to 77 percent. For other regions, both absolute profits and shares of profits declined. European companies’ shares of total profits fell from 34 percent to 21 percent, while for all of the rest of the world, the share declined from 17 percent to only 2 percent. Purely in terms of profits, U.S.-based large companies garnered more than 3.5 times as much profit as their European counterparts over 2015–2019, and thirty times as much as large companies in the rest of the world.

David Autor and his colleagues point to a “superstar firm” model, where industries are increasingly characterized by “winner take most” competition, whereby a small number of highly profitable firms command growing market shares, reflecting growing concentration of sales among firms within industries.¹⁰ (Notably, such firms also tend to have lower labor shares, such that industries with larger increases in concentration exhibit larger declines in labor shares of value added.)

The ability of the largest firms to rake in more profits goes well beyond garnering more revenues and market shares. In fact, the top five hundred companies out of the four thousand considered in this study reduced their share of revenues from 61 to 60 percent in the pre-COVID decade (2005–2009 to 2015–2019). However, their share of profits increased from 82 percent to a whopping 97 percent. The share of profits of the top one hundred firms increased from 46 percent to 49 percent, even as their share of revenues fell marginally to around 30 percent. Clearly, this increase in profits of the top firms represents more than just greater shares of sales, and the implications of concentration go well beyond those expressed only by market power.

It is worth noting that China’s large companies—recognized to be the leading drivers of both sales and productivity growth in that country, as well as in the world economy over this period—were contained in the tiny share of 2 percent of the global profits of large corporations, even though Chinese companies were the major contributors to increases in global investment over this period. This lack of correlation between profitability and productive dynamism is worth pursuing further.

Investment and Growth in Major Economies

GDP growth is definitely not an adequate or realistic indicator of human progress, or even of purely material advancement. But it is necessarily the goal of capitalism, the very raison d’être of which is increasing expansion of marketed economic activity and thereby profits. “Accumulate, accumulate! That is Moses and the prophets,” as Marx famously declared in the first volume of Capital, seeing this as the driving force of capitalism in general. Therefore, it is worth noting that over the past half century, global GDP growth has mostly been decelerating (see Chart 4). Well before the COVID-19 pandemic, global capitalism was not in good shape, with slowing growth, decelerating investment, and less dynamism overall. In the decade after the Global Financial Crisis, it required massive injections of liquidity by central banks of the advanced economies just to keep afloat. Further life support, in terms of both monetary and fiscal impulses, was employed extensively in the major advanced economies during the COVID-19 pandemic, continuing well into the first years of the Ukraine War.

In capitalist systems, corporate profits are justified by the supposed incentive to invest that they create, and the actual ability of more profitable firms to go in for greater investment. This would naturally lead to the expectation that the large U.S. firms that have garnered the greater share of global profits would be the leaders in terms of productive investment. Investment rates in the United States should therefore be higher or increasing more rapidly than in other regions of lower profitability.

Charts 5 and 6 rapidly dispel such ideas. Investment rates in high-income countries (or “advanced economies,” as they tend to call themselves) have been falling on average for at least three decades, and over the past decade have remained stagnant at low levels. By contrast, investment rates in low- and middle-income countries have risen rapidly over the past quarter century in particular, such that they are now on average around one and a half times those in rich countries.

It is no secret that this difference is largely because of the very significant weight of China, rather than other developing countries. Chart 6 establishes beyond any doubt the very stark differences in investment dynamism between the United States and China. Even though China’s investment rates have come down somewhat over the unbelievably high rates of 45–48 percent of GDP experienced around the mid-2000s, they are still above 40 percent of GDP, around double the investment rates in the United States.

It is true that public investment accounts for a greater proportion of investment in China than in the United States. However, it is not public investment as such, but the ability of the Chinese state to direct and control private investment that makes China’s economy more “state-driven.” Clearly, high profits in the United States have not resulted in higher investment or more rapid innovation, whereas much lower profits received by Chinese companies in what is a more state-controlled system are associated with both of those desired results. However, as I have suggested and will argue further below, it is not simply the willingness and ability of the state to shape markets—since states do this in all economies—but in whose interests those markets are shaped that constitutes the central defining features of different forms of capitalism.

