Branko Milanovic, 29 January 2021

In classical capitalism, the rich earn their money from capital while the poor sell the value of their labour. In which countries is that still true, and how does it affect the gap between rich and poor? Branko Milanovic tells Tim Phillips about a new way in which we can think about inequality.

Marco Ranaldi, Branko Milanovic, 03 December 2020

Similar levels of income inequality may coexist with completely different distributions of capital and labor incomes. This column introduces a new measure of compositional inequality, allowing the authors to distinguish between different capitalist societies. The analysis suggests that Latin America and India are rigid ‘class-based’ societies, whereas in most of Western European and North American economies (as well as in Japan and China), the split between capitalists and workers is less sharp and inequality is moderate or low. Nordic countries are ‘class-based’ yet fairly equal. Taiwan and Slovakia are closest to classless and low inequality societies. 


Keynote: Inequality and the future of capitalism

Wednesday Nov 11

06:00 PM - 07:00 PM (CET)

Special times call for special measures. That is why the annual UBS Center Forum for Economic Dialogue will this year take place online. The four-part event series focuses on different aspects of inequality - a topic that has become even more important in light of the global pandemic and its devastating consequences, which has hit many of the most vulnerable people in the world particularly hard.

In the sessions, experts from different fields will analyze the determinants and implications of economic and social inequalities and discuss possible solutions on how to address these issues. The event series started with an interdisciplinary research slam on the topic of inequality and prosperity, in which seven researchers gave an insight into current findings from their research areas in short presentations. Last week, behavioural economist Janet Currie, globalization and labour markets expert David Dorn, and inequality expert Branko Milanovic discussed the facts and consequences of inequality.

In the webinar on November 3, Florian Scheuer will give an outline of his research on the taxation of the superrich.

Concluding the event series, Nobel Laureate Sir Angus Deaton will elaborate on the topic of inequality and the future of capitalism, drawing on his most recent research.

Professor Angus Deaton believes that today’s inequalities are signs that democratic capitalism is under threat, not only in the US, where the storm clouds are darkest, but in much of the rich world, where one or more of politics, economics, and health are changing in worrisome ways. “But we need to think about repairs for democratic capitalism, either by fixing what is broken, or by making changes to head off the threats,” he stresses. Drawing on his most recent research, Deaton will reflect on whether and how the flaws of capitalism can be addressed to help build a more prosperous and just world.

Sir Angus Deaton is Senior Scholar and Professor Emeritus at Princeton University and Presidential Professor of Economics at USC. His interests span domestic and international issues and include health, happiness, development, poverty, inequality, and how to best collect and interpret evidence for policy. In 2015, he received the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel “for his analysis of consumption, poverty, and welfare.”

This session is supported by the Centre for Economic Policy Research (CEPR).

Philippe Aghion, Helene Maghin, André Sapir, 25 June 2020

The COVID-19 pandemic has shed light on the structural dichotomy between the models of capitalism operating in Europe and the US; the former offers better protection for its citizens while the latter shows greater economic dynamism. This column argues that for all the harm COVID-19 has caused, the crisis has also provided an opening to rethink the versions of capitalism practised on both sides of the Atlantic. Some degree of convergence towards a better model is desirable, the authors suggest, and perhaps even possible.


You are invited to a CEPR / LSE IGA / SPP webinar on:

Shrinking Capitalism

Join us on Thursday 4 June 2020
13:00-14:30 (BST, London), 14:00 - 15:30 (CST)


Philippe Aghion, Professor of economics, College de France and LSE, CEPR
Samuel Bowles, Director of Behavioral Sciences, Santa Fe Institute
Wendy Carlin, Professor of economics, University College London, CEPR
David Soskice, Professor, LSE School Professor of Economics and Political Science, LSE

Chair and Moderator:
Erik Berglof, Director, Institute of Global Affairs, LSE School of Public Policy and Fellow, CEPR 

The COVID 19 pandemic along with climate change has dramatized the obsolescence of the benchmark paradigm that still forms the basis of undergraduate teaching and popular discussion of economics. As was the case in the aftermath of the Second World War and the Great Depression a combination of new problems and new developments in economic theory provide the groundwork for a new paradigm. This would allow us to escape the limits of the government versus markets policy menu and encompass motivations beyond material gain and compliance with governmental authority to include ethical motivations of solidarity and duty that have underpinned successful anti-COVID policies.

Join Philippe Aghion, Samuel Bowles, Wendy Carlin, David Soskice and Erik Berglof in this webinar discussion.

Register online:

Pascal Lamy, 27 November 2019

Diane Coyle, 25 June 2018

Samuel Bowles, Alan KIrman, Rajiv Sethi, 08 December 2017

Hayek pioneered the informational view of markets in which prices are messages, and his dynamic vision of the economy provides the basis of an alternative to the equilibrium methodology that today underpins the economics of information. This column argues, however, that these contributions do not support, and may even give reason to doubt, the limited government policies that Hayek advocated.

Theresa Finley, Raphael Franck, Noel Johnson, Stelios Michalopoulos, 02 December 2017

Political revolutions often bring swift regime change leading to short-run economic change, but the long-term consequences are less clear. Some argue that revolutions pave the way for capitalist market growth, while others argue they are only political in nature with limited economic consequence. This column uses extensive evidence from the French Revolution to show that the effects vary across the country and over time. The analysis speaks to questions of concern to developing countries regarding the relationship between institutional change, inequality, and long-run economic development. 

Daron Acemoğlu, James Robinson, Thierry Verdier, 21 November 2012

Amid the current economic slowdown there is renewed interest in what type of capitalism fosters growth and best improves welfare. This column argues Nordic-style capitalism may provide higher welfare but in an interconnected world, it may be the cut-throat US capitalism, with its extant inequalities, that makes possible the existence of more cuddly Nordic societies.

Richard Pomfret, 22 May 2012

Politicians who rail against socialism or capitalism always adopt a more moderate stance after they come into office. This column argues this is because we are still experiencing the consequences of the industrial revolution. The current state of that process involves a widely accepted compromise between aggregate prosperity and distributional equality.

Andrei Shleifer, 05 February 2012

Twenty years ago, communist countries began their shift towards capitalism. What do we know now that we didn’t know then? Harvard's Andrei Shleifer, the Russian-born, American-trained economist, provides his answers and their relevance for contemporary policymakers.


CEPR Policy Research