Capitalism is ‘under serious threat’, says Raghuram Rajan

TIL Desk/Business/New Delhi/ Former RBI governor Raghuram Rajan on Tuesday warned that capitalism is under “serious threat” of a “revolt” as the economic and political system has stopped providing for the people, especially after the 2008 global financial meltdown.

Rajan, now a professor at the University of Chicago, told BBC Radio 4’s Today Programme that governments across the world cannot afford to ignore social inequality when considering the economy.”I think capitalism is under serious threat because it’s stopped providing for the many, and when that happens, the many revolt against capitalism,” the former chief economist at the International Monetary Fund (IMF) said.

Rajan said he believes that capitalism is breaking down because it is not providing equal opportunities. “It’s not providing equal opportunity and in fact the people who are falling off are in a much worse situation,” he said. He said authoritarian regimes arise “when you socialise all the means of production”. “A balance is needed, you can’t pick and choose – what you need to do is improve opportunity,” he said.