What explains this lack of dynamism of private investment in the aggregate, despite all the massive changes in the system over the past few decades that were specifically designed to promote the private economic activity of large capital in particular? As Wolfgang Streeck has argued, capitalism was probably too “successful” for its own good, in a classic prey-predator syndrome.¹¹ Neoliberalism destroyed or undermined all the checks, balances, and limits to capital’s unfettered power: the regulatory power of states was deployed in favor of large, globally active capital rather than in the interests of meeting the human rights of people or the needs of nature and the planet; the mobilizing and associating power of workers was undermined through both legislative and regulatory changes along with reduced institutional capacity; welfare measures and social policies that could cushion the vulnerable from shocks and downswings were mostly underfunded and reduced. The increasingly dominant role of private finance and financial markets, a process which was also directly enabled by state policies, created fragility, volatility, and proneness to crises and increasing insecurity of ordinary life. These changes occurred through both predistribution and redistribution. Underconsumption and lack of effective demand were the inevitable outcomes of sharply rising inequalities in income and wealth and falling wage shares of national income in most countries.

How Do Rents Come in?

I want to juxtapose these various trends: global capitalist stagnation or reduced dynamism; falling rates of investment in the economies exhibiting the highest profits accruing to large capital; significant increases in concentration within and across industries; declining wage shares of national income; and increased inequality across and within countries as well as across different categories of capital and labor.

Dean Baker has argued that the bulk of upward redistribution in the United States has come from the growth of rents in the economy in four major areas: patent and copyright protection, the expansion of the financial sector, the pay of CEOs and other top executives, and protectionist measures that have boosted the pay of doctors and other highly educated professionals.¹² Piketty argues that there is a basic tendency in capitalism for the rate of return on capital to exceed the rate of growth of aggregate income (the famous “r > g”)—essentially, the accumulation of capital through investment leads to growth in capital income, because the rising quantity of capital stock is not fully offset by a fall in the returns per unit of capital.¹³ A contrarian view is presented by Matthew Rognlie, who argues that the long-term increase in capital’s net share of income in large, developed countries has consisted entirely of returns to housing, which in turn harkens back to scarcity.¹⁴

My focus here is on rents that are directly or indirectly enabled by state policies, regulation, or direct intervention. Of course, it could be argued that this is inevitably true of all rents, since the ability to appropriate rents is the result of the recognition of private property, which is the domain of the state. But there are, in addition, rents that are specifically created by the state through various institutional legal and regulatory means. They may be expressed as scarcity (for example in housing, if publicly created housing is inadequate and/or regulations reduce other more affordable housing investment). But essentially, they are the outcome of legal and regulatory interventions that enable the private acquisition of surplus. The concern with market power is not new to the economics discipline, even in its mainstream avatar. In 2014, the Swedish Central Bank Prize in Memory of Alfred Nobel was awarded to Jean Tirole “for his analysis of market power and regulation,” and his role in addressing concerns that highly concentrated markets, if “left unregulated…often produce socially undesirable results—prices higher than those motivated by costs, or unproductive firms that survive by blocking the entry of new and more productive ones.” Tirole’s work was on the forms of regulation that could help to reduce excessive market power, but what has marked the past few decades is rather the opposite: policies and regulations that have actively enabled greater concentration and market power.

Various studies have highlighted the increase in concentration within the United States, within all rich countries, and even in the global economy as a whole, as measured by shares of revenues or market capitalization.¹⁵ It has also been noted that, specifically with reference to the United States, the evidence since 2000 suggests that “inefficient concentration, decreasing competition, and increasing barriers to entry as leaders become more entrenched and concentration is associated with lower investment, higher prices, and lower productivity growth.”¹⁶

However, it is not concentration in terms of revenues or assets, but rather the concentration of profits, and the greater profitability of larger companies—which, I have argued, mostly represents rents—that possibly deserves even greater attention. A 2017 study by the UN Conference on Trade and Development brings this out very clearly by identifying not just profits but what the authors describe as “surplus profits,” or the gap between actually observed profits and benchmark profits. The benchmark is taken to be the median value of firms’ rate of return on assets or ratio of operating profits to total assets (depending on industry). A positive gap between the actual and benchmark profits suggests that some firms are able to garner surplus profits, and if the gap grows over time, it “provides an indication of forces at work that may facilitate the transformation of temporary surplus profits into rents.”¹⁷

Chart 7, which shows the results of that study, indicates that such a process of transformation of temporary surplus profits into rents has indeed been under way. By the latest period in that study, 2009–2015, 40 percent of the profits of the top one hundred firms in the database were “surplus,” that is, significantly above the benchmark profits. The evidence of gradual increase suggests that these were already indeed rents rather than temporary excess profits.

