With the end of the Cold War on Christmas Day 1991, the word "capitalism" seems also to have disappeared from public discussions. In its place, there is much talk about "the market" as an impersonal object and praise for its alleged merits as a guide to economic decision making. But there is surprisingly little attention paid to the actual state of capitalism itself - especially as it is evolving in the United States in the late 1990s. Yet it is capitalism as an economic system that defines "the market," and it is the policies and institutions of capitalist countries that actually shape market outcomes. Thus, it is of consequence to ponder how this process is working. For just as its chief intellectual rival - communism - collapsed from within because centralized socialism could not keep pace with capitalist economies that were consistently revolutionizing the frontiers of knowledge, supporters of capitalism also must watch for signs of its own undermining.
With regard to its outward manifestations, the American variant of capitalism seems healthy and vibrant. The contemporary economic indicators are essentially positive: unemployment is falling; inflation is low and essentially stable; profits are generally high; industrial production is close to capacity; future expectations by both consumers and producers are optimistic; and the stock market averages are at or close to record levels. But, on the other hand, the social indicators that describe the quality of contemporary life are almost universally morbid and depressing. Divorce rates are staggering; the use of illicit drugs is widespread; bankruptcies are increasing; illegal immigration is massive; teen-age pregnancies are at epidemic levels; homelessness is spreading; less than half the voting age population actually votes in national elections; membership in trade unions has fallen to the same low levels that last existed in the depths of the depression in the early 1930s; the percentage of children living in poverty, the incidence of violent crimes, the magnitude of adult illiteracy, and the number of persons reported to be AIDS-HIV infected are all the highest in the industrial world; and more than a million persons are in jails and prisons (more than half of whom are blacks) with more than twice that number either on parole or on ball. Moreover, stories of the prevalence of violent urban "street gangs," oppressive manufacturing "sweatshops," and armed militias in rural areas are commonplace on evening news shows. So if the economic indicators are so good, why are the social indicators so bad?
Ironically, a plea for a critical assessment of the state of capitalism in the United States was made in 1997 by one of the foremost beneficiaries of this free market era - the billionaire financier George Soros. Writing in Atlantic Monthly, he bluntly stated: "Although I have made a fortune in the financial markets, I now fear that the untrammeled intensification of laissez-faire capitalism and the spread of market values into all areas of life is endangering our open and democratic society. The main enemy . . . is no longer the communist but the capitalist threat" [Soros 1997, 45]. Soros sees what many economic conservatives in academia, business, the media, and government refuse to recognize: namely, that "too much competition and too little cooperation can cause intolerable inequities and instability" [Soros 1997, 47].
By far the most significant of the emerging outcome "inequities" in the United States pertains to the widening economic disparity among the population. In early 1997, U.S. Secretary of Labor Robert Reich summed up the situation as follows: "Over 15 years ago, inequality of income, wealth, and opportunity began to widen and the gap today is wider than at any time in living memory" [Reich 1997, E-13]. Because the United States has always been among the extreme examples of consumer-driven capitalism, it is questionable - given this disparity among...