7 - Rescuing Capitalism from the Capitalists

Summary

In Chapter 7, I discuss the latest crisis of capitalism and Amartya Sen’s journey to rescue capitalism from the capitalists. I begin by discussing the increasing vulnerability of capitalist societies at the end of the twentieth century due to the deregulatory environment encouraged by the Chicago School. I use Karl Polanyi’s double-movement theory to explain the rise of the Chicago School and its assault on the “relationship capitalism” that had evolved in the postwar period. While the new “investor capitalism” was successful at unleashing the power of the market, it also increased the vulnerability of capitalist societies to opportunistic self-interest. This increased vulnerability was fully realized in the 2007–08 mortgage-backed security crisis that nearly collapsed the global financial system. After describing the near collapse of the global financial system, I discuss the implications of the collapse for the neoclassical theory out of Chicago. This leads to a discussion of Amartya Sen’s journey from India to the West to rescue capitalism from the capitalists. This discussion introduces the role of the East in the development of capitalism and its future promise. I conclude by discussing Sen’s critique of capitalism based on Adam Smith’s original moral foundation.