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Can American Capitalism Survive?

Capitalism in America: A History, Alan Greenspan and Adrian Wooldridge, Penguin Press, 496 pages [1]

“I hear America singing…the United States is the greatest poem” — Walt Whitman

It’s not often that I read a book, mark it up on every page, and listen to the audio recordingto boot. Capitalism in America is a delightful romp through the 400-year economic life of America from agricultural giant to industrial juggernaut to information/technology revolutionary. Stories and statistics sparkle on every page.

But the book is more than a history. It is a policy guide to make sure capitalism in America flourishes like never before.


I seldom say this, but this book is required reading for anyone who cares about life, liberty, and prosperity in America. Capitalism in America is a celebration of free enterprise. The authors’ thesis is plain and simple: the giants of American business and enlightened Founding Fathers created the greatest form of democratic capitalism and a land of opportunity, resulting in “the highest standard of living in the world.” Former Federal Reserve chairman Alan Greenspan and Economist political writer Adrian Wooldridge (hereafter referred to as G&W) have written the best summary of American exceptionalism since John Chamberlain revealed the remarkable story of The Enterprising Americans in 1963.

Their heroes are the entrepreneurs, from Eli Whitney to Steve Jobs, and the intellectuals who advocated policies that encouraged the invisible hand of the marketplace, “shifting resources to more productive activities…creating new jobs and opening new enterprises.” Ayn Rand, Greenspan’s mentor, said it best: “Throughout the centuries there were men who took first steps down new roads armed with nothing but their own vision.” The results have been astonishing, leading the world in food production, industry, healthcare, transportation, finance, and entertainment.

Even the tycoons of the Gilded Age, known as the “robber barons,” are largely applauded: “For the most part…these businesspeople were neither ‘robbers’ nor ‘barons.’” Vanderbilt, Carnegie, and Rockefeller didn’t inherit wealth, but came from humble circumstances. In their chapter “The Age of Giants,” the authors declare, “The titans prospered by exploiting economies of scale rather than by price gouging. They prospered by creating markets…with ever-cheaper products.”

Carnegie offered “the best steel at the lowest price.” Rockefeller stabilized the oil industry and refining business, buying out competitors with generous stock offers, and “used his organizational genius to lower unit costs rather than to bilk the public.” Most were philanthropists extraordinaire. J.P. Morgan transformed the face of corporate America through the creation of new companies and mergers, the financing of the railroads, twice bailing out the U.S. government from default on its gold holdings, and saving the country from a financial panic in 1907. It’s like the authors took a page from Hillsdale professor Burt Folsom’s The Myth of the Robber Barons, though ironically G&W continued to use the pejorative term “robber barons” throughout the rest of the book.

Capitalism for the Masses

G&W’s favorite phrases are the “invisible hand” of Scottish philosopher Adam Smith and “creative destruction” of the Austrian economist Joseph Schumpeter. (I prefer the more accurate phrase “creative disruption.”) Smith’s “system of natural liberty” formed a “remarkable intellectual somersault,” the authors declare. Prior to 1776, when Smith wrote The Wealth of Nations, people “had generally regarded the pursuit of self-interest as, at best, unseemly, and at worst, sinful. Smith countered that, provided it took place within the constraints of law and morality, the pursuit of self-interest boosts the well-being of the entire nation.”

Indeed, America is living proof of Smith’s promise that his “system of natural liberty”—incorporating a trinity of freedom, competition, and justice—would increase the quantity, quality, and variety of goods and services, and therefore lead to “universal opulence which extends itself to the lowest ranks of the people.” The tycoons of the late 19th century created “the age of the common man.” As Carnegie boosted, “Capitalism is about turning luxuries into necessities.”

I learned many new facts and ideas from Capitalism in America. For example, G&W call the creation of the limited liability private corporation “the greatest single discovery of modern times.” Under the new business organization, anyone could create a company after paying a small fee and meeting some basic capitalization requirements. The private corporation could last beyond the grave, and could declare bankruptcy without personal liability. The authors declare, “It changed the balance of power between the state and the private sector: instead of businesspeople lobbying government for the privilege of incorporation, state governments lobbied business for the privilege of their presence.”

Indeed, G&W dedicate the most space in their book to the period from the end of the Civil War to America’s entry into the First World War “because it was the country’s greatest era of creative destruction.”

