Capitalism or Trouble

The authors of American Amnesia, well-known political scientists from Yale and Berkeley, argue that supporters of the free market have forgotten a fundamental truth. Defenders of the market often point to the “Great Fact,” as the distinguished economic historian Deirdre McCloskey terms it, i.e., the amazing increase in human well-being and wealth that began about two hundred years ago when trade and production in parts of Europe and America became freer than ever before. Does this not make manifest the virtues of the free market? Our authors do not think so. It is the “mixed economy” of government and business that has accomplished the real economic miracle.

They explain in this way what they have in mind: “The political economist Charles Lindblom once described markets as being like fingers: nimble and dexterous. Governments, with their capacity to exercise authority, are like thumbs: powerful but lacking subtlety and flexibility. … Of course one wouldn’t want to be all thumbs. But one wouldn’t want to be all fingers, either. Thumbs provide countervailing power, constraint, and adjustment to get the best out of those nimble fingers.” (Lindblom, by the way, was so long ago as 1951 a target of William Buckley’s God and Man at Yale: Lindblom used some of the same anti-market arguments that our authors deploy here.)

for material gain above the common good. They and others are the amnesiacs who “have never been good at acknowledging government’s necessary role in supporting both freedom and prosperity.”

Unfortunately for our authors, these contentions about the obstructionists do not follow, even if one accepts the view that a mixed economy is necessary. From the “fact,” in my view, the opposite of the truth, that government provision of certain services is necessary, it does not follow that one ought  now to favor the extension of the government’s activities. How many of the Republicans whom our authors excoriate, one wonders, wish to do away altogether with the mixed economy? The fact that most of them vote for billions of dollars in government programs, albeit in lesser amounts than “progressives” would like, suggests that they too support a mixed economy.  This to my mind is an unfortunate fact, but it is a fact nonetheless.

Thus, the authors have failed to make a case for the mixed economy and also failed to show that large numbers of people have forgotten this case. Despite the eminence of the authors and their book’s fifty-nine pages of notes, American Amnesia is a work of propaganda, not of scholarly inquiry.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

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