CAPITALISM'S ACHILLES HEEL Dirty Money and How to

Renewing Capitalism 373
economies in part because its free-market corollary is operating with inadequate
benefit to billions of people. Democracy is dependent on the rule of
law. Capitalism is increasingly operating outside the rule of law. An ideological
tension has always existed between these two concepts, but today that
tension appears to be growing. Some fundamentalists favor weakening the
state in favor of strengthening the market. The worst thing that can happen
to capitalism is to have this wish come true. A system committed to increasing
lawlessness risks self-destruction. Furthermore, to the extent that capitalism
seeks to distance itself from the rule of law, it places democracy at risk. A
world severely divided in income yet somehow united in democracy is a
chimera. Between these two grand schemes, it is the ideal of democracy that
must be sustained and capitalism that must evolve closer to democracy’s
commitment to equal rights. Capitalism has to contribute its fair share to
democracy, security, and peace, and that obligation is not at this time being
sufficiently met.
Today, we face a level of challenges similar in magnitude to those that
had to be confronted in the latter years of the Industrial Revolution. Then,
the problems were widespread poverty, low wages, child labor, cramped
cities, poor sanitation and health, and growing inequality. Over a period of
decades in the second half of the 1800s and early 1900s, governments and
private sectors together in the industrializing countries responded with public
education, sanitation and transportation, unemployment insurance, pension
schemes, health care, child labor laws, antitrust laws, progressive
income taxes, and more. Those problems were local and national.
Now problems are international. Capitalism’s victory over socialism
and, following that, the rapidly emerging process of globalization is presenting
a set of challenges every bit as daunting as those in the Industrial Revolution.
Widespread poverty and massive inequality are still with us, though
in the developing and transitional economies more than in the industrialized
economies. In addition, the planet’s population, which was barely one billion
at the beginning of the earlier era, is currently past six billion and
moving toward eight billion in this century. Couple this with drugs, crossborder
crime, terrorism, ethnic wars, state collapse, HIV/AIDS killing tens
of millions, and a parallel financial structure crippling progress for scores of
countries, and the problems in the globalization revolution are as momentous
as those in the Industrial Revolution. Capitalism, to be sustainable,
must come forward with equally bold reactions to these current challenges.