First, welcome to all the new readers of Exploring Capitalism this week. I hope everyone is enjoying this new Substack format and the writing I have done so far. If you find value in it, please recommend it to friends and colleagues who you think might also enjoy it. With the generous support from the donors at the Clemson Institute for the Study of Capitalism, this newsletter will remain free for subscribers for the foreseeable future, so help me grow its reach by recommending it to others.
In addition to longer form essays like the first two issues I have published, I’ll also be sending along shorter, digest style updates, called “Compounding Interest,” to share thoughts and links. Some of these brief thoughts may be the basis for future essays, and I welcome your thoughts if you have any, either via email or the comments section on the web version of the Substack.
Unstacking the Deck with Conceptual Clarity
In contemporary discussions of capitalism, one might hear a reference to “neoliberalism” or “market fundamentalism.” The concepts are often used derisively or dismissively, as if the very act of linking a proposal or argument to them is rhetorically equivalent to instant refutation. For a few years now, I have been able to point to Jeffrey Tucker’s insightful mini-history of the idea of neoliberalism and its origins, as well as its inapplicability to those who in fact support capitalism. This month, over at the Future of Freedom Foundation, George Leef has added an insightful analysis of why “market fundamentalism” is equally misplaced in the discussion of the foundations of a free society.
Leef identifies the latest iteration of the idea in a new book, Minds Wide Shut, by Gary Saul Morson and Morton Shapiro. Though Minds Wide Shut does well to warn of a resurgent fundamentalist approach to thinking in many areas, Leef notes, its inclusion of “market fundamentalism” conflates some important distinctions. The phenomenon of fundamentalist thinking, per Morson and Shapiro, is distinguished by regarding a canonical text as inerrant, by dismissing counter-arguments as arising from evil motives or mental illness, and engaging only in contextless assertions, not reasoning. As Leef notes, that two university professors have identified such tendencies in the modern academy and contemporary is noteworthy.
Yet the claim that there is a thing called “market fundamentalism” relies on blurring the distinction between reason and anti-reason. Leef shows how Morson and Shapiro rely upon anti-market thinkers like George Soros and Joseph Stiglitz to criticize supporters of capitalism as being “too certain” or “overly confident.”
As Leef notes, “believing that your conclusions are correct, even ‘certain,’ just shows confidence in one’s thinking, not that it is fundamentalist.” Leef expands his critique of “market fundamentalism” by detailing the ways that anti-market criticisms truck in ignoring the reasoned, evidence-based case for economic freedom while depicting it as somehow a set of arguments not just without evidence (basic fundamentalism) but in defiance of the evidence (aggressive fundamentalism).
“In fact, by calling arguments for eliminating government intervention in the economy ‘fundamentalist,’” Leef continues, “the authors are actually doing exactly what they spend the book deploring; namely, dismissing arguments they don’t want to engage with just by pinning a pejorative label on them.”
The whole article is well worth a read.
Regulating Our Way To Freedom and Opportunity?
Over at Law and Liberty, Nikolai Wenzel usefully digs into the paradox of attempts to use regulation and federal power to untangle markets and increased opportunity.
Over the summer, the Biden administration issued an Executive Order regarding new approaches to “competition policy.” Containing enforcement guidance and rule making initiatives on everything from airline ticket fees to prescription drugs, from banking account changes to minimum wages, the EO was vast in its scope. The President characterized the agenda as “promoting competition in the American economy.”
Wenzel highlights the central problem in the idea of using regulation to achieve freedom. It is hard, he notes, “to take seriously an administration that has, in six short months, vastly increased the regulatory and fiscal burden of the federal government—with unabashed plans for more—and then claims to be addressing competitiveness.”
Check out the details. Wenzel ably dissects the agenda and shows major problems it will create—from massively increasing costs of enforcement and compliance, and thereby harming economic recovery, to pushing beyond the limits of constitutionality. At its heart, the piece shows that in areas where existing regulations and government manipulations have reduced market competitiveness, the solution is removing those barriers, not in adding more regulations to correct them.
Comic-Con for the Society Set?
