The Utopia of Self-Regulation in the Market System
The Utopia of Self-Regulation in the Market System
This chapter questions whether the market contains self-regulating processes which can prevent the system from ending in self-destruction. There is no in-built mechanism which can internalize the external costs created by the market system. Only an external organization, the government, can do this. Capitalism itself is not capable of preventing an inevitable clash with its limits. Technological revolutions, in particular the digital revolution, do not currently raise productivity sufficiently to generate the resources needed to prevent environmental decline. Kuznets has turned out to be wrong in his belief that a highly developed capitalism would cause income inequality to drop. Piketty, Saez, and Atkinson point out that inequality in the most developed capitalist countries has recently increased. The regulatory mechanisms must therefore come from outside the market system, and indeed from the government.
Keywords: regulation, self-regulation, technological progress, role of government, inequality
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