When Markets Lose Their Moral Compass: Why Unregulated Capitalism Deepens Inequality

Marketshave extraordinary power. In the United States, they have fueled two centuriesof innovation, raised productivity to historic heights, and helped create oneof the world’s most dynamic economies. Yet as Joseph Stiglitz reminds us, “thepower of markets is enormous, but they have no inherent moral character. Wehave to decide how to manage them.” Without that management—without rules,guardrails, and shared ethical commitments—the market’s brilliance can quicklyturn into something harsher: a system that rewards concentration over competition, cost-shifting overfairness, and short-term extraction over long-term prosperity.

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I. Markets Without Morality Drift Toward Inequality

Alaissez-faire market does not ask who benefits.
It does not concern itself with rising rents, declining wages, or the anxietyof families who feel the future slipping away. If left on its own, the markettends to elevate those with existing advantages—capital, information,bargaining power—while weakening the position of everyone else.

Stiglitz isdirect about this structural drift: markets can “concentrate wealth, passenvironmental costs on to society, and abuse workers and consumers.” In theU.S. context, we see the consequences everywhere:

• Monopolistic tech platforms     setting the terms of digital life
• Corporations posting record     profits while real wages stagnate
• Communities bearing pollution     that firms quietly externalize
• Families struggling with     school debt, medical bills, and insecure jobs

These outcomeswere not chosen by citizens. They were allowed by rules—or the absence ofrules—that tilted the economy toward those already positioned to win.

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II. A Market System That Hurts Most People Cannot Sustain Democracy

The Americanpromise rests on a simple idea: that economic opportunity and political voiceshould reinforce each other. But when markets are unregulated, they begin topull these two pillars apart.

A system thatroutinely leaves ordinary citizens worse off is incompatible with a meaningfuldemocracy. Stiglitz warns of this collision with unusual clarity:
“We cannot maintain an open and globalized market system… if that systemyear after year makes those citizens worse-off. One or the other will have togive—either our politics or our economics.”

When citizensfeel the economy is rigged, trust erodes.
When economic gains flow overwhelmingly upward, political participation becomesfragile.
And when people believe the rules serve the few at the expense of the many,democratic institutions—already strained—become vulnerable to anger,polarization, and anti-democratic temptations.

In this sense,unregulated markets do not simply produce inequality.
They undermine the civic foundations that hold the United States together.

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III. America Has Rebalanced Markets Before—And Must Again

The U.S. hasrepeatedly recognized that markets require moral and institutional guidance.

• The Progressive Era introduced antitrust laws to     curb corporate power.
• The New Deal created Social Security,     employment protections, and a minimum wage.
• Civil Rights–era regulations sought to prevent     discrimination in labor and housing.
• Occupy Wall Street and today’s youth-led     movements signal a renewed demand for fairness.

Each of thesemoments affirmed a basic truth:
Markets do not tame themselves. A just economy is always a politicalachievement.

And whensociety withdraws guidance—when regulation weakens, unions decline, or publicinvestments stall—inequality accelerates again, as we see today.

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IV. The Moral Question That Shapes an Economy

At its core,the question we face is not technical but ethical:
What is the purpose of a market economy?

If we believeit exists to enrich a few, we need only continue as we are.
If we believe it exists to expand opportunity, strengthen communities, andsupport a living democracy, then the market must be shaped—deliberately—towardthose ends.

This is wherethe next part of the story begins:
How governments write the “rules of the game” that make markets fair, open,and aligned with the public good.

The UnitedStates has done this before.
It can do so again.