June 25, 2022

Where Have All the Capitalists Gone?

Duke University professor Richard Salsman asks an alarming rhetorical question in his new book.

Economist Richard Salsman presents liberty advocates with a striking rhetorical question in the title of his most recent book. Are there really fewer capitalists than ever before?

Pundits and theorists have been lamenting the threats to free enterprise and the paucity of its defenders almost as long as American capitalism has existed, of course, but that doesn’t mean that recent warnings are any less urgent. Upon diving into the corpus of Salsman’s collected essays from the past decade, however, the bigger question may be why capitalism ever had enough defenders to come into existence in the first place.

Salsman, a professor of political economy at Duke University, starts with an important semantic distinction: people who are in favor of socialism are called socialists, so why don’t we call everyone who is in favor of capitalism a capitalist? Instead, we tend to reserve that word for someone who is a CEO, a start-up founder, or a finance professional: in other words, people who are assumed to be wealthy already.

This makes being a capitalist sound more glamorous, but reinforces the prejudices of the socialist view, which asserts that socialism is preferred by the great majority of people, because it benefits the masses, while capitalism is preferred only by the elite few who build fortunes by its operation.

But as Salsman reminds us, a capitalist economy creates the opportunity to build wealth for everyone who cares to participate in it, employees and CEOs alike. Capitalist countries might have higher degrees of income and wealth inequality, but they also tend to have much higher degrees of income and wealth overall. Moreover, the presumption that everyone should be equal in career and financial achievements denies not only the diversity of human society – that we have different abilities and strengths – but also the diversity of our goals and desires. Even if we were all equally talented and intelligent, we would want different things and pursue vocations of differing value to others. Only a tyrannical micromanaging of everyone’s life could make us financially and demographically the same.

But if free societies are both more economically prosperous and more reflective of our freely chosen selves, then capitalism finds itself beset by a paradox, one that Salsman returns to again and again in his essays. Not the paradox proffered by capitalism’s critics – that it is economically productive but somehow ultimately immoral – but that it is both productive and moral, yet somehow perennially attacked and derided. How could such a system – so perfectly suited to human flourishing that Salsman cheekily refers to it as the ideal “habitat for humanity” – be the subject of such poisonous calumny from so many directions?

As might be expected of someone who frequently invokes the writing of Ayn Rand, Salsman points to the flawed moral premises of many of capitalism’s critics. Capitalism, property understood, is not just an economic system, he reminds us, but one based on vital political and ethical principles as well. We need to be free to buy and sell, but we also need a rights-based system of limited government, like the US Constitution, and an understanding that enlightened self-interest is superior to altruistic self-sacrifice. Many of capitalism’s critics are ideologically opposed to the deeper foundations of capitalism, so the fact that such a system produces both wealth and opportunity is, to them, a second-order irrelevancy. They prefer their theories to the facts of human existence.

In Salsman’s analysis, these opponents can be sorted into two general categories – those who are explicitly opposed to capitalism, and those who are theoretically supportive of it, but lack the principled moral grounding to fully embrace it. In the first group, we have an array of communists, socialists, progressives, and elected Democrats. But in the other, we also have many conservatives and even libertarians who Salsman derides as fair-weather patriots in the battle for free markets and limited government. The only true, consistent supporters of capitalism are apparently Objectivists like Salsman himself. Even Hayek gets a verbal thrashing for his support, in The Road to Serfdom and The Constitution of Liberty, of social-safety-net style welfare programs.

This extremely high standard for who qualifies as a “real” supporter of capitalism produces the book’s other compelling contradiction. It is important to hold commentators, policymakers, and general readers to first principles and make the strongest possible case that human beings should be free to invent, profit, and transact business with each other, unmolested by economic planners and envious killjoys. From that perspective, Salsman’s vociferous and choleric style is a breath of fresh air, saving us from mealy, unprincipled compromise and stale political cliches. Much like Rand herself, he fires the imagination of readers who want to live by clear moral principles that celebrate humanity.

But we also live in a democratic republic in the 21st century. We have a mixed economy, in which our shared commercial life is already widely politicized, and the policies that keep it that way have the support of an interlocking set of influential interest groups. The elected politicians who have the power to change the system – even the ones theoretically in support of reform – rarely exhibit the boldness that would be required to actually reform it. Going against that system to fight for greater freedom will be difficult. But what chance do we have if even libertarians, considered by most conventional political thinkers as the most extreme pro-capitalist faction on the American political spectrum, don’t qualify as the real deal? I’m not aware of any scientific estimates of the total number of Objectivists in the United States, but it’s fair to say they aren’t in danger of becoming a popular voting majority any time soon.

So while I admire Salsman for pushing back on the tribalism and reactionary opposition to human flourishing so unfortunately common in American political life, we still have a long way to go when it comes to putting together a practical coalition for turning back the tide of collectivism in law and policy. This would have been true even a decade ago in the midst of the Tea Party era, when there was a genuine populist movement for cutting taxes and government spending. But the challenge is even more daunting now that we are seeing a significant fraying of the fusionist alliance between conservatives and libertarians that kept both groups allied in favor of economic freedom in the several decades preceding the Trump years (see my colleague Iain Murray’s recent book The Socialist Temptation on this problem).

So while Salsman has not given us a blueprint for solving all of our economic and political problems, he has at least given us an excellent assessment of them. He presents strong opinions on many of the most important economic developments of the last decade, including the Troubled Asset Relief Program (“it made things worse”), the increased prominence of the Democratic Socialists of America (a “fad group for some of the young”), Covid-19 lockdowns (“unwarranted, unprecedented”), the extension of unemployment benefits (terrible), and the Federal Reserve’s repeated inversion of the yield curve (how much time do you have?).

Salsman’ clear explanation of the fundamental principles at issue in each headline-grabbing crisis help overwhelmed readers see past the drama of the moment and the arguments-from-necessity that accompany the recurrent power grabs by politicians and bureaucrats.

Being an essay collection, the book doesn’t have a single narrative or theme, but it is helpfully organized into thematic chapters. While the original essays were written in response to a sundry assortment of topics and news personalities, they contain a lot of valuable economic pedagogy that is missing from less intelligent, mainstream punditry. While likely not out of any intention, Where Have All the Capitalists Gone? might reminds readers of both of James Doti and Dwight Lee’s The Market Economy: A Reader (Roxbury, 1991) and, perhaps surprisingly, Irving Kristol’s Two Cheers for Capitalism (Basic Book, 1978), another book of collected columns and op-eds focusing on economic policy.

Students of political economy, both collegiate and adult, would be wise to commit their reading time to Salsman’s analysis.

This article, Where Have All the Capitalists Gone?, was originally published by the Foundation for Economic Education and appears here with permission.  Please support their mission.