Some have argued that the rise in rents is largely the result of technological forces that enable concentration within sectors. It is certainly the case that for some industries, technological economies of scale and network externalities pose powerful barriers to entry. However, there are also institutional barriers to entry—possibly even more significant—which are the creation of the state and its functioning in particular contexts, as well as the ability to extend those barriers globally through various trade and other international agreements. These are not simply the result of market forces, but constitute rents enabled by legal changes and regulatory capture in various ways. These include changes in intellectual property regimes nationally and globally; the related creation of new forms of “property,” including not just knowledge but cyberspace and what used to be considered as publicly delivered amenities; the supposed “deregulation” of investment that really involved greater freedom for capital to function without various constraints; the weakening of antimonopoly legislation in many countries; and the removal of protections such as those for labor or the environment.

There are many possible examples of the ways in which this plays out. Here, I will confine myself to three broad areas of recent experience: intellectual property rights, finance, and taxation. I will not cover the sphere of cyberspace, digital technologies, and data, which have already been so ably discussed by Varoufakis and others.

The rapidity, intensity, and spread of the privatization and commercialization of knowledge that has occurred through the universalization of intellectual property rights is quite remarkable. In barely three decades, the acceptance of such property rights—literally created out of thin air—has solidified to the point where it seems almost like a fact of nature. This has many adverse consequences, not least for the generation of future knowledge and technological development. The negative implications for access to drugs and pharmaceuticals, including life-saving preventive and therapeutic treatments, is well-known, especially after the global experience during the most recent pandemic. The constraints such knowledge monopolies pose for the necessary global responses to the climate challenge, whether for mitigation or adaptation, are also increasingly being recognized. For present purposes, the universalization of intellectual property rights is relevant because it has enabled the garnering of substantial economic rents through the monopolies it creates.

The U.S. rules for intellectual property protection, which were already among the most stringent in the world, have been further tightened and extended in the recent past. And these have then been exported to most of the world through trade agreements, exemplified first in the TRIPS Agreement of the World Trade Organization, and subsequently through other plurilateral and bilateral trade and investment agreements that have included ever stronger protections. As a result, the ability to control knowledge for private gain has entailed a substantial increase in monopoly power, with the associated ability to influence profit margins and prices. Indeed, the emergence of nonfinancial corporate rentier capitalism has surfaced as one of the striking features of the neoliberal decades, as evident from the some of the data on “surplus” profitability of large firms. It is no surprise that Big Pharma and Big Data, both of which rely especially heavily on private appropriation of and control over knowledge, are among the companies showing the greatest rates of “excess profits.”

Finance capitalism is seen as the original form of rentier capitalism because it involves profit-making through activities like lending at interest, trading in stocks, bonds, and derivatives. Obviously, to the extent that such activities are more enabled through changes in regulatory practice, they can become more profitable. In our contemporary moment, the stark example is that of cryptocurrency, whereby the easing of restrictions on what is essentially a fictitious asset, the only real value of which is that of secrecy, creates opportunities for massive capital gains for some players, even as many others are likely to be caught and impoverished by the volatility (and likely eventual collapse) of that market. But in any case, in the realm of finance, the ability to extract rents takes many diverse forms. The commercialization and privatization of many activities that earlier involved fewer intermediaries or were directly provided by the state has often required consumers to take on loans. The enforced shift of pension payments to market-oriented forces brings in risks, the costs of which are borne by workers and pensioners. All of these thereby enable new financial intermediaries—creditors and insurance providers—to benefit from these gaps through further extraction, once again possible only because of state actions.

