Elevating Capitalism: Government’s Indispensable Role

To achieve the promise of capitalism’s next stage, greater government supervision of the economy will be needed Thinkers have recognized that to correct capitalism’s defects, extensive government supervision is necessary. Capitalism’s ills are many. Because of inadequate government supervision, these ills proliferate. To raise capitalism to a higher level, government’s role in regulating and remedying these problems is indispensable. This chapter’s purpose is to unpack capitalism’s close ties to government and to argue that to elevate capitalism to a higher level the world must rely on strong and effective government. This chapter argues that unlike twentieth century interpreters, such as Friedrich Hayek and Milton Friedman, Adam Smith supported government’s essential role. It reviews three approaches to market failure and analyzes how governments can correct these defects. It notes the ascendance of the neo-liberalism over the other approaches and calls for a restoration of balance in which neo-liberalism recedes into the background, a process that is underway already. The chapter’s purpose is not to propose a precise change agenda, nor to how to achieve it. Rather, it is to urge politicians, citizens, lawmakers, lobbyists, social movements, the media, and other institutions and individuals with influence to reform and enhance government. The conundrum is how to lift the performance of government and thereby strengthen capitalism, in this way raising the performance of both.