Has the scope of public planning in contemporary capitalist economies promoted or hindered economic growth and income distribution? We explore this question by assessing the impact of various mechanisms for raising government revenues on investment, growth, and income distribution in 22 developed market economy countries. The article considers whether growth and distribution are affected differently by governments' relative reliance on personal and corporate income taxes, social security contributions, property taxes, and sales and value added taxes, or by the relative progressivity of tax mechanisms. Our findings lend support to the assertion that fiscal instruments (especially personal income taxes) can be used successfully to achieve greater income equality. On the other hand, these findings run counter to the conventional notion that an automatic trade-off exists between an active public sector and a dynamic, expanding economy: although there is surely some tension between the economic goals of growth and equality, it is not at all clear that they are necessarily incompatible or that government can contribute only to the latter.

This essay assesses communitarian and democratic critiques of capitalist economies. Distinguishing them are sharply contrasting evaluations of markets and private property. Communitarian critics of capitalism trace its moral failure to the marketplace. Drawing on Aristotle's normative economics, this school maintains that production for gain corrodes society's moral fabric. I defend the democratic approach. Democratic critics accept the modern claim that markets are both efficient and liberating. Capitalist ownership relations are another matter, indicted because they constitute a form of private power over people's lives. I reconstruct the ethical core of the democratic school and contend that it offers a better understanding of the most objectionable aspects of capitalist economies while avoiding the dangers inherent in the communitarian approach.

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