anita angelovska bezhoska : how to make capitalism work for all speech by ms anita angelovska bezhoska, governor of the national bank of the republic of north macedonia, at the imf / wb constituency meeting, skopje, 22 june 2019. * * * distinguished prime minister, ministers of finance and other respective representatives of government institutions, governors of central banks and other respective representatives of central banks, executive directors, vice presidents in world bank group directors in international monetary fund, professor zingales, delegates of the constituency, excellences, fellow colleagues, representatives of the media, at the very beginning, let me say how honored we are to have the opportunity to host this important gathering of our constituency. sixteen years have passed since the last meeting of the constituency in skopje, and we are delighted to have all of you with us here during these three days. by a twist of fate, i recently came across a book that i have not seen since my early youth days ; a book that starts with a very powerful notion – “ happy families are all alike ; every unhappy family is unhappy in its own way ” – you might recall tolstoy ’ s “ anna karenina ”. few days after, while searching for the most recent discussions on the matter of capitalism, inequality, wealth distribution, i read an analytical piece where the author cited the same quote, linking it with all the different modalities of inequality, as a symbol of the global unhappiness. standard metrics on inequality point to a widespread and rising phenomenon. it obviously underpins the rising populism, that reflects the dissatisfaction with the system that does not create equal opportunities for everyone, a system where reward is not merit based, i. e., system that gradually evolves into a crony capitalism. against this background, i have no doubts that we have chosen the perfect spotlight for this constituency meeting. let me shortly use the historical lenses – what questioned the sustainability of capitalism and led to marxism was the stagnation of wages and concentration of wealth in the early phases of industrial revolution. it gave ground for rising inequality, and as thomas pikketty, the so - called “ modern marx ” reveals in his book “ capital in the twenty - first century ”, the only exception from this rising trend of global inequality is the period as of 1914 until 1970s, as a historical outlier. indeed, actual data does indicate rising income inequality since the 1980s onwards almost across the board

, although with different intensity. this turning point is very often associated with the end of the so - called “ post - war egalitarian regime ” around the globe. to bring the point closer, let me refer to the data retrieved from the 2018 world inequality report, which reveals that in 1980, the income share of the top 10 % in the income distribution in western europe, north america, china and india was around 30 – 35 %. by 2016, this percentage rose to around 35 – 40 % in western europe, while the increase in the other regions was stronger, reaching 45 % - 50 % of the total income. one might notice the remarkable difference in the income concentration at the top - level earners in western europe and us, meaning the inequality diverged substantially in these two groups in the last almost four decades. this so - called “ modern ” surge and divergence in inequality leads economists wondering, which forces may be preventing benefits of capitalism being widely distributed. observing the us – europe nexus, apparently the level of development does not always matter for how the income distribution could look like. there are policy tools and fundamental values in the society that can affect the distribution curve markedly. for instance, many authors associate the divergence in western europe and us with the educational inequalities and less progressive tax system in us. on the other hand, in western europe tax progressivity declined moderately, but even more importantly the educational system and wage setting policies are thought to be relatively more 1 / 3 bis central bankers'speeches favorable to low and middle income groups. hence, equal opportunities to higher quality education, in particular nowadays when technology is rapidly advancing could be one of the remedies for the “ illness ” of inequality. it could enable young people at the bottom of the income distribution to get access to better - paid jobs, and hence flatten the income distribution curve. in the region - specific context despite the transition, process that in principle leads to increase in inequality, the top 10 % of the income distribution has a share of close to 29 % of the total income, lower compared to western europe. apparently, the issue of rising unequal income distribution is neither new, nor the world has been shielded from tectonic changes in the systems, such as for example the transition in europe, which was “ fertile soil ” for rising inequality. however, it is only in the last ten years that we witnessed such substantial proliferation of literature, and academic and political debates on the roots and