When Capitalism Works and When it Doesn't

29 April 2021

Capitalism often works as an engine of economic growth, but it doesn’t always generate rising incomes for most people. The history of the leading capitalist economies – the UK and the USA – over the last four centuries divides into four phases. In two of them, capitalism ‘works’ as wages in general rose at the same rate as output per worker, while in the other two periods the gap between high and low wage jobs exploded and the average wage stagnated even though output per worker was increasing. These long cycles are traced back to the interplay between technical change, the labour market, and globalization.

Robert Allen
Robert Allen | Lecturer
Global Distinguished Professor of Economic History at New York University, Abu Dhabi. He received his PhD from Harvard University. Allen’s research aims to understand the process of economic growth and why some countries are rich and others poor. He has written on English agricultural history, international competition in the steel industry, the extinction of whales, the global history of wages, prices, and living standards, and contemporary policies on education, including in relation to Soviet economic history. Bob Allen was the president of the Economic History Association in 2012-2013. He is a Fellow of the British Academy and the Royal Society of Canada.
Andrei Markevich
Full Professor