At the world economic Forum in Davos, one nagging issue keeps popping up: the growing gap between the haves and have-nots. It's a thorny topic of debate at an event that brings together the world's wealthiest and most powerful people at a swanky Swiss ski resort. But during a roundtable discussion hosted by TIME and moderated by Jim Frederick, editor of TIME's international editions, on Jan. 25, our panellists international labor leader Sharan Burrow, CEOs Ben Verwaayen and Brian Moynihan, private-equity chief David Rubenstein and economist Raghuram Rajan confronted the subject head-on with the opening question: "Is 20th century capitalism failing 21st century society?" Four of the five panelists disagreed with the proposition. And yet a majority of audience members polled took the opposite view. Capitalism must be in some kind of crisis when even the haves and the have-mores can't agree.
The Big Question
Is 20th century capitalism failing 21st century society and driving up wealth inequality?
BURROW: Absolutely. We've lost our moral compass. We need to redesign the system. When you have the greatest inequity since just before the '30s Depression, this is bad news for capitalism. Seventeen of the richest countries in the world have gone backward on equality, and 210 million people are out of work. The market's lost its capacity to soak up people who need to be employed.
VERWAAYEN: If you ask me, corporations don't have enough power. If you travel the world, you'll find places where the aspiration is to [move toward] capitalism because it has lifted millions of people out of poverty. We are living in a world [where] power is shifting from West to East. We need to talk about innovation and sustainability and reform, not just about corporations and greed.
RAJAN: There are deeper forces driving inequality than oversize corporations. Technology, competition, globalization and a need for innovation are all pushing for higher pay and higher levels of skills. The question is whether people's skills are being rewarded justly. That's not to say there aren't egregious instances where corporations overpay their executives. Those are problematic. But that can't fully explain the rise in wages at the upper levels of the population.
RUBENSTEIN: Economic disparity is bad in many parts of the world, and capitalism has not solved that problem. Capitalism has many great virtues, and many people are wealthier than they ever were before, but we haven't solved the economic-disparity problem. The question is, How do we deal with it? How do we eliminate the economic boom-and-bust cycle in capitalism, and how do we eliminate the economic disparity? Government is supposed to be the leader. The business community wants leadership from the government officials that we elect. In the West, we have seen a serious inability to provide leadership during this recession, and that is one of the problems that has created the continued economic disparity and left us unable to get out of this recession.