The title of the last book written by Branko Milanovic is “Capitalism, Alone” (I interviewed him about it for the magazine Política & Prosa). Samuel Bowles and Wendy Carlin wrote an article with the title“Shrinking Capitalism,” more or less at the same time that the book was published, just before the current COVID-19 pandemic, and then they updated it in a shorter version for Vox-CEPR. These are three authors that I know, admire and respect. But can capitalism be “alone” in the world today, as Milanovic argues, and at the same time be "shrinking," as Bowles and Carlin say? I find this debate interesting, these days that some of us are starting new graduate or undergraduate courses on introductory economics, public economics or micro.
I have to assume that they wrote their pieces separately and independently. “Capitalism Alone” was written before the articles about“Shrinking Capitalism”, so the book could not anticípate the arguments of the articles. And the articles do not mention the book. The three authors share an interdisciplinary approach to the economy, and a concern for a fair distribution of income, wealth and power. They know marxism and neoclassical economics, as well as more pluralistic and recent approaches. They share a concern for the renewal of the discipline of Economics as well.
I checked whether the different perspectives on capitalism are based on different definitions. Bowles and Carlin say that “a defining feature of capitalism is that work produced using privately owned capital goods is performed under the control of an owner or manager in return for wages, producing goods to be sold for profit”. Milanovic characterizes capitalism in his book as following the principles of “production organized for profit using legally free wage labor and mostly privately owned capital, with decentralized coordination”. The definitions thus are very similar.
Bowles and Carlin emphasize the role played by different mechanisms of resource allocation, and how these relate to different paradigms and narratives in economics. They argue that today with COVID-19 and climate change, as well as in the past with the Great Depression and the Second World War, a new paradigm in economics is needed. The growing importance of the knowledge economy and the care sectors (this is the "positive" side of their argument), makes it very difficult to mobilize resources appealing only to the material incentives typically associated with the market system. Although the pandemic will move ideas and policies toward a bigger role for government intervention in the one-dimensional continuum between state and market, a third pole is needed to open up new possibilities to complement incomplete markets, so that the intrinsic motivations and social norms of communities and civil societies can be mobilized. The old preference neutrality of the economics profession should be replaced in this context by an active promotion of cooperative values (this is the "normative" side of their argument), something that markets and governments alone cannot do.
Milanovic takes a more macro and global approach, thinking more in terms of socio-economic systems than in terms of mechanisms of resource allocation. As compared to 40 years ago, the capitalist system does not have rivals because communism has basically been eliminated, except for some marginal and uninfluential corners. Although the diversity of capitalisms goes probably, as a review in the New York Review of Books has argued, beyond the dichotomy between liberal and political capitalism (US vs China models) that Milanovic proposes, there is little doubt that the diversity of models has been reduced by the expansion of markets and the profit motive. If anything, even the Western type of capitalism is becoming more similar to the Chinese type, with the expansion of authoritarianism and global corruption. Although in "Capitalism, Alone" the positive side dominates over the prescriptive side, there are some policy recommendations (focus more on pre-distribution rather than re-distribution) and one can see in Milanovic a dislike for some features of capitalism, such as the commodification of household activities and other examples of overreach of the profit motive. So probably Milanovic would agree with Bowles and Carlin at least on some normative aspects.
If a synthesis is possible, I would say that capitalism has defeated other socio-economic systems, such as communism (although it has not always been this way), but its triumph has been accompanied by some dysfunctions that make it, in its real current versions, hardly suited to deal with many of our local or global problems. To tackle the pressing issues of our time, capitalism should at least make room for cooperative social norms and a new narrative in economics.