For the capitalist system to operate effectively, it needs a number of basic structural foundations.

Unlocking prosperity potential

By Harriet Maltby


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• True prosperity has a capitalist core
• Capitalism is the engine of both wealth and well-being
• Prosperity is about more than materialism: education, health, freedom

Picture America’s financial child, sitting on the knee of Uncle Sam: her hair falls in angelic ringlets and she chews away at a ‘prosperity’ popsicle. Through the door crashes the wild child, America’s moral offspring. He fires his pistol, ‘filthy literature’ and ‘bootleg’ alcohol in hand.

When this cartoon ‘Neglecting the Other Child’ appeared in the Los Angeles Times in 1926, America was in the grips of what it saw as an unparalleled age of prosperity. During Hoover’s 1928 presidential campaign, Republican literature boasted that ‘Republican prosperity’ had ‘put a chicken in every pot and a car in every backyard’. Prosperity and economic expansion were not only inseparable, but interchangeable.

We have since come to recognise, as the American cartoonists of the 20s were beginning to, that prosperity is not simply an economic construct, but includes ideas such as heath, happiness, and opportunity. Indeed, theLegatum Prosperity Index™ conceives of prosperity as a combination of wealth (GDP per capita PPP) and wellbeing (life satisfaction). Underpinning this prosperity are eight pillars: the economy, entrepreneurship and opportunity, governance, education, health, safety and security, personal freedom, and social capital. Economic success matters for prosperity, but so too do things like values, freedom, democracy, and education.

As we have come to reject the interchangeability of prosperity and economic growth, so too has hostility grown towards the engine of that growth: capitalism. Just as cartoons of the 1920s attacked American economic ‘prosperity’ for neglecting moral and social development, modern rhetoric attacks capitalism for failing to deliver ‘true’ prosperity, pointing to inequality, rampant consumerism and poverty as signs of its absence.

Indeed, across its 89 variables, the Index reflects these factors. Uneven economic development is included and has a strong and negative relationship with overall prosperity score. The principles of family, charity, and helping one another form a positive part of our social capital measure. People’s living standards and their access to food and shelter are an important part of our economy measure. Nations with uneven development, weak social values, and people without a roof over their head or food on their table are punished in the Index. Their prosperity suffers.

Yet the Index does not lay the blame at the door of capitalism. In fact, it implies we should do the very opposite. Even when we look at prosperity as wealth and wellbeing, as being about eight core pillars like opportunity, education and societal strength. Even then, at the very heart of prosperity, we find the core foundations of capitalism.

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