“The great heroes of capitalism are the entrepreneurs who can feel the future in their bones and will do anything to bring it into being — fanatics who are compelled to build castles in the air, as Joseph Schumpeter put it. The biggest beneficiaries of these innovations are consumers who are showered with products and services beyond the dreams of previous generations. Capitalism may have made accommodations with some horrible regimes and vile practices in the past, as Beckert shows in detail. But as a system it thrives best in conditions of freedom, where government power is limited, property rights secure and businesspeople left alone to pursue their dreams and subject them to the stern test of the market.”
– Adrian Wooldridge, Bloomberg ($), in one of his best recent columns IMHO, gently taking apart a new book by Sven Beckert that purports to show how we have become rich primarily through violence and enslavement, not mutual exchange. The book is apparently more than 1,300 pages long, and the largest ever published by Penguin. To write a book that long, and miss the key elements of why free enterprise is as great as it is, seems a lot of work for scant reward. Alas, I suspect Beckert’s book will be treated as reverently on parts of the Left as Thomas Piketty’s blockbuster, which turned out to be built on proverbial sand.
A recent Nobel prizewinner in economics, Joel Mokyr, has written a book that I think rather more accurately identifies why, for instance, the UK became as wealthy as it did during the Industrial Revolution, and plays far more attention to the role of ideas. The Wealth and Poverty of Nations by David Landes is also a good study, in my view. Anything by Deidre McCloskey is also good.
I’ve said this before and I’ll say it again: one of “Capitalism”‘s biggest problems is its name. It conjures up images of Mr Monopoly or Scrooge McDuck swimming in his basement full of gold coins. Capitalism isn’t about capital except in a very broad sense. When people hear “capital” they think “rich people with too much money and too much power”.
So let’s call it what it is: “free markets”, “freedom of exchange”, “fair dealing between willing participants”. The power in this system has very little to do with money. It is about the immediacy of feedback when you have to make a product or service that people want more than the money you charge for it. It is about trying without permission, succeeding without penalty, and failing without recourse. It is ultimately about freedom.
The word “capitalism” makes me cringe. Let’s say “free markets” instead and improve its PR. Free markets are about liberating the little guy, and yet somehow “capitalism” is in many people’s mind (sometimes justifiably) about “the system”, the rich, the powerful and them, the regular folks never having a chance to succeed. What a cruel reversal indeed.