Similarly, various strategies of financial deregulation (both national and crossborder) have enabled significant surplus profits (rents) to be extracted by some large corporations over particular periods, as large financial players are able to benefit from market volatility that in many cases they themselves generate or amplify. One striking example is the financial activity in food and fuel futures markets, which in two periods in recent memory (2007–2009 and 2022–2023) have caused massive swings in global prices without any justification in terms of shifts in real global supply or demand.¹⁸

The issue of taxation is more complex, because it relates not to predistribution, which is how rents are generated in the first place, but redistribution (or the lack of it) through fiscal policy. However, it is still of importance, because it helps us to understand how large and growing rents are retained by recipients, even as other forms of income are more heavily taxed. National taxation systems today exist within an international tax architecture that was developed more than a century ago, when tax havens and multinational corporations could be disregarded for fiscal purposes. The arm’s-length tax treatment of multinational corporation subsidiaries as separate companies enabled transfer pricing and other measures that could shift profits to low-tax or no-tax jurisdictions without penalty, sharply reducing states’ ability to tax the profits of transnational corporations. Once again, while this appears as a constraint on public finance policy, it results from decisions and choices made by states, and is therefore very much within the framework of regulatory systems that enable private enrichment.

Particularly in the major capitalist economies—but also elsewhere—governments have ceded essential powers to finance capital and sought to render their accumulation “risk free” on the backs of tax payers and to offshore production to facilitate the operations of finance and other large capital.

Impact on Inequality, Society, and Democracy

It is easy to see how the processes I have outlined earlier inevitably lead to great inequality, both across locations, but, more importantly, within countries. Richer regions and locations with more political power gain at the expense of poorer ones; capital gains at the expense of workers; and within the capitalist class, large players gain at the expense of smaller ones. Economic power begets political power, which in turn enables even greater economic power. Even if we are not fully technofeudal serfs yet, citizens are increasingly at the mercy of this unholy nexus between the wealthy and the politically powerful.

This obviously undermines economic justice and the achievement of basic social and economic rights of people. Beyond this, the absence of substantive economic democracy tends to undermine trust in political democracy, favors polarization, and has contributed to many of the extreme political outcomes we can observe today. The sad truth is that the economic choices in the past decades made even by those professing progressive politics have contributed to the widespread public cynicism about their positions and their effectiveness. The outcomes, in terms of the emergence of supposedly nationalist, often nativist “strongmen” who profess to shake up the system but tend to do so in ways that further entrench rent-mutated capitalism and the power of the biggest players, are being felt across the world.

This argument is quite different from the more mainstream perception that democracy and capitalism typically go hand in hand, that free markets are essential companions of “liberal democracies.” Indeed, Heilbroner himself ascribed at least partially to this view: “the state of explicit political liberty that we loosely call ‘democracy’ has so far appeared only in nations in which capitalism is the mode of economic organization.… It is certainly not that the pursuit of capital breeds a liberty-loving frame of mind. It is rather that the presence of an economy within a polity gives an inestimable aid to freedom by permitting political dissidents to make their living without interdiction by an all-powerful regime.”¹⁹

My argument also contradicts the perception that capitalists themselves prefer democracy as a political form. Indeed, recent statements by many hugely successful capitalists, especially those associated with the digital economy, make this explicit. Libertarian digital capitalists like Peter Thiel have argued that “freedom,” effectively of capital, and democracy are no longer compatible.²⁰ Large global capitalists, often those associated with newer digital corporations, increasingly seek to create new legal jurisdictions that remove all obstacles to their power and functioning while reducing the rights of workers. Their political clout is actually enhanced by states that seek to regulate and control any opposition to such moves.

It is not that there is no way out of this mess. Transcending capitalism is obviously the most desirable goal, but necessary changes cannot wait for that ultimate requirement. Even within a broadly capitalist framework, there are available strategies that would move away from a dystopian future and halt and/or reverse the processes I have outlined. Addressing inequality requires a two-pronged approach. The first covers predistribution: ensuring that policies, institutions, and regulatory systems do not allow the generation of sky-high incomes and wealth by a few while denying working people decent wages. The second relates to redistribution: creating tax systems that force extremely wealthy people and large corporations to pay their fair share, and making sure that these resources are used to finance investment in public goods and spending that enhances people’s social and economic rights. To some, these measures may appear to be half-hearted, in that they do not really transcend capitalism so much as seek to control and manage it in the greater public interest. But, they are essential stepping stones to a more comprehensive transcendence.

