Former Reserve Bank of India governor Raghuram Rajan on Tuesday warned that capitalism is “under serious threat” as it has stopped providing for the masses, BBC Radio 4’s Today Programme. Rajan said governments cannot afford to factor in social inequality when planning economic policies.
Rajan, known as the man who predicted the 2009 global economic crisis, said that capitalism is disintegrating because it is not providing equal opportunities. “I think capitalism is under serious threat because it has stopped providing for the many, and when that happens, the many revolt against capitalism,” the former chief economist at the International Monetary Fund said.
Rajan said a good education can ensure success in today’s world. “Unfortunately, the very communities that are hit by the forces of global trade and global information tend to be communities which have deteriorating schools, rising crime, rising social illnesses and are unable to prepare their members for the global economy,” he said.
The professor at the University of Chicago also criticised governments that are restricting the trading of goods. “If you put up those barriers, then down the line they will put up barriers to our goods,” he said. “How are you going to keep the goods flowing across those borders when we need to send them?”
Observers have speculated that Rajan may succeed Mark Carney as governor of the Bank of England.