I recently had the pleasure of reading this essay at the Ludwig Von Mises Institute website. While I agree with at least some of the general gist of the piece I found the parts I disagreed with worthy of commenting on. Before I do this I would like to note that this piece uses Ludwig von Mises’ “The Anti-Capitalistic Mentality” to critique Thomas Piketty’s book Capital in the Twenty-First Century, which apparently expresses concern about inequality and has some anti-market sentiments. I have not read either of these books, but I am going to grant the assumption, for the sake of conversation, that this author Andrew B. Wilson represents their content accurately. With that out of the way, we can explore my disagreements with Andrew W. Wilson’s article.
First, I favor a disowning of the word capitalism by free market advocates. It causes confusion, and sounds bad to a lot of people. While this author and Mises may have used the word to simply mean free exchange, for a lot of people it means something like “the economic system we have now”, or “the domination of society by big business” or “the hyper-commercialization of society”, and I think there are plenty of reasons why a libertarian can object to the things implied by all these meanings. The word just has a lot of baggage and ambiguity. I have similar feelings about the word socialism as well. Further discussion on the problems with using the label “capitalism” can be found here.
Additionally I find the Author’s statement “Few people credit capitalism for the fact that they enjoy amenities that were denied to even the most prosperous people of earlier generations. Telephones, cars, steel-making, and thousands of other advancements are all “an achievement of classical liberalism, free trade, laissez faire, and capitalism” to be highly problematic. To start all three of the examples he gives are things that government infrastructure played a major role in making as ubiquitous as they are. They can hardly be called achievements of classical liberalism, unless by classical liberalism one means government and business collusion. What is worse is that a lot more of the amenities that make modern life as rich as it is are products of government funded R&D, often in the form of the military or space program research. I’m not saying that the resulting amenities justify the uses of force that contributed to their being developed, I am only saying that attributing them to free trade or classical liberalism strikes me as misguided, since this is at best a gross over-simplification and at worst dishonest.
My next objection comes when Piketty goes onto claim that objections to what he calls “capitalism” spring from “envy, the green-eyed monster, which causes many people to think they have gotten the short end of the stick“. I have written about my problems with this common trope here, but here is a quick summary. I know a lot of people who are political liberals, progressives or adherents of ideologies other than free market ones. Some of these individuals are quite wealthy, others are not, but I do not believe any of them hold their positions because they are simply jealous or envious of people than richer them. Most are motivated by things like a desire to not have poor people starving to death, or see the people around them suffer from greater levels of insecurity if they get laid off or whatever. It strikes me as highly tone deaf and obnoxious to hear a bunch elitist libertarians claiming that anyone who disagrees with them simply jealous. I think this sort of attitude undeniably alienates many people who would otherwise be interested in libertarian ideas.
This is not to mention that many of the super elites that dominate the economy made their fortunes through government contracting, licensing cartels, subsidies, war-spending, ect. Criticism of such things should hardly be dismissed as jealousy. It is an undeniable reality that certain companies have enriched themselves at the expense of the tax-payer and the consumer, and they should be called out on this. I also tend to think that despite validity of his ideas, Mises brought an elitism to the libertarian movement that is both misguided and generally obnoxious to a lot of people.
My next objection comes when the author list the third reason why he/Mises think people have an anti-capitalist mentality: “And finally, the third factor is the unceasing vilification of capitalism by those who seek to constrain or destroy it.” While there may be some truth to this I find promoters of what is labeled capitalism are even more responsible. For decades (if not centuries) government managed corporatism, cronyism and American international intervention have been marketed as “capitalism”, “free market reforms” or “the free market”. If people believe that these things are what the free market is all about than it is no wonder they are rejecting it. We have seen free market language and appeals to capitalism used to justify horribly interventionist policies by the likes of GW Bush and Reagan and even regimes like Pinochet’s Chile. If these things are what is being marketed under those labels it should be little surprise that much of the population is rejecting it.
The author goes on to state that Piketty “contends that disparities in income and wealth are spiraling out of control, setting the haves- against the have-nots”. As I mentioned before I have not read Piketty’s book nor am I familiar with his data, enough to comment on it. But my understanding is that huge wealth disparities are usually not a sign of societal health or stability. I find it strange and self-defeating that so many libertarian writers have this knee-jerk impulse to defend economic inequality, without qualification, whenever and wherever they find it. I would think a better strategy would be to acknowledge that inequality is a problem when it is not the product of a free and competitive market and to point out all the things the government does that leads to wealth being concentrated in the hands of a narrow elite. I think a narrative that focuses on all the ways the government enriches the few at the expense of the rest of us would be a much easier sell than a knee-jerk defense of all inequality. I do acknowledge that this author does go on to make a similar point in his footnote.
Next, comes the point when the author points to the growth in numbers of Chinese and American billionaires and claims it a result of the freeness of the economies in these countries. My problem with this is that both of these countries are unambiguously corporatist and cronyist. I suspect that in a true free market (one without government infrastructure, licensing, subsidies, patents/copyrights, liability limits ect.) there probably would not be a whole lot of billionaires. I strongly suspect that a frees society would produce a much more egalitarian distribution of wealth since all enterprises would be subject to high levels of competition, as there would be no state imposed barriers to entry. Simply put it does not seem likely that one could make the equivalent of billions of dollars without patent protections, government infrastructure or special opportunities to extract resources from government lands.
One a final note, the author goes onto state “Mises would have challenged Piketty’s assumption that the heirs to great fortunes would manage their money wisely, or that they would have the same success as others (more driven than they) in searching out the best investments.” I am sure there is some element of truth to this, but I does seem to me that the Mitt Romneys and Charles Kochs of the world, did have, and will be able to give their children, advantages above and beyond what most of the rest of us had. Even if their children squander these advantages they still will be living better than most of us for a good while. My understanding is that many very wealthy and powerful people had huge advantages over the rest of us starting at very young ages and I do not think this is a reality of the current system we should be trying to sweep under the rug. Those are my main thoughts on this piece. Thanks for reading.