[credit provider=”Flickr | World Economic Forum” url=”http://www.flickr.com/photos/worldeconomicforum/3011845379/”]
Most everyone agrees the global capitalist system has failed on two main counts–growth and fairness, writes PIMCO CEO Mohammad El-Erian in a column published today in the Financial Times.He argues that continuing failure to address both (not just one) of these problems not only constitutes a “crisis,” but “raises legitimate questions about the model itself.”
If the system is going to continue, three things have to happen:
- Capitalism is prone to occasional market failures, and the world has to accept this.
- Global imbalances, created by the rise of countries like China, have become unsustainable and must be addressed.
- Global institutions must transform to fairly represent the global population in order to adequately recognise and deal with problems.
Each of these areas can be corrected. Theoretically at least, what has occurred is less a calamity of the system as a whole, and more an issue of how it was run. Yet, four years into the crisis, little has been done to repair the damage coherently and comprehensively and to safeguard the real victims, let alone counter the risk of further costly dislocations. Until this is done, it will be difficult to convince the world that capitalism itself is not the problem.
Read El-Erian’s full editorial here >