It is likely that, until very recently, most people had either not heard of the Met Gala or had paid it scant attention. The crème de la crème of high-prestige annual fundraisers has not completely escaped from controversies during its recent history—it has, after all, been co-chaired by the actual Devil Who Wears Prada for the last fifteen or so years.
Although the recent advent of red carpet preening and posturing celebrities and paparazzi may give the impression of a typical Hollywood awards show, with the attendant pabulum from the commentariat, its roots in a rather more staid traditionalism are not so distant. From the late 1970s until 1994, none other than Pat Buckley (yes, the wife of conservative stalwart William F. Buckley, Jr.) chaired the event, and recent sponsors include the David H. Koch Foundation (1997) and billionaire private equity baron, Obama tax policy critic, and Trump donor Stephen A. Schwartzman (2018). Lately though, the $30,000 per person event has become a glitz-fest of A-list names wearing outrageous costume fashion outfits listening to pop star performances and promoting their latest movie, album, or social cause.
In that wider context, it should come as no surprise that Representative Alexandria Ocasio-Cortez stirred up considerable controversy by un-ironically donning a dress emblazoned with the slogan “Tax The Rich” to this year’s event. As soon as I saw the headlines as well as Ocasio-Cortez’s pre-reveal social media justification, I knew the reaction would be both predictable and that it would miss the point.
Right leaning babble-heads busied themselves either calling out Rep. Ocasio-Cortez’s hypocrisy for hob-nobbing with the mega-rich elite while posturing as a patron of the average American or in detailed analysis of exactly how much of the tax burden rests on the shoulders of the top 1%. Left-leaning chatter-mouths responded in kind by elevating the message, refuting the detailed tax rate analyses with number crunching of their own, or, somewhat surprisingly, castigating the New York representative for not doing enough radical policy making and too much shoulder-rubbing with the radical chic fashion world. The New York Times captured the range of sentiments well in its article. Outside this lamentably narrow-(minded) range of reactions, Robby Soave brilliantly nailed his analysis of the real hypocrisy of the event.
The online buzz and perpetual dissection of the event quickly devolved either into an episode of the hypocrisy game—did the designer of Rep. Ocasio-Cortez’s dress actually have a six-figure unpaid tax bill? was the slogan ripped off from the design of a single mom?—or an endless photoshop challenge—what funny slogan could one append to a picture of the dress?
Perhaps it would be too much to expect a real debate to emerge from this tempest in a teapot stirred up at an event specifically oriented to fluff and ephemeral non-significance. Yet the possibilities were there.
We could be having a conversation about whether engineering differential tax rates based on income or wealth or social status is a form of justice. We could be re-examining the history of the federal tax code, noting that the original arguments for taxing the rich so that they paid their “fair share” in the Progressive Era became arguments about federally-enforced redistribution and wealth transfer in the New Deal era—on down to Rep. Ocasio-Cortez herself, who channeling FDR, says it is immoral to have a system where billionaires exist alongside poverty. Perhaps we would have noticed that even if we taxed every single penny of income over one million dollars, assuming anyone would continue working for that extra “income,” the Treasury would only have some hundreds of billions to catch up to the tens of trillions in new spending, let alone the tens of trillions in ballooning debt. Alas, that conversation will have to wait.
Notes on Terminology
I received a couple of queries in response to my first essay here on the concept “capitalism.” Wouldn’t it be easier to escape all the decades of misuse by adopting a new term? In recent decades, many scholars I respect and think are worth taking seriously (among them Bryan Caplan, Deirdre McCloskey, Sheldon Richman, and others) have suggested that we abandon the word “capitalism.” They have strong arguments—the term was coined by the system’s enemies, it has become thickly encrusted with false associations and accusations, it forestalls reasonable debate due to its polarizing connotations, etc. So far, I am not convinced of the call to abandon the term in favor of “the free market” (too reductionistic and economic) or “trade-tested betterment” (inelegant and overly economic). Moreover, as Richard Salsman argues, there is something deeply appropriate in the etymology of the term—in its roots, it means the system of the mind (caput is head in Latin). Eamonn Butler similarly notes that the most fundamental form of capital, which ultimately gives rise to all other forms of capital, is human capital—i.e., our rational capacities. Thus, I think “capitalism,” both the term and the political-social system, is worth keeping around.