Published on Sep 5, 2014
Capitalism is arguably the most successful system humans have yet devised for raising general prosperity. Yet knowing that capitalism works is not the same as understanding how it works. Traditionally, economics defines capitalism as a system that uses markets and price signals to efficiently allocate resources. Yet many of the basic assumptions of this view are under challenge. Likewise, the version of capitalism that many countries have created has also proven to be subject to financial crises, rising inequality, and environmental damage. These issues have raised fundamental assumptions about the nature of economic growth and a quest for new models of inclusive, sustainable prosperity. Eric Beinhocker of INET Oxford will discuss an emerging view that the economy is not the mechanistic system of traditional economics but instead is a complex adaptive system. Under this view capitalism is not primarily characterised as a system for resource allocation, but rather is an evolutionary system for devising solutions to human problems. This view sheds light on current debates regarding inclusive, sustainable growth, and has potentially important implications for policy and politics.