After communism collapsed in the former Soviet Union, capitalism seemed to many observers like the only game in town, and question- ing it became taboo for academic economists. But the financial crisis, chronic unemployment, and the inexorable rise of inequality have resurrected the question whether there is a feasible and desirable al- ternative to capitalism. Against this backdrop of growing disenchant- ment, Giacomo Corneo presents a refreshingly antidogmatic review of economic systems, in the unusual form of a fictional dialogue be- tween a daughter indignant about economic injustice and her father, a professor of economics.

Is Capitalism Obsolete? begins when the daughter’s angry complaints prompt her father to reply that capitalism cannot responsibly be abolished without an alternative in mind. He invites her on a tour of hypothetical economic systems in which production and consump- tion obey noncapitalistic rules. These range from Plato’s Republic

of Philosophers to diverse modern models, including anarchic com- munism, central planning, and a stakeholder society. Some of these alternatives have considerable strengths. But daunting problems arise when the basic institutions of capitalism—markets and private proper- ty—are suppressed. Ultimately, the father argues, all traditional coun- terproposals to capitalism fail to pass the test of economic feasibility.

Then the story takes an unexpected turn. Father and daughter jointly come up with a proposal to gradually transform the current economic system so as to share prosperity and foster democratic participation.

An exceptional combination of creativity and rigor, Is Capitalism Obsolete? is a sorely needed work about one of the core questions of our times. 

Giacomo Corneo presents a manual in public economics centered around the problems and merits of the welfare state. This manual employs modern microeconomic techniques, especially the tools provided by the economics of information. A variety of empirical and institutional findings are presented before theoretical models are put into use.