Discussion - “Can Capitalists Save
Capitalism?” by Edsall @ NY Times
Report of the Coalition for Inclusive Capitalism and
Commission on Inclusive Prosperity (Center for American
Progress)
Thomas Edsall - NY Times
 The fundamental “inclusive capitalism” argument is
that business enterprises lose profit-making
opportunities when consumers have little money to
spend.
 Inadequate purchasing power among the many
threatens corporations and poses a direct danger to
the top 1 percent, and, indeed, to capitalism itself.
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Coalition for Inclusive Capitalism
Background
Worldwide increases in income inequality, large-scale corporate
and financial scandals, historically high and persistent
unemployment, and slow economic growth are undermining
cohesion and stability. Trust in business has declined in most
parts of the world and fundamental questions are being asked
about the ability of our capitalist system to deliver benefits to all.
Purpose
The Conference brought together visionary leaders from the
private and public sectors to begin to create a practical agenda
to turn the situation around. The aim is to define concrete steps
that will help renew trust and deliver better social and economic
outcomes for all.
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Membership/Participants in Coalition
for Inclusive Capitalism
 E.L. Rothschild LLC
 Rockefeller Foundation, Ford Foundation
 Angle-Saxon World
 Prince of Wales, Mark Carney, Gov. Bank of England and Chair of Financial Stability
Board, City of London, Lionel Barber – Editor of Financial Times, John Mcklethwait
– Editor-in-Chief of The Economist, Chancellor of Cambridge
 Bill Clinton and Clinton Foundation, Eric Schmidt- Google, Larry Summers former
U.S. Treasury Secretary and current President of Harvard
 Canadian Parliament
 International Monetary Fund
Christine Lagarde, Managing Director
 Global Corporations
 CEO’s of Blackstone, Google, Honeywell, Dow Chemical, UBS, GlaxoSmithKline
 McKinsey and Co., Alcatel-Lucent,, Blackrock, Unilever,, Prudential
 Norwegian, New Zealand and China representatives
 Together, participants control $30 Trillion worth of assets, 1/3 global total
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Politico Magazine on Conference on
Inclusive Capitalism
Christine Lagarde, managing director of the International
Monetary Fund
She quoted both Karl Marx’s prediction that capitalism
“carried the seeds of its own destruction,” and
Pope Francis’ characterization of increasing inequality as “the
root of social evil.”
She came out against a favorite centrist reaction to rising
inequality—“that ultimately we should care about equality of
opportunity, not equality of outcome.”
The problem was that opportunity could never be equal in a
deeply unequal society. She called for more progressive
income tax systems and greater use of property tax.
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Politico Magazine on Conference on
Inclusive Capitalism
Mark Carney – Governor of the Bank of England
He warned, with strong language, that the capitalist system
was at risk:
“Just as any revolution eats its children, unchecked market
fundamentalism can devour the social capital essential for
the long-term dynamism of capitalism itself.”
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Politico Magazine on Conference on
Inclusive Capitalism
Chrystia Freeland - federal member of parliament for Toronto Centre,
the author of Plutocrats: the Rise of the New Global Super-Rich and
the Fall of Everyone Else
“This emphasis on fairness is a big and consequential change.
Plutocrats were the chief beneficiaries of so-called neoliberalism and
the suite of political changes it brought beginning in the late
1970s—deregulation, weaker protection for unions, the shareholder
value movement and the subsequent inflation of executive
compensation. It is no surprise that the superrich supported these
policies, and the intellectual movement that underpinned them.
What’s striking is that today, 30 years later, in at least some
gatherings of the plutocrats, we are starting to hear speeches that
would not have been out of place at Zuccotti Park.”
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Thomas Edsall – NY Times
 The Summers-Balls report – “The Report of the
Commission on Inclusive Prosperity” – is the most
comprehensive summary. This report, which uses the
phrase “inclusive capitalism” more than a dozen
times, was published by the Center for American
Progress, a Democratic think tank founded by John
Podesta – Bill Clinton’s former chief of staff who in
February will join Hillary Clinton’s exploratory
presidential campaign.
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Thomas Edsall – NY Times
 Those pressing the Democratic Party to take more
populist stands contend that the lack of a persuasive
Democratic economic program contributed to, or
drove, devastating losses in the 2014 elections in
states as diverse as North Carolina, Maryland, Iowa
and Colorado
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Thomas Edsall – NY Times
If policies grounded in “inclusive capitalism” become
central to the party platform, it will mark the party’s
strongest commitment to the economic interests of
working- and middle-class Americans since Franklin
Roosevelt’s New Deal.
The new agenda stands apart from Lyndon Johnson’s
War on Poverty, which was focused primarily on the
“Other America” of the very poor.
