"I think capitalism is under serious threat because it's stopped providing for the many, and when that happens, the many revolt against capitalism," he told the BBC.

Mr Rajan said it was possible in the past to obtain a middle class job with "modest education".

"Now, if you really want to succeed, you need a really good education," he told Radio 4.

"Unfortunately, the very communities that are hit by the forces of global trade and global information tend to be communities which have deteriorating schools, rising crime, rising social illnesses and are unable to prepare their members for the global economy."

Mr Rajan believes that capitalism is breaking down because it is not providing equal opportunities.

"It's not providing equal opportunity and in fact the people who are falling off are in a much worse situation," he said.

He said authoritarian regimes arise "when you socialise all the means of production".

"A balance is needed, you can't pick and choose - what you need to do is improve opportunity."