Financial History Issue 125 (Spring 2018) | Page 12


In Defense of Capitalism Part II : The Temporal Nature of Capitalism

By Brian Grinder and Dan Cooper
In the last “ Educators ’ Perspective ” column , we noted increasingly negative attitudes towards capitalism , especially among young people , and argued that such attitudes cannot be ignored . Those who disparage capitalism need to be heard , but they also need to see the entire picture . Mere propagandistic platitudes will not do . Our younger generations , who often have a rather vague understanding of the workings of the capitalist system , deserve better . We started by defining capitalism as a privately-owned , minimally regulated economic system that seeks production efficiencies , generates profits , seeks to expand markets and encourages innovation . A relatively stable environment where long-term investments can be made is also essential to capitalism ’ s success . In this column , we want to address the commonly held idea that capitalism is merely a stop-gap measure on the road to a superior economic system .
Marxism , socialism and progressivism all recognize the flaws in humanity , and all seek to remedy those flaws at some point in the future by economic means . Capitalism also admits to human failings but makes no such claim to a future economic remedy . The proponents of these alternate economic systems see capitalism ’ s failure to envision a future heaven on earth as a fatal weakness . This leads most of them to conclude that since capitalism is merely transitory and inherently evil , it must eventually be replaced by whatever economic system they favor .
In The Communist Manifesto , Karl Marx argued that capitalism would soon undercut itself because the fierce competition among capitalists would reduce the number of capitalists . The few surviving bourgeois capitalists in their weakened and bloody state would be easy pickings for the proletariat . According to Marx , “ What the bourgeoisie , therefore , produces , above all , is its own grave-diggers .
“ The rootedness of insatiability in human nature leads to a very simple but fundamental insight : the economic problem cannot be solved by economic means alone , not even in a hundred years …”
Its fall and the victory of the proletariat are equally inevitable .”
Marx envisioned a revolutionary movement from capitalism to communism that was apocalyptic in nature . The revolution , he predicted , would occur in the most advanced capitalist nations — Germany and the United Kingdom — where the economic disparities between the bourgeois and the proletariat were the greatest . Once the proletariat controlled the means of production , a great improvement would mysteriously arise in human nature , and there would be no more need for government .
Unfortunately , Marx ’ s revolution began in 1917 in Russia , an agrarian economic backwater . By any standard , the Russian Revolution was a great failure . Journalist Ian Frazier writes :
The worldwide Socialist revolution that the Bolsheviks predicted within months of their takeover proved a disappointment . In fact , no other country immediately followed Russia ’ s lead … Other countries eventually did go through their own revolutions , and of those , China ’ s made by far the largest addition to the number of people under communist rule . This remains the most significant long-term result of Lenin ’ s dream of global proletarian uprising .
Fifty years after the Russian Revolution , one-third of the world ’ s population lived under some version of communism . That number has shrunk significantly , as one formerly communist state after another converted to a market-based economy ; today even Cuba welcomes capitalist enterprises
— Miroslav Volf
from America . The supposed onward march of communism , so frightening to America in the ’ 60s — first Vietnam , then all of Southeast Asia , then somehow my own hometown in Ohio — scares nobody nowadays . The great communist experiment instigated by V . I . Lenin terminated abruptly . Instead of replacing capitalism , the communist revolution ran its tragic , unsuccessful course and died in 1991 . The centennial anniversary of the Bolshevik Revolution occurred in 2017 more than a quarter of a century after the demise of the Soviet Union . Capitalism , ironically , lives on .
Progressives of the late 19th and early 20th century were less apocalyptic than the communists , advocating a movement that would gradually lead to the alleviation of economic disparity . This millennialist approach optimistically believed that economics held the key to solving the problems of mankind and bringing heaven to earth .
In 1930 , during the Great Depression , John Maynard Keynes penned a famous essay entitled “ Economic Possibilities for Our Grandchildren ,” in which he clearly expounded the hopes of the progressive movement . According to Keynes , “… assuming no important wars and no important increase in population , the economic problem may be solved , or be at least within sight of solution , within a hundred years .”
He foresaw a situation where “ for the first time since his creation man will be faced with his real , his permanent problem — how to use his freedom from
10 FINANCIAL HISTORY | Spring 2018 | www . MoAF . org