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President Obama’s State of the
Union Economic Proposals
 Imposition of new taxes on the wealthy and on major
financial institutions, totaling $320 billion over 10
years.
 The money would be used to finance tax cuts credits
for low-to-moderate-income men and women, and
 to make attendance at community colleges tuitionfree
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Obama’s SOTU Tax Proposals
 Raise capital gains tax rates from 23.8 to 28 percent for
couples making more than $500,000 in taxable income,
 Eliminate a provision in tax law that allows the very rich to
avoid taxation on much of the wealth passed on to their
children and
 End a current exemption from taxation on the increase in
the value of stocks, bonds and other assets when passed on
through inheritance
 A .07 percent fee on financial institutions with more than
$50 billion in assets that would produce $110 billion in
revenue over 10 years
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Report of the
Commission
on Inclusive Prosperity
Co-Chaired by Lawrence H. Summers and Ed
Balls Convened by the Center for American
Progress January 2015
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Edsall on Report of the Commission
on Inclusive Prosperity
Their report addresses four major economic developments
broadly undermining wages and working conditions:
1. “increasing global economic integration has also meant
increased competition for many workers who produce
tradable goods and services.”
2. “advances in robotics and artificial intelligence have put
intermediate-skill jobs at risk in what economists call a
hollowing out of the labor market.”
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Edsall on Report of the Commission
on Inclusive Prosperity
3. Third, that “Major corporations have opted to use
subcontracting to perform basic functions, and
many workers are now classified as independent
contractors, eroding basic labor law protections.”
4. “corporations have come to function much less
effectively as providers of large-scale opportunity.
Increasingly, their dominant focus has been on
maximization of share prices and the compensation
of their top employees.”
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Specific Policy Recommendations
 call for making parent companies responsible for the
working conditions of employees of subcontractors;
 adopting government policies favoring employee
stock ownership so that workers benefit from the
growing share of national income flowing to capital
as opposed to wages;
 imposing tough and costly sanctions on employers
who use illegal tactics to fight unionization.
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Specific Policy Recommendations
 substantial boost in the $24,000 pay ceiling under which
employees must get time and a half for overtime work
beyond 40 hours a week;
 increased infrastructure spending of $100 billion a year, or
$1 trillion over 10 years;
 strengthened provisions in trade agreements guaranteeing
collective bargaining rights and basic environmental
protections to reduce the movement of American
companies to countries with the lowest labor standards.
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Specific Policy Recommendations
 creation of an income tax credit for those with moderate
pay levels. It would start at $23,260 for joint filers with
children, just where the current earned-income tax credit
phases out. At $85,000, the credit would diminish, reaching
zero at $95,000.
 They would also change the mortgage interest and
property tax deductions into tax credits. Deductions
inherently provide larger benefits to those in higher tax
brackets. Credits provide equal benefits to all who qualify.
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Edsall of NY Times
 “..one of the objectives of the evolving Democratic
economic agenda is to get back support among whites
without college degrees – the polling shorthand version of
what is sometimes still called the white working class.”
 Democrats plan to use the tenets of inclusive capitalism as
a wedge issue in the 2016 elections to force Republicans to
choose between their affluent backers and their white
working class supporters
 In 2014, these voters, who made up 36 percent of the
electorate, cast their ballots for Republican House
candidates by a 30-point margin (64-34 percent). This was
nearly double the 16-point Republican margin among white
college graduates, 57-41.
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Discussion and Questions
 Can Capitalism Eliminate Its Main Internal Contradiction –
Overproduction and Under-consumption (Unrelenting drive
for profits lowers wages causing lower aggregate consumer
demand)?
 Are the proposed changes by this Capitalist sector for real
or pure political populism?
 What should be the response for progressives seeking real
economic justice reforms?
 What should be the response from Socialists?
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Backup Slides
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Commission US Policy Response
Actual General Policy Proposals
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Commission US Policy Response
 Increase workers’ share of productivity growth, which will
help sustain demand
 Increasing support for profit sharing
 Expanding worker voice
 Modernizing employment rules to accommodate the
changing nature of work
 Increasing the minimum wage
 Better target public investment to increase demand and
raise long-run productive capacity
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Commission US Policy Response
 Expanding infrastructure investments to increase
productivity and relieve constraints on growth
 Increasing the return on public investments by defining
national goals and ensuring accountability through
performance management
 Increase demand and provide for housing needs by
restoring residential investment
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Commission US Policy Response
 Use scalable public service to counteract cyclical
employment declines for young workers
 Ensure a level playing field for global trade
 Use tax policy to support demand and promote fairness
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Commission US Policy Response
 Increase labor-force participation and labor-force growth
 Expand educational opportunity to increase human capital
and support economic mobility
 Reform corporate governance to encourage long-term
investment
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