Capitalism has achieved “one success after another”, former Federal Reserve Chairman Alan Greenspan said on Thursday, reducing poverty "dramatically" and more than doubling life expectancy. But the capitalist model needs to be improved, he said.
“Capitalist practice needs adjustment,” Greenspan wrote in a commentary piece for the Financial Times.
He said the battle for free-market capitalism was "far from won".
"While central planning may no longer be a credible form of economic organization, the intellectual battle for its rival – free-market capitalism – is far from won," he wrote.
According to Greenspan, the “unforgiving market competition” that defines market capitalism “clashes with the inbred human desire for stability and, for some, civility”.
He believes the "often-assailed greed and avarice associated with capitalism" are "characteristics of human nature, not of market capitalism".
“I was particularly distressed by the extent to which bankers, previously pillars of capitalist prudence, had allowed their equity buffers to dwindle dangerously as the financial crisis approached,” Greenspan wrote.
But anti-capitalist virulence appeared strongest from those who confused “crony capitalism” with free markets, Greenspan wrote.
"Crony capitalism abounds when government leaders, usually in exchange for political support, routinely bestow favors on private-sector individuals or businesses. That is not capitalism. It is called corruption."
Greenspan said U.S. immigration law was an additional contributor to inequality in America, arguing it “protects” many high earners from skilled migrant competitors.
The World Economic Forum in Davos taking place this week has become synonymous with capitalism, attracting the rich and powerful to lament social inequality.
Many business leaders and politicians there have highlighted the ever-widening income gap, and argued in favor of reform.
“Whatever the imperfections of free-market capitalism, no regime that has been tried as a replacement, from Fabian socialism to Soviet-style communism, has succeeded in meeting the needs of its people,” Greenspan wrote.
“Yet I fear that, in response to the crisis, innumerable ‘improvements’ to the capitalist model will be enacted. I am very doubtful those 'improvements', in retrospect, will appear to have been wise,” he wrote.