Is Capitalism Broken?
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What is the central question of the debate and who are the main participants?
There are plenty, plenty, plenty, plenty of low road operators
who rip their customers off, rip their employees off and prosper. You're just going to pass a law and say every American company now needs to be nice. No, that's going to be your law. No, no, no. Like that's just a ludicrous, ludicrous, naive idea about how a company functions.
America's economy runs by capitalism. That is a fact that some celebrate and others lament. But now even some fans of capitalism are looking at how it's working in the U.S. and they are asking, is capitalism broken? I'm John Donvan. This is Open to Debate, and that's the question we're going to argue. Our debaters, Nick Hanauer, an entrepreneur, an investor, a thinker who made billions under capitalism, and Jason Furman, an economist, a professor, also a thinker, who helped guide economic decision-making during the Obama administration. Nick and Jason, welcome to Open to Debate. Thank you so much. I want to say now to anybody who is listening, do not assume that you know who is taking which side because you're probably going to be surprised.
Nick Hanauer, Nick Hanauer, you who have done so very well under capitalism. I have. You are the one here arguing that capitalism is broken. The floor is yours, Nick. to bring us your opening.
Thank you, John. Let me start by saying that markets are the greatest social technology ever created for creating prosperity. Nothing else comes close. I've founded, funded, or managed over 40 companies, creating tens of billions of market capitalization. I feel very confident I understand them. So let's be precise about what's actually on trial today. It's not markets. It's capitalism. Markets are a technology for solving human problems. Market capitalism is an ideology defining who that technology serves. And it's right there in the name, capitalism. Capitalism is an ism, a belief system, an ideology that is taught in every school, that's written under our tax code, labor laws, trade agreements, that has long defined our norms and expectations about who gets what and why.
The textbook definition of capitalism isn't what's being debated today. What is worth debating is what is happening in the real world and what the capitalists believe, the rich and powerful people who capitalism serves, and what they want all of us to believe about how markets really work. If you take them at their word, capitalists believe that the sole purpose of the corporation is to maximize returns to shareholders, not to customers, not to workers, not to the community or the country. Capitalists believe that people earn exactly what they're worth, that market outcomes, however unequal or absurd, are always both moral and efficient. Capitalists believe that regulating corporations kills growth, that raising wages kills jobs, and that cutting taxes on the rich creates prosperity for everyone.
Of course, there is no empirical evidence for any of this, yet this is the capitalism that has guided our nation's policies for more than 50 years, a half century over which the bottom 90% of Americans lost $79 trillion to rising inequality, $3.9 trillion in 2023 alone, enough to give every American worker a $32,000 a year raise. In the 1970s, wages were about 51% of this economy. Today, they're about 41, the lowest share ever recorded. Corporate profits went the other direction, rising from 6% to 12.4%. And what are we doing with those profits? This year, American corporations will spend roughly a trillion and a half dollars, 4.5% of GDP, buying their own stock back. which was illegal until 1982. Americans are now $79 trillion poorer, less secure, and less resilient than they would have been had capitalism not concentrated wealth at the very top.
For example, in 1985, it took a typical American 40 weeks of work a year to afford housing, healthcare, transportation, food, education, and the other essentials of the middle-class life. By 2022, it took 62 weeks Last time I checked, there are still only 52 weeks in a year. So it should come as no surprise that 65% of American voters now say the system is rigged against them, or that only 12% think our democracy is working well.
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Chapters
8 chapters
1
What is the central question of the debate and who are the main participants?
0:00–9:20
2
How does Nick Hanauer define the difference between markets and capitalism?
9:20–18:04
3
What evidence does Jason Furman use to argue that housing is still improving under capitalism?
18:04–25:28
4
Why does Nick claim that the current form of capitalism is an ideology that harms democracy?
25:28–33:22
5
What is “market humanism” and how does it propose to restructure the economy?
33:22–41:30
6
How do the debaters view competition as a solution to wage and inequality issues?
41:30–47:37
7
What arguments are made about corporate purpose, CEO pay, and profit distribution?
47:37–55:39
8
What are the final positions of Nick and Jason in the closing statements?
55:39–1:05:29