Capitalism has been quite successful as a system of political economy. It emerged in the eighteenth century, took off in the nineteenth, and dominated the world in the twentieth. The Faustian bargain it offers—riches and freedoms, at the price of stability, tradition, and community—has proved so attractive that ever more societies keep making it. Now, having left its ideological competitors in the dust, the system is confronting its own flaws, and the reckoning is not always pretty. Yet so far, all the talk about moving on to something new and better remains just that.

Branko Milanovic notes that the triumph of markets is unique in human history; never before has a single mode of production become universal. Schism often follows triumph, however, and today, two capitalist camps are battling for supremacy: a liberal meritocratic one, led by the advanced industrial democracies, and a state-led, political one, headed by China. Each has major problems looming ahead.

Abhijit Banerjee and Esther Duflo—who won the Nobel Prize last fall for their research—note that market-led economic growth over the last half century has lifted more people out of poverty faster than ever before, particularly in China and India. But nobody has been able to find a reliable formula for economic success. Instead of chasing grand theories, therefore, governments should concentrate on direct interventions to help improve people’s lives.

Joseph Stiglitz, Todd Tucker, and Gabriel Zucman argue that capitalism is in crisis thanks to a lack of revenue, which has come about because plutocratic elites have gamed the system to protect their interests, hoarding their resources and starving the state. The authors’ solution to the problem is dramatically increased taxation. 

Miatta Fahnbulleh goes further, claiming that stagnating incomes, concentrated wealth, and looming environmental catastrophe show that capitalism has reached its limits. A new economic model is needed, one that adapts traditional socialist ideals to contemporary realities, empowering people and communities rather than the state. Jerry Muller begs to differ. The neosocialist boomlet is a joke, wealth taxes would be a nightmare, and the real work of handling climate change will be driven by entrepreneurial innovation—unless today’s Jacobins get control of the economy and shut it down.

The bottom line? Two and a half centuries later, we’re still trying to figure out how to reap the upsides of markets while protecting ourselves from the downsides. The benefits outweigh the costs, so capitalism keeps moving forward. But the more the system seems to work only for those at the top, the more it will have trouble sustaining democratic legitimacy.