Column: Economic theories need reform

Column: Economic theories need reform

With the crisis in Ukraine continuing to unfold, Cold War divisions are again entrenching themselves throughout the world, pitting, among other things, economic theories against each other. As in the past, communism is fighting capitalism and democracy, trying to determine once and for all which system is better economically and politically. What this renewed clash fails to take into account, however, is the thought that neither system is best. Thomas Piketty, a French economist, illuminated this newfangled idea recently in his book, Capital in the Twenty-First Century. His two basic assertions are that communism simply does not work, as seen through firsthand experience in post-Soviet bloc countries such as Romania and that unregulated, laissez-faire capitalism also does not work, as it promotes unbridled economic and political inequality that does nothing to further advancement and locks those less fortunate into rolls of adverse economic stability. In fact, the basic tenet of capitalism requires those who “have” and those who “have not.”

In order for capitalism to work, there must be the innovators and there must be the workers who are willing to produce goods cheaply so that the innovator can profit. This is great for a developing nation, because it allows those inherently wealthy to fuel growth through production, taxation, and consumerism, but once a nation is established as developed and economically sound, capitalism seems to actually inhibit further growth. Even more specifically, the American way of employing capitalism similarly entrenches socio-economic roles without creating room for fiscal leverage. Ideologically, trickle-down economics is a viable option, but it “just happened to be wrong.” This assertion is complemented by an accumulation of facts all showcasing that this theory indeed does not work towards equalizing opportunities. Instead, as we see with the current rise of the top 1% in our society, capitalism left to its own devices in a developed nation creates greater income and wealth disparities, dissolves democratic efficacy by giving more clout to the word and money of the wealthy over the vote of the common man, and even influences education differences, making it harder for poorer members of society to receive the same level of education as their wealthier compatriots, further contributing to the socio-economic divide.

So, what now? Now that the two major theories of economic principles have been debunked, where do we go from here? We can’t ignore these realities, nor can we be daunted by the gravity of the situation at hand. There are concrete solutions to fixing our ineffectual system of economics, although some may go against the wishes of international political figureheads. One such disputed fix, as purported by Piketty, is a global tax on wealth (not simply income, but rather net wealth) designed to equalize the playing field cross-nationally. These taxes would be collected by some unaffiliated, supranational institution and redistributed directly to the people in need of the funding, not to sovereign governments (because we all know what would happen to those funds if given to the wrong hands). Additionally, a happy marriage of certain laissez-faire capitalist principles and those of a communist descent might actually benefit the world overall. Neither system is inherently right or wrong, but instead both offer certain pros and cons to the table. Taking the best from each might be the most effective way to rectify the current harms both systems cause when presented alone. Of course, it’ll take much more effort from those such as Piketty to convince nations around the world to shift away from the dimorphic capitalism vs. communism system, but for the sake of all seven billion human beings across the globe, this categorical shift needs to happen, and needs to happen sooner rather than later.

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As my last article for the Rubicon comes to a close, I would like to thank everyone who’s read my columns in the last two years. Whether you are a consistent reader or just a casual peruser, your readership is greatly appreciated, valued, and honored. When I started writing in the fall of 2012, I never would’ve imagined that my column would become this prominent in my routine. One of my great joys each week is to sit down and write something (ideally) meaningful and thought-provoking, and my hope is that it has been as gratifying to read as it has been to write. I encourage all of you to continue to think critically and with a macroscopic view of the world, just as I’ve done through this article. Continue to search for truth and justice, and continue to question critically all that comes before you. As John Adams once put it, “Let us tenderly and kindly cherish…the means of knowledge. Let us dare to read, think, speak, and write.” Continue to dare, and dare boldly.