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Branko Milanovic: "The danger is in moving from a democratic system to a system where political power is extremely concentrated as much as economic power"

A moment during the conference given by Branko Milanovic.

A moment during the conference given by Branko Milanovic.

17/10/2019

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“The danger in the meritocratical capitalism is that we, insensibly, move from a democratic system to a system where political power is extremely concentrated as much as economic power so that the system will be no longer democratic even if you have the elections, the free press... the political power will be extremely concentrated". Economist Branko Milanovic ended his speech with this warning, at the Faculty of Economics and Business on October 9.

 

 

Milanovic talked about some of the main topics developed in his last book, Capitalism, alone (Harvard University Press), which analyzes current capitalism, when the system is leading the world. The book talks about two types of economic systems: the one Milanovic calls political capitalism in China and the liberal meritocratic capitalism in western countries. During his conference at the UB, Milanovic analysed some of the tendencies of the latter, which lead to a growing inequality. To do so, he started talking about the fact that the part obtaining aggregate share from national income is increasing, while there is a higher concentration of capital ownership, and there is a higher rate of return on the assets of the rich: “The return I get for every unit of my assets is higher if I am rich”, said Milanovic.

The author notes there are other economic and social tendencies, such as an increase of homoploutia –association of high-capital and high-labour incomes in the same individuals- and homogamy –assortative matting. However, the economist noted that the rich “are more and more in control of the political process; the case of the United States is dramatic, in this sense”. Moreover, these rich people “can transfer money and contacts to their children with very expensive schools”, so there is a high class that can be maintained itself. “Everything leads to a movement driving democracy to plutocracy”, commented Milanovic.

The following participated in this conference at the Faculty of Economics and Business: Marta Curto Grau, director-general of Economic Analysis of the Catalan Government, Germà Bel, professor of the UB, and Francesc Amat, UB researcher from Institutions and Political Economy Research Group (IPERG).

Branko Milanovic is a senior scholar at the Stone Center on Socio-Economic Inequality. He obtained a doctorate in Economics from the University of Belgrade and worked as economist in the World Bank’s Research Department for almost twenty years. After this period of time, he wrote a book on income inequality, Worlds Apart (2005). 

His work The haves and the have nots (2011) was selected by The Globalist as the 2011 Book of the Year. Global Inequality (2016) received the Bruno Kreisky Prize to the best book on politics in 2016 and was translated into twelve languages. In October 2017, Milanovic received, together with Mariana Mazzucato, the 2018 Leontief Prize for Advancing the Frontiers of Economic Knowledge. He was senior associate at the Carnegie Endowment for International Peace (Washington, 2003-2005) and has held teaching appointments at the University of Maryland (2007-20013) and the Paul H. Nitze School of Advanced International Studies at Johns Hopkins University (1997-2007).

 

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