The Future of Capitalism: Facing the New Anxieties

by Paul Collier

Quick Summary

An analysis of the deep rifts tearing apart Western societies along geographic, educational, and moral lines, and a pragmatic proposal for restoring inclusive capitalism. Collier, an Oxford economist, argues that the divergence between thriving metropolises and declining provinces, between the educated elite and the working class, and between prosperous nations and those left behind by globalization demands ethical renewal across the state, firms, families, and international institutions rather than the ideological extremes of either pure market fundamentalism or socialism.

Detailed Summary

Paul Collier's "The Future of Capitalism" diagnoses the crisis of contemporary capitalism through three intersecting divides: geographic (booming metropolises versus broken provincial cities), educational (the well-educated new class versus the struggling less-educated), and global (winners and losers of globalization). Collier argues that these divides are generating the anxieties that fuel populism on both the left and right, threatening the foundations of liberal democracy.

Part One establishes the crisis. Collier documents how metropolitan areas have surged ahead economically while provincial regions have stagnated or declined, creating spatial inequality within nations that maps onto cultural and political polarization. The educated class has forged a new identity based on skill, developing a distinctive morality centered on victim group identities and claiming moral superiority over the less educated. Meanwhile, the less educated face a cascade of problems: job loss from globalization and automation, family breakdown, substance abuse, and in America, actually declining life expectancy for whites without college degrees.

Part Two proposes ethical renewal as the remedy, working through four institutional domains. The "Ethical State" chapter argues that government must move beyond both the libertarian minimal state and the socialist redistributive state to actively build reciprocal obligations -- a sense that citizens have duties to each other, not just rights against the state. The "Ethical Firm" chapter advocates for corporate governance reforms that balance shareholder returns against obligations to workers, communities, and long-term sustainability. The "Ethical Family" chapter addresses the crisis of family breakdown among the less educated, arguing that stable two-parent families provide essential social capital that cannot be substituted by state programs. The "Ethical World" chapter proposes reforms to international institutions that address the legitimate concerns of those left behind by globalization without retreating into protectionism.

Part Three addresses the geographic, class, and global divides specifically. For the geographic divide, Collier proposes policies to revitalize broken cities through targeted investment, tax incentives, and the relocation of government functions away from the metropolis. For the class divide, he advocates for education reforms that value vocational training alongside university education, and for labor market policies that give workers more voice. For the global divide, he proposes managed migration and reformed trade policies that share the gains of globalization more broadly.

Part Four addresses the political challenge of implementing these reforms without succumbing to the extremes. Collier argues that pragmatic centrism -- informed by evidence rather than ideology, drawing on the best insights of both left and right -- is the only viable path forward. The book deliberately avoids the partisan framing that characterizes most political economy writing, drawing criticism and praise from both sides of the political spectrum.