The End of the Story

Q: Dr. Hurd, isn’t the collapse of capitalism, as we know it, and the emergence of all-out socialism in the U.S., a failure of the free-market individualist moment?

A: No. If unrestrained, unhampered capitalism and individual rights were ever given a chance, in practice, their success would speak for themselves — at least in a society where the primary values are material comforts and individual freedoms. The problem in the U.S. isn’t that people don’t want these things. The problem in the U.S. is that we have a mixed economy, and the failures of the mixed economy are blamed entirely on capitalism. The ‘mixed economy’ refers to the system in which some private profit is allowed, but only conditionally and based upon continuous government fiat and control. Everything from our paper currency, manipulated daily by the government-operated Federal Reserve, to our phony capitalistic mortgage houses Fannie Mae and Freddie Mac, to our heavily regulated banking and investment systems, to our alphabet soup federal agencies are all the product of a mixed economy. None of this existed under genuine capitalism, and none of them would ever have been proposed unless we had departed from genuine capitalism. The mixed economy has been part of American phony “capitalism” since at least the 1930s, with increasing intensity each passing decade. It doesn’t matter if Ronald Reagan was President, or if FDR was President — each was responsible for organizing an administration to execute and generally expand the regulatory infrastructure as we know it. The fact that Roosevelt did so gleefully while Reagan did so disdainfully and reluctantly doesn’t change the fact that it has been happening all along. Nearly a century of government intervention was designed to prevent the very things we see happening now from EVER happening. Why doesn’t the mixed economy get the blame?

The problems we’re seeing in today’s economy are much worse than anything you would have seen under a truly capitalist economy, in which the government would have stayed totally out, aside from cases of contract violation or fraud. But none of this matters to those who control the government. The government is in charge and responsible for the running of the economy, according to them and, apparently, according to a majority of the population. If the fundamentals of the economy seem to stop working, we’re told this is because of too much capitalism rather than too little. It’s a tragic misunderstanding on the part of the uninformed, and an evil evasion on the part of those who know what they’re doing. Perhaps advocates of genuine capitalism could and should have done a better job explaining what’s happening. In all fairness, it’s difficult to do so in a system that almost seems deliberately set up to confuse everyone. History may record that socialism was ultimately imposed on America with great difficulty, and only by convincing a majority of Americans that it was, in fact, capitalism that had failed them rather than all the socialist controls that hampered and ultimately did capitalism in. Of course, other scenarios are possible. If I’m correct that the great majority of Americans want MORE economic growth and prosperity for all (yes, including the “rich”), then they’re going to be disappointed as more and more of what was once the private sector becomes nationalized — codeword for ‘stagnant.’ Without staggering and massive reversals in government policy and rhetoric, economic stagnation is coming, and with less and less capitalism — and more and more “Obamaish” France-like welfare statism — in place, how will defenders of more government involvement justify the results of their policies then?

American capitalism, sadly and in hindsight, was first the inspiration and later the envy of the world. It does seem, in many ways, that we have reached the sad ending of a tragic story. But sometimes the worst part of the story is just before the end. The coming few years may tell the tale. Stayed tuned. After all: What other choice do we have?