Capitalism, Alone

5 min readSep 15, 2020


I’ve admired Branko Milanovic for years, initially because he was one of the very few economists doing useful work on economic inequality. This is before Piketty and others have broken into the mainstream. His work has been critically important and is constantly referenced by those of us who have an interest — or concern — about economic inequality.

I follow him on twitter and diligently read his blog. It’s usually interesting even when it’s on topics that I don’t care much about. He’s a good writer, or rather, he’s an writer who draws on knowledge and sources that are unusual and interesting to me.

So, of course, I thought I’d pick up his new book, Capitalism, Alone, even though I didn’t know what it was about. As expected, it’s good and thought-provoking, although it’s also a bit eclectic. As he mentions in his notes, his original intent was to write on a narrower topic (the impact of communist regimes on post-communist development). But it evolved into something else.

The central case Milanovic makes is that we have, indeed, reached the “end of history”, but it’s not Fukuyama’s version. Rather, it’s much more about economics: capitalism now prevails. Milanovic argues that capitalism is the organizing economic model across countries, despite claims otherwise. However, there are two big variants on the form of capitalism: liberal capitalism (with the US as the avatar) and state-led capitalism or what he calls “political capitalism” (with China as the avatar).

Liberal capitalism we are all familiar with, although the ideas have been mystified and conflated with other ideas as well. Liberal capitalism has subvariants — like social democracy (see Scandinavia). We tend to conflate liberal capitalism with other liberal attributes, like pluralism, democratic governance, human rights, etc. They aren’t all necessarily locked together, but they do tend to come as a bundle. The main features of liberal capitalism are that the state is not heavily involved in the allocation of capital. And workers can “freely” contract for their labor rather than being obligated through other means. Legal systems are strong and not directly subject to political manipulation; although there are indirect forms of influence and also systemic biases and prejudices, of course. Milanovic spends a lot of time discussing the subvariants — including some that are hypothetical, but don’t exist in the real world. Liberal capitalism has a tendency to lead to increasing inequality, especially as returns on capital are higher than returns on labor.

Most of this is interesting in Milanovic’s telling, but not especially new.

What’s more interesting is his explication of political capitalism. Here he must first argue that many countries not conventionally considered capitalist (including China) are, indeed, capitalist. This he does, rather quickly, but also convincingly. He also documents that this class of capitalism isn’t exclusively Chinese, nor East Asian. Russia could be included, perhaps Rwanda and other autocratic countries. The attributes of political capitalism include heavy influence of the government in the allocation of capital and other aspects of the economy, legal impunity, corruption, and a constant political-economy tension around effectiveness: if politics is going to play such a strong role in the economy, there is a sort of informal social contract that requires high levels of growth and broad distribution of economic benefits.

The Fukuyama hypothesis on the “end of history” had a kind of presumption that liberal values were not better just as a matter of principle, but also in performance. Liberalism enhances personal and market freedom and helps harness private interests towards public good. Economic growth and material well-being were the result, according to this view.

But Milanovic is arguing that political capitalism actually competes with liberal capitalism on performance. Economic growth and material well-being have been massively improved under China’s political capitalism. Similar results in other East Asian economies. We can’t know the future, but there’s no obvious reason to think that liberal capitalism will outperform political capitalism in the future.

Higher growth and more material benefits appeal to the public. And for elites and governments, political capitalism holds some advantages. “Political capitalism itself has certain features that make it attractive to the political elites in the rest of the world and not only in Asia: the system provides greater autonomy to political elites.”

To make his arguments, Milanovic explores a number of related issues: what is globalization? What are the sources and causes of economic inequality? Does a meritocracy lead to greater inequality? Is citizenship a form of rent (unearned economic value)?

Milanovic runs off on some tangents and has a few axes to grind. He doesn’t think UBI is viable. He thinks “future of work” is overblown as a concern. He thinks the “de-growth” movement is silly. He draws on a lot of sources and evidence, but there are also plenty of unsupported ideas and viewpoints in the text. Milanovic’s perspective benefits from his own upbringing in a communist Yugoslavia. He can constructively draw on Marx and Marxist thought more fluently and with less self-consciousness than many. He has a much more nuanced view of communism and doesn’t categorically reject or ignore the experience of those countries and regimes. This is valuable, because there were some positives of communism and, especially, in the legacy that communism left for capitalist successors. Post-communist states have less inequality and higher growth that comparable countries.

I don’t mind Milanovic’s tangents and obsessions, and even when I disagree, I appreciate his perspective. But sometimes if feels a bit more like his opinion that a well-source, evidenced argument. I like that he regrets the expansion of globalization into the private realm, the commodification and commercialization of private spaces, of cognition and attention. He’s an economist that can regret using economic paradigms for everything. He hardly mentions climate change — which is fair since it’s not the book topic — although there’s plenty of other topics in the book that feels like he wedged it in.

Overall, I think Capitalism, Alone is excellent and is definitely worth reading. There are some critical insights about political capitalism that I’ve been coming back to and and that have changed how I view things like “great power competition”, which now seems less like a rivalry of values than of operating models.

  • note: this is a working document and maybe be edited or expanded.





I'm a human person, working in policy & advocacy in international development, gender rights, economic justice.