The coronavirus is bad news for everyone, obviously, but it is especially bad news for free-marketeers. An epidemic, like any perceived common threat, makes people warier, more collectivist, more authoritarian. We are thrown back onto our Pleistocene heuristics: hunker down; make sure you have enough food stored; avoid outsiders; keep your kids close.
Translate these instincts into policies, and you end up with closed borders, closed economies, and closed schools. “The crisis shows why we need to be more self-sufficient,” previously reliable free-traders keep telling me. Actually, it shows nothing of the sort. Even a simultaneous global shock did not prevent international food markets from functioning normally. If anything, the coronavirus has reminded us of how critical it is to be able to import supplies from a wide variety of places. In Britain, the closures hit during what farmers call the “hungry gap”—the lean weeks between late March and early May when winter crops such as potatoes and cabbages have run out, but when we have not yet reached the first summer harvests. Had we not been able to source what we needed from around the world, we’d have been living on rhubarb, asparagus, and maybe a bit of nettle soup.
The trouble is, few people think logically in times of generalized panic. They begin with their hunches, their Paleolithic intuitions, and then they cast around for ways to rationalize them. No amount of empirical data will settle their unease at the thought that their country depends on imports. Even in normal times, the notion of relying on strangers for what you need—the basis of a modern economy—feels unnatural. That is why protectionism, state intervention, and economic nationalism are perennially popular, despite the fact that they always, over time, make a country poorer. In moments of crisis, our book-learning gives way to our tribal instincts and we become, for want of a better shorthand, Trumpier.
Might the pandemic bring the end of capitalism? Oddly enough, I am slightly more sanguine after reading Foretelling the End of Capitalism by Francesco Boldizzoni. It turns out that predictions of an imminent end to competition and private ownership are as old as capitalism itself. In every age, publishers pay good money to writers who are prepared to prophesy the end of the free market.
Boldizzoni, a political scientist at Helsinki University, runs through these critics pretty comprehensively, from Karl Marx through Herbert Marcuse to Slavoj Žižek. His book is written from, and largely aimed at, the Left—or, as he puts it, at readers who “are driven by a strong commitment to social justice.”
That said, Boldizzoni does his best to paint from a broad palette. Yes, he gives plenty of space to the socialists of each generation who, like cultists sensing that Judgment Day is nigh, keep finding signs and auguries that Marx is about to be vindicated. But he also makes room for cultural conservatives who decried capitalism as vulgar and destructive of traditional morality. He finds space, too, for pessimists who recognized the achievements of capitalism, but who doubted its sustainability. He reminds us, en passant, that even David Ricardo believed that there would come a time when economies stopped growing.
Joseph Schumpeter, that brilliant and vinegary free-marketeer, gets a decent hearing, as does John Stuart Mill—albeit the older and more interventionist Mill, not the younger libertarian. Even Deirdre Nansen McCloskey, who attributes the great enrichment of the past two centuries to the rise in bourgeois values, gets a mention—though it is hard to believe that the author has ploughed through the whole of her gargantuan trilogy.
Indeed, one gets the impression that, while Boldizzoni has dutifully familiarized himself with the works of economic liberals, he hasn’t properly grasped what makes them tick. There is a revealing moment when he talks about “the famous ‘trickle-down’ argument, which John Kenneth Galbraith once compared to the old saying that ‘if you feed the horse enough oats, some will pass through to the road for the sparrows.’ The origin of this curious doctrine is lost in the mists of time.”
Actually, the reason that its origin can’t be located is that no one has ever advanced such a deranged doctrine. Search online for “trickle-down economics” and Google will prompt you with “debunked,” “failure,” and “is a fallacy.” What you won’t find is anyone actually arguing that the best way to stimulate growth is to give plutocrats more money to spend on their yachts.
“Trickle-down economics” is a leftist slur, a caricature of what capitalists are supposed to believe. The origin of the phrase is not lost at all. As Thomas Sowell established, it was first uttered by Samuel Rosenman, a New York Democrat who worked as fdr’s speechwriter, and who deployed it to attack “the philosophy that had prevailed in Washington since 1921, that the object of government was to provide prosperity for those who lived and worked at the top of the economic pyramid, in the belief that prosperity would trickle down to the bottom of the heap and benefit all.” Rosenman was ludicrously misrepresenting the Coolidge administration, which had strategically cut tax rates so as to boost tax revenue. But the words, and the falsehood they represent, have been so widely repeated in progressive circles over the intervening century that they now go unquestioned.
“Trickle-down economics” is a handy ideological Turing test. You only ever hear the phrase when a leftist is advancing what he imagines to be the rightist case. In truth, we free-marketeers believe not in trickle-down, but in trickle-up: capitalism, uniquely, rewards people who offer goods or services to the masses. Yet Boldizzoni can assert, apparently in good faith, that “the principle that ‘you expand and revitalize the economy by giving the poor less, the rich more’ became the official doctrine of the Reagan and Thatcher administrations.”