Political Roadblocks to Prosperity

The headwinds holding back the dynamic growth of American business include labor unions, misguided politicians, and academic intellectuals. Their influence rose rapidly after the First World War. G&W are Hamiltonian conservatives who favor the gold standard, free trade, private enterprise, and a small but powerful government. They are quick to indict the disastrous economic policies of Herbert Hoover, Franklin Delano Roosevelt, Lyndon Baines Johnson, Richard Nixon, and George W. Bush, among others. To summarize their impact:

Hoover’s response to the economic storm of the early 1930s was to raise taxes, sign the disastrous Smoot-Hawley tariff bill, and, through the Federal Reserve, fail to be a lender of last resort to commercial banks.

Despite being an “irrepressible optimist,” Roosevelt took advantage of the “Hoover Depression” to transform the American laissez-faire economy into “a Washington-dominated political economy.” He centralized power via “numerous mistakes,” such as the National Recovery Act, Agricultural Adjustment Act, the Wagner Act, and the National Labor Relations Act. The consequences were permanent entitlements such as Social Security, price fixing, regulation, cartels, anti-business rhetoric, and “a hodgepodge of often inconsistent policies” that postponed recovery for the entire 1930s. Only the Second World War bailed him out.

Roosevelt was followed by the relatively benign administrations of Truman, Eisenhower, and Kennedy, resulting in a post-war golden age of growth. But then came “Landslide Lyndon” Johnson, who took advantage of Kennedy’s assassination to push through a “massive expansion of the entitlement state” with Medicare, Medicaid, food stamps, and Aid to Families with Dependent Children. As a result, government spending and the national debt ballooned, and “government began to fail at everything it touched, from fighting poverty to fighting the North Vietnamese.”

Then Nixon came along and “presided over an even bigger expansion of the entitlement state than LBJ,” adding wage-price-rent controls, creating new agencies such as the Environmental Protection Agency, and taking America off the gold standard. The 1970s were an age of stagflation, energy crisis, and public negativity towards government.

The Ford-Carter era was followed by the “Age of Optimism,” bull markets on Wall Street, and a short-lived “end of big government” under Reagan, Bush 41, and Clinton.

The 9/11 terrorist attacks in 2001 allowed the “compassionate conservative” George W. Bush to be “the biggest government spender since his fellow Texan Lyndon Johnson.” Surpluses quickly disappeared, replaced by monstrous deficits. The financial crisis of 2008 elected Barack Obama, but the economy’s recovery was tepid after the passage of Obamacare and Dodd-Frank.

Which brings us to the present: “America’s Fading Dynamism.” G&W endorse some of President Donald Trump’s agenda, such as corporate tax cuts and deregulation, but not his “dangerous” trade policy. To “make America great again,” the nation, they advise, must address the more difficult problems of entitlement costs, our failing infrastructure, and the never-growing national debt. Most importantly, we must enjoy a vibrant financial sector with a stable monetary system. America needs to be on the move again as a “caravan” society, not a “citadel” society like Europe.

A Few Sins of Omission

There are a few sins of omission in the 496-page account. The authors missed a huge opportunity by leaving out perhaps the best case study of labor-capital relations in the 20th century: the famous Henry Ford $5-a-day story, when Ford made front page news by more than doubling overnight the wages of workers in 1914. In one brilliant move, he destroyed the Marxist arguments of exploitation and alienation. Ford shared his record profits with workers and for the first time employees could buy the product (the Model T) that they were making. Ever since then, the Marxists have bemoaned the revolutionary impact of what they call “Fordism.” This story is told in detail in most economic histories, including Jonathan Hughe’s The Vital Few, and I always make a point of discussing it with my students at Chapman University.

There are a surprising number of dynamic industries that are omitted in their history of post-war American business, such as sports franchises, advertising, publishing, and even the sex industry, which began in earnest under the demonic genius of Hugh Hefner and Playboy magazine.

Not surprisingly, the authors reject the popular view that the Federal Reserve, led by Greenspan, helped create the artificial boom in real estate prior to the financial crisis of 2008. They blame President George W. Bush’s “Blueprint for the American Dream” for subprime mortgages, and Wall Street for promoting high-risk and highly leveraged mortgage securities. Never mind that Greenspan’s Fed kept interest rates artificially low, as low as 1 percent, for several years prior to the crisis. Never mind that Greenspan and his successor Ben Bernanke were the chief bankers of the United States and did nothing to discourage fraudulent “no doc” and “subprime” mortgage loans, while other central banks in Canada, Australia, Switzerland, and other parts of the world maintained their high “prudent man” banking standards. It does not take