A defining feature of capitalism is that work using privately owned capital goods under the control of an owner or manager in return for wages produces goods to be sold for profit. The domain in which this system of production works tolerably well is shrinking as the knowledge- and care-based economy expands. It is thus imperative on efficiency as well as moral grounds to develop a new paradigm for policies and institutional design. A new paradigm needs to combine a model appropriate to today’s economy with ethical values that go beyond fairness to include a broad conception of freedom.