Capitalism has been a force for progress in the world. It has lifted millions of people out of poverty and created a vibrant middle class.
However, unregulated capitalism is not an unalloyed good. Left alone, it is not simply a wealth-generating system. It is a wealth-concentrating system, in which the extremely rich own a vastly disproportionate amount of the wealth and exercise a disproportionate amount of political influence, with which they get steadily more wealthy and own more and more of the country.
It may sound like a cliché, but the rich get richer and the poor get poorer.
Americans lived through the so-called Gilded Age of unregulated capitalism from the late 19th century to the early 20th. This time was characterized by extreme poverty in the lower classes and extreme wealth in the upper. An unregulated stock market caused the Crash of 1929, Bush-era deregulation led to the economic disaster in 2009 by extension, and the Great Recession that we’re still climbing out of.
It took so-called “Socialist legislation” such as the New Deal to create the national prosperity and vibrant middle class that characterized the mid-20th century.
During the 1950s, a time virtually everyone (especially conservatives) idolizes as a period of American prosperity, the top 10 percent owned about a third of the nation’s wealth. As Nobel laureate economist Joseph Stiglitz has noted, today the richest 1 percent of Americans own 40 percent of the wealth, whereas the bottom 80 percent own only 7 percent.
Again, capitalism is the best economic system the world has yet seen. But history shows that it works best when tempered by sensible government legislation.