If you were pinned down, and had to summarize the economic and political discourse since the financial crisis in one line, I reckon many would settle one a version that includes income inequality and political polarisation. But this is probably where the agreement ends. Ask ten so-called thought-leaders about the drivers and impact of these two trends, and you’re likely to get ten wildly different answers. In his new book, The Myth of Capitalism, my former colleague Jonathan Tepper, and his co-author Denise Hearn, provide a razor-sharp synthesis of an economy and markets which are increasingly devoid of the virtues that we tend to ascribe to them.
The book’s central message is microeconomic in nature—the market power of one or few firms is going parabolic in one industry after the other—but its implications are profoundly macroeconomic. The plummeting share of labour and wages in firms’ profit and capital creation, the soaring inequality between owners of capital and workers, and the increasing sense that the system is rigged against the median household and individual. Jonathan’s and Denise’ book offers important insight to illuminate all of these issues.
Investors should read it because the trend towards market power across industries has become one of the dominant drivers of returns, at least in public equity markets. And if you don’t think that will continue, the potential backlash from antitrust authorities is equally important to be aware of. The firms treated by Tepper and Hearn will be the ones to suffer the most from such a change. Policymakers need to read it because they ought to know what is happening under their nose. Forearmed, in this case with knowledge, is forewarned, no matter on what side of the political spectrum you fall. Finally, the layman should read it to understand how the modern economy works, and why it appears that the capitalist system on the brink of 2020s isn’t producing the results that it is supposed to.
The book can be pre-ordered from Amazon via the link above.