Seriously? The official doctrine? Both those leaders presided over a sustained rise in living standards for people at all levels of income. The quotation comes, not from any Reaganite or Thatcherite, but from the liberal economist J. K. Galbraith.
Boldizzoni is more comfortable when describing the Marxists who have kept trying to fit their bearded prophet’s theories to the circumstances of their own day. Although he is honest enough to spot what they keep getting wrong, he shares their broad intellectual framework, seeing history in Hegelian dialectical terms. He is thus attuned to precise variations in their arguments which, to the non-Marxist reader, seem trivial.
What is most striking about the anti-capitalist critique is that, with a few exceptions such as the introduction in the 1960s of the idea that natural resources might run out, it has changed so little. Its essentials were all there in the writings of the old cadger himself. Capitalism was doomed by its tendency to “overproduction.” It would at first preserve itself by scrambling around for new markets—earlier Marxists thought mainly in terms of colonial exploitation, later ones in terms of the ability of advertisers to make people want useless products—but it would eventually become unsustainable. The mass of people who worked without owning stuff would overthrow the minority who owned stuff but didn’t work, and a golden age would dawn.
That is a broad generalization, and plenty of clever people have nudged the argument this way or that. But you surely have to be an intellectual not to spot the fact that Marx was spectacularly wrong. I don’t mean he was wrong in a moral sense—though, with perhaps a hundred million deaths resulting from the application of his philosophy, he has a heavy case to answer. No, I mean that he was a hopeless forecaster. He thought he was describing ineluctable historical processes, but every one—every one—of his predictions turned out to be a dud.
Capitalism, Marx wrote, would polarize society between a handful of oligarchs and a dispossessed mass. In fact, it has enlarged the middle class wherever it is practiced. The revolution, he said, would occur when the working class became sufficiently self-aware, something he expected to happen first in Britain and Germany. In fact, as working people in those countries became more educated, they became more attached to private property. The revolutions instead happened, calamitously, in the last places he’d have expected: the agrarian societies of Russia and China. Capitalism, he believed, was doomed: it would collapse under the weight of its internal contradictions. In fact, when he made that prediction in 1848, markets were already working their magic. During Marx’s lifetime, the real income of the average British family increased by an incredible 300 percent.
Yet his disciples have kept the faith, always imagining that doomsday is just around the corner. Such is the power of his creed that, despite its palpable falsehoods, it has seeped into general discourse. Plenty of people who don’t consider themselves Marxists have unconsciously drunk in its assumptions—above all its incorrect but nowadays widespread belief that the rich are getting richer while the poor get poorer. Every time we use words like “exploit” or “bourgeois” or, indeed, “capitalism,” we are quoting either Marx himself or his adjacent theorists.
How are we to explain this endurance? How is it that Marx, the anti-clerical grandson of two rabbis, ended up becoming what he detested—the patriarch of a false religion? We can hardly attribute it to his prose: like most of his followers, he had a peculiar ability to write clunky sentences.
No, I think his power lies in something else, namely the fact that capitalism, for all its utility, seems wrong. We are not designed for a world of skyscrapers and superabundance. We feel (to use a word that Marxist academics love) “alienated.” Even when we recognize that we are living longer, healthier, and richer lives than any past generation, we somehow sense that something is missing. We complain that modernity is soulless and materialistic. That complaint is a howl of protest from our inner caveman, yearning for the community and simplicity of the tribe.
Why has capitalism survived when each generation spurns it? Boldizzoni argues that it rests on hierarchy and individualism. The first claim is nonsense. Every alternative system is more hierarchical, because free contracts allow us to relate equally one to another instead of having our relations mediated by birth, caste, and tradition. To sustain his claim, the author argues that capitalism isn’t just about free markets because China and something or other and mimblewimble. The trouble is that the word “capitalism” has, from the first, been applied by the other side, and is therefore often used to mean “something I don’t like.”
The author is correct when he identifies individualism as a defining characteristic. Yet, while the elevation of personal autonomy might serve to make us richer and freer, it still runs up against a million years of evolution. In our dna, we long for the authority and hierarchy of the kin-group.
No, the success of capitalism is more contingent and more precarious than that. Because it generated wealth, it allowed the countries that adopted it to outperform rival systems—absolute monarchy, theocracy, tribalism, fascism, communism. Had the market economy not allowed Ronald Reagan to tell Mikhail Gorbachev that he could never win the Star Wars arms race, history would look very different.
That, though, is no defense against internal decay. The open society generated by free contract, limited government, and the elevation of the individual may well turn out to be a blip, a brief interglacial between ice ages. If so, we will miss it more badly than we can imagine.
This article originally appeared in The New Criterion, Volume 39 Number 4, on page 80
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