EDUCATORS’ PERSPECTIVE
In Defense of Capitalism Part IV:
The Promise and the Peril
The Promise
Throughout his career, the late Hans
Rosling expressed amazement at the gen-
eral lack of understanding of the current
state of the world. Rosling went around
the world asking questions, based on sta-
tistics from the United Nations and the
World Bank, to people from all walks of
life. Most of them were unable to answer
his questions correctly. Consider the fol-
lowing question from Rosling’s posthu-
mously published book, Factfulness.
In the last 20 years, the proportion of
the world population living in extreme
poverty has:
A. Almost doubled
B. Remained more or less the same
C. Almost halved
According to Rosling, only 7% of the
people asked knew that the proportion
of the world population living in extreme
poverty has almost halved in the last 20
years. Most did not know that the major-
ity of the world population now lives in
middle-income countries, that 80% of the
world’s population has some access to
electricity and that the average life expec-
tancy in the world today is 70 years.
Rosling attributed such ignorance to
our preference for negative news stories.
“Stories about gradual improvements,” he
noted, “rarely make the front page even
when they occur on a dramatic scale and
impact millions of people.” It is amazing
that Rosling never mentioned capitalism’s
role in our improving world environment,
but its contribution to improving life for
millions is incontrovertible.
For most of recorded history, accord-
ing to economist Deirdre McCloskey,
the average person consumed about $3 a
day. Today, the average person consumes
about $30 a day. “The heart of the matter,”
she declares, “is 16. Real income per head
nowadays exceeds that around 1700 or
“Commerce, which has enriched the citizens of England, has
contributed to their freedom, and this freedom has in turn stimulated
commerce…Posterity will perhaps be surprised to learn that a small
island that had but little lead, tin, fuller’s earth, and coarse wool,
became by its commerce powerful enough in 1723 to send three
fleets at the same time to three separate parts of the globe… All this
is cause for justifiable pride to an English merchant and allows him
to compare himself, not without reason, to a Roman citizen. Indeed,
the younger son of a peer of the realm is not disdainful of commerce.
Lord Townshend, a minister of state, has a brother who is content to
be a London merchant. At the time when Milord Oxford governed
England, his younger brother was a business agent in Aleppo, whence
he did not wish to return and where he died.”
— Voltaire
1800 in, say, Britain and in other countries
that have experienced modern economic
growth by such a large factor as 16, at
least.” This economic miracle is the direct
result of capitalism.
McCloskey argues that the miracle
began in Holland where society’s elites
finally began to accept the idea that honor
and dignity could be ascribed to a career
in business. “It became honorable…to
invent a machine for making screws or
to venture in trade to Cathay.” This great
“Revaluation,” as McCloskey terms it, was
the spark that set off the capitalist revolu-
tion, which spread to England, Scotland
and France.
Philosopher Michael Novak posited
that, “Of all the systems of political econ-
omy which have shaped our history, none
has so revolutionized ordinary expecta-
tions of human life—lengthened the life
span, made the elimination of poverty
and famine thinkable, enlarged the range
of human choice—as democratic capital-
ism.” This is the great promise of capital-
ism, a promise that continues to this day.
The Austrian economist Friedrich
Hayek (1899–1992) understood capital-
ism’s uncanny ability to raise living stan-
dards. However, as journalist John Cassidy
By Brian Grinder and Dan Cooper
Photograph of Austrian economist Friedrich
Hayek, circa 1950. Hayek understood capitalism’s
ability to raise living standards and also realized
capitalism does not work in every situation.
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