Even this would require major transformations in how we organize our economies. Regulation of markets for the public good will be critical in this process as well as for all the economic turnarounds: not just the markets for goods and services, but financial and capital markets, labor markets, and markets for land, nature, and the environment. Democratization of knowledge and wider access to new technologies, as well as recognition and dissemination of traditional knowledge, is key. Of course, this necessarily requires active governments willing to reshape markets and drive long-term visions for societies, which in turn requires not just political will, but a real sea change in the way governments perceive and deal with economies and societies. This is unlikely to happen without significant public pressure and mass mobilization.

Notes

1. ↩ Katharina Pistor, The Code of Capital: How the Law Creates Wealth and Inequality (Princeton: Princeton University Press, 2019).
2. ↩ Robert Heilbroner, The Nature and Logic of Capitalism (New York: W. W. Norton, 1985), 33.
3. ↩ Heilbroner, The Nature and Logic of Capitalism, 94.
4. ↩ Michel Aglietta, A Theory of Capitalist Regulation: The US Experience (London: Verso, 2015); Robert Boyer, The Regulation School: A Critical Introduction (New York: Columbia University Press, 1990).
5. ↩ Jayati Ghosh, “Differential and Absolute Land Rent,” Journal of Peasant Studies 13, no. 1 (1985): 67–82.
6. ↩ Yanis Varoufakis, Technofeudalism: What Killed Capitalism (New York: Random House, 2023).
7. ↩ Engelbert Stockhammer, “Why Have Wage Shares Fallen?: A Panel Analysis of the Determinants of Functional Income Distribution,” ILO Working Papers no. 994709133402676, International Labour Office, Geneva, 2013; Thomas Piketty, Capital in the 21st Century (Cambridge, Massachusetts: Harvard University Press, 2014).
8. ↩ Marc de Jong, Tido Röder, Peter Stumpner, and Ilya Zaznov, “Working Hard for the Money: The Crunch on Global Economic Profit,” McKinsey Quarterly, April 21, 2023.
9. ↩ Jong, Röder, Stumpner, and Zaznov, “Working Hard for the Money.”
10. ↩ David Autor et al., “Concentrating on the Fall of the Labor Share,” NBER Working Paper no. 23108, National Bureau of Economic Research, Cambridge, Massachusetts, January 2017.
11. ↩ Wolfgang Streeck, How Will Capitalism End?: Essays on a Failing System (London: Verso, 2016).
12. ↩ Dean Baker, “The Upward Redistribution of Income: Are Rents the Story?,” David Gordon Memorial Lecture, Review of Radical Political Economics 48, no. 4 (December 2016): 529–43.
13. ↩ Piketty, Capital in the 21st Century.
14. ↩ Matthew Rognlie, “Deciphering the Fall and Rise in the Net Capital Share: Accumulation or Scarcity?,” Brookings Papers on Economic Activity (Spring 2015): 1–69.
15. ↩ See, for example, John Bellamy Foster, Robert W. McChesney, and R. Jamil Jonna, “Monopoly and Competition in Twenty-First Century Capitalism,” Monthly Review 62, no. 11 (April 2011): 1–39; de Jong, Röder, Stumpner, and Zaznov, “Working Hard for the Money”; and Mario Draghi, The Future of Competitiveness (Brussels: European Commission, 2024).
16. ↩ Matias Covarrubias, Germán Gutiérrez, and Thomas Philippon, “From Good to Bad Concentration?: US Industries over the Past 30 Years,” NBER Macroeconomics Annual 34 (2019): 1–46.
17. ↩ UNCTAD, “Market Power and Inequality: The Revenge of the Rentiers,” UNCTAD Trade and Development Report 2017 (Geneva: UN Conference on Trade and Development, 2017), Chapter 6,124.
18. ↩ See for example, Jayati Ghosh, “The Unnatural Coupling: Food and Global Finance,” Journal of Agrarian Change 10, no. 1 (2010): 72–86; UNCTAD, “Food Commodities, Corporate Profiteering and Crises,” Trade and Development Report 2023 (Geneva: UNCTAD, 2023); and Jayati Ghosh, “Possible Strategies for Enhancing Food Security,” G20 Policy Note no. 7, South Africa Institute for International Affairs, Johannesburg, 2025.
19. ↩ Robert Heilbroner, 21st Century Capitalism (New York: W. W. Norton and Co., 1993), 74.
20. ↩ Peter Thiel, “The Education of a Libertarian,” Cato Unbound, April 13, 2009.