Summary of the master class “Crisis of Capitalism: What’s Next For the West” at the 2012 Annual Members’ Conference.
The Hon. Philip Lader,** Chairman, WPP plc
H.E. Ana Palacio,** former Foreign Minister of Spain
Mr. Maciej Witucki,** CEO, Polish Telecom
Moderated by Dr. Frances Burwell, Vice President and Director, Program on Transatlantic Relations, Atlantic Council
This panel assessed the current state of Western capitalism in the context of a shifting global economy.
Despite the title of the session, the United States and Europe are not undergoing a crisis of capitalism as an economic system. Rather, they are experiencing the difficult yet predictable consequences of trying to balance capitalism with mass democracy. At the core of current financial instability is an inadequate political system.
Generally speaking, the tempo of decision-making in Europe and the United States is considerably slower than in rising powers such as China. While this slower tempo has negative economic consequences, it is ultimately in the transatlantic community’s best interest for its leaders to act deliberately, as debate and discussion is central to maintaining strong democracies. That is not to say, however, that the transatlantic partners (Europe in particular) couldn’t benefit from stronger, more forward-thinking leadership that is prepared to make crucial decisions, even in the face of public backlash. The key question is then at what point does policy-making become undemocratic if citizens don’t support the tough decisions that governments must take to bolster economies?
Also at the heart of the future of capitalism is its ability to support a sound social system in a world facing unprecedented demographic challenges. Both the United States and Europe must quickly address a rapidly aging population and adjust their social systems accordingly. The body politics’ demands on current social systems have the ability to dramatically restrain economic growth. How the transatlantic community addresses social and political issues will dictate whether capitalism flourishes. The West may even come to realize that it has to rethink what capitalism looks like in order to accommodate a changing global context.
While the current crisis may be one of peoples’ relationship with the market (as opposed to the market itself), the situation may very well change if US and European leaders do not deal with today’s social and political deficits. One step in the right direction would be to improve the public’s access to information so that it can engage in a higher quality debate on current economic challenges and the benefits of a capitalist system.