Who Killed Capitalism?

A journalist wrote me the following: “I always say both Democrats and Republicans want to transfer wealth. Democrats want to take from the rich and give to the poor. Republicans want to take from the poor and give to the rich. This [proposed government bailout] only proves my point.”

There’s actually some truth to this. Both conservatives and liberals endorse the mixed economy — a lethal mixture of government controls, subsidies, private profit and private property. Conservatives tend to favor “business” — not capitalism, but business — through subsidizing its errors for the sake of the larger society. Liberals tend to favor “the little guy” — not freedom for the little guy, but the little guy as a special interest group — by subsidizing him in every possible way, making him a partial (or total) ward of the state.

In the current crisis, you see both liberals and conservatives exploiting what they see as the primary unit of society. To conservatives, business is most important, although only when protected and regulated by the government. To liberals, who never got over their love affair with Marxism and socialism, it’s the worker who keeps the world going.

Actually, the world can’t keep going unless we return to — or more precisely, discover — full-fledged capitalism. In full-fledged capitalism, it is true that there is no regulation, outside of prosecution for obvious fraud or contract violation. At the same time, under genuine capitalism there are no bailouts — and, more importantly, no possibility of bailouts. Whatever mistakes were made by companies in the past several years, those mistakes were made in a context: a context whereby there was every rational reason to assume that the government would bail them out if there was some kind of disaster. In practice, this means that the rest of society will bail out an entire industry because of mistakes made by that industry.

I don’t know where we go from here. I don’t know how government policy will play out in coming months, and I don’t know what things will be like in the months and years to come. I don’t think anybody knows. I am certain that more government intervention will only lead to more disaster. I am also certain that almost nobody in the country, and certainly nobody in power, chooses to understand this. Liberals and conservatives are fighting, like seagulls on the beach over a carcass, about seizing control of what’s left of wealth in our once capitalist society.

I know that capitalism can and will rise again. It won’t happen on the watch of people like Barney Frank, John McCain, George W. Bush, Barack Obama, or Nancy Pelosi. But it will rise again. I sense some faint rumblings of this in the House of Representatives, at least in the Republican minority. But capitalism — genuine capitalism, not what we have had in the 1980s and 1990s, nor at any time since before the 1920s — will rise again. How can I be so sure? Because it must. Human beings saw how far we could go under capitalism, and how far we fell when we handed it over to the politicians. Human beings can recover from their mistakes, and they will. What you’re witnessing at this juncture in history are the consequences of the abandonment of capitalism. Once more powerful and influential people come to understand this, then a great economy, and a great country, will rise again.