In its 250th year, America finds itself confronting an age-old question with new urgency: what, exactly, counts as progress? 1776 was a hinge year for the modern world. Adam Smith published The Wealth of Nations, America adopted the Declaration of Independence, and Matthew Boulton and James Watt commercialized the steam engine—three developments that unleashed an age of capitalism, bringing unprecedented growth and unprecedented inequality.
And while growth and inequality are often treated as separate stories, fetishized respectively by the right and the left, corporate America and labor unions, and Wall Street and Main Street, this November’s midterm elections will put them on a collision course. But they have always gone hand in hand, their fates inextricably intertwined.
America’s triumphs are real. The United States is still the world’s largest economy. It remains a global engine of innovation. Its stock market is booming thanks to artificial intelligence, while its capital markets remain the deepest and most powerful in the world. And despite tariffs, a labor market slowed by restrictive immigration and repeated energy price shocks, its growth—as attested to by its $32.3 trillion GDP, larger than China, India, and Germany combined—appears to defy the odds and remains resilient.
Yet this dynamism is only half the story. Affordability has become the defining issue of the moment, and many signs indicate that the midterms in November will be decided on that basis. The Pew Research Center has found that the voters place the economy front and center by a wide margin, even as only 24% of Americans describe it as “good” or “excellent.” Gallup, meanwhile, reports that voters identify the cost of living as their foremost concern in the election.
GDP, the single statistic that now determines a country’s economic might, traces its roots to the scholarship of the American economist Simon Kuznets during the Great Depression, particularly his landmark 1934 report, National Income, 1929-1932. But as the Cambridge economist Diane Coyle points out, Kuznets was, himself, aware of the many flaws and pitfalls of the metric he had developed and warned against confusing economic output with human welfare.
What even fewer people know is that the “godfather” of GDP was also a pioneer in the study of inequality. The Kuznets curve—his famous prediction that inequality would eventually decline as economies grew richer—is not one history has obliged, but it points to the Janus-headed quality of modern capitalism.
Indeed, it’s been exactly 15 years since the Occupy Wall Street protests radiated out of Zuccotti Park in New York’s Financial District. Born in the aftermath of the Great Recession of 2008, the movement became the most visible public outcry against economic inequality in recent American history and gave the country an enduring rallying cry: “We are the 99%.”
While the movement dissipated, the issues it raised have not. If anything, the concerns it foregrounded have migrated from the political margins to the mainstream in American politics, championed by progressive figures like Bernie Sanders, Alexandria Ocasio-Cortez, and Zohran Mamdani.
The World Inequality Report 2026 finds that the top 0.001% of the globe’s population own “three times more wealth” than the entire bottom half of humanity combined, and within “almost every region, the top 1% alone” hold more wealth than the bottom 90% combined. Inequality in America is no longer only a question of who has more; increasingly, it is a question of who has enough to make ends meet. According to the Brookings Institution, 45.5% of American households do not earn enough to cover even basic necessities, with housing, health care, and childcare among the most acute pressures.
The problem is that a single statistic can conceal as much as it reveals. GDP can tell us how the economy is performing without telling us how Americans are faring. It can tell us how much an economy produces, but not who receives the rewards, whether those gains improve people’s lives, or what is destroyed and what is sacrificed in producing them.
Some of the things on which society most depends—unpaid caregiving, clean air, cohesive communities—barely register in its accounts. Economists classify many of these costs as “externalities”: consequences borne by people and places that fall outside the transaction being measured.
Climate change provides perhaps the starkest example of GDP’s glaring blind spots. A natural disaster can destroy homes, lives, and ecosystems without being registered as an equivalent loss in GDP; the money spent to rebuild afterward, meanwhile, counts as additional economic activity. The meter can rise even as human welfare falls.
But the two metrics—GDP, our shorthand for growth, and the Gini coefficient, our shorthand for inequality—are not rival ways of describing the economy so much as incomplete halves of the same story; the two key consequences of capitalism, joined at the hip. One shows us how large the pie has grown; the other, something about how it has been sliced.
On growth and inequality
When it comes to growing the pie, the relentless efficiency of global capitalism in allocating resources is hard to match. It has allowed, in the aggregate, societies to eke out more from finite resources than ever before. Its advocates point out that most people live longer and better lives: they are better fed, more securely housed, and better protected against diseases that once routinely killed them.
Capitalism’s champions can reasonably claim that it has helped lift much of humanity above bare subsistence while proving more compatible with individual freedom than its major rivals. It holds out the promise of a game that everyone has an equal chance to play—and win. Its defenders often invoke the specter of repression and unfreedom associated with state-led communism or socialism as a cautionary tale.
Capitalism’s unique two-plus-two-equals-five quality—its capacity to produce more than the sum of its parts—may also have helped pave the way for the material foundations of modernity. The shift from sustenance to surplus created, in many ways, the foundations for our moral revolutions, from liberalism and feminism to cosmopolitanism.
Yet, beyond some vague gestures toward “trickle-down economics,” the discipline’s approach has largely been to focus on growing the pie and argue about slicing it later. Economics has tried to separate the two: markets create wealth; politics distributes it. Friedrich von Hayek, the Nobel Prize-winning economist, who was an early and influential proponent of free-market economics, warned against the “fatal conceit” that governments could know enough to design an economic order from above.
The Kaldor–Hicks principle, a dominant idea in modern economics, offered a technical basis for avoiding the reckoning with distributive questions. An outcome counts as an improvement if the winners gain enough that they could compensate the losers—even if they never do. That “even if” is a significant caveat.
Kenneth Arrow’s Impossibility Theorem, another foundational result in economics, exposes the deeper difficulty: there is no perfect mathematical procedure for turning individual preferences into a coherent collective choice. At some point, as even mainstream economists recognize, economic calculation must give way to political judgment. It follows that morality should trump mathematics.
But what if inequality is baked into the pie itself? Thomas Piketty coined the famous formulation for the notion that the odds may be stacked against the ordinary person: r > g, the proposition that the return on capital tends to exceed the rate of economic growth. History suggests that the playing field was never level.
In Empire of Cotton and, now, Capitalism, Sven Beckert excavates the blood-soaked origins of modern capitalism through slavery, colonialism, and state power; Ha-Joon Chang shows how rich countries used tariffs and industrial policy before prescribing freer markets to poorer ones. Such empirical evidence reinforces a broader idea: markets do not simply materialize, as the spectral metaphor of the “invisible hand” suggests. Markets are made—by human hands.
If the economy is a game, then the question is not merely who wins and who loses. The question instead is: Who designed the board, who wrote the rules, and whether the game was rigged from the start? Today, capitalism treats Monopoly money as real while human beings are reduced to pieces on a chessboard.
Perhaps the most important omission from the current economic paradigm concerns the psychology of the sport. Research on “inequality aversion,” the idea that who gets what matters as much as how much there is, suggests that people care deeply about how the pie is sliced, even when a fairer division means settling for a slightly smaller one.
The economics of the everyman
Can growth, given enough time, deliver widely shared prosperity, as capitalism’s champions still insist? Or does the way the game is designed predetermine who benefits from growth? Far from disappearing, could excessive inequality gnaw away at the very foundations of economic growth?
GDP’s shortcomings have inspired repeated attempts to devise a better answer. In Mismeasuring Our Lives, Joseph Stiglitz, Amartya Sen, and Jean-Paul Fitoussi argued for moving beyond economic production and measuring well-being, distribution, and sustainability. Sen’s capabilities approach asks a still more fundamental question: not merely what resources people possess, but what those resources actually enable them to be and to do.
The late Pakistani economist Mahbub ul Haq’s Human Development Index, inspired in part by Sen’s work, was an attempt to translate that insight into numbers, treating health, education, and income as measures of human progress.
The point is not to dispense with GDP. Growth matters enormously. It has financed scientific discovery, lengthened lives, reduced material deprivation, and expanded the range of human possibility. But human progress may be better represented by a dashboard of indicators rather than by a single number. More fundamentally, what should be a means to an end has too often become an end in itself. A metric intended to crudely measure the output of the market economy has gradually acquired the authority to tell us whether society itself is succeeding.
America’s 250th anniversary offers an unusually apt moment to question that bargain. The Declaration of Independence did not promise Americans the pursuit of economic growth. It promised something considerably more ambitious: the pursuit of happiness. Two and a half centuries later, perhaps the most important economic question America can ask is also the simplest: Who is the economy for?
Fittingly, this fall, American voters will have an opportunity to offer their answer. If the elections of the past decade were won in part by rejecting an outdated economic playbook, 2026 may present a more constructive opportunity: not merely to discard the economic playbook, but to redesign and rewrite it with Everyman, the ordinary American, as its protagonist.
Adapted with permission from Everyman: The Untold Story of Economics by Antara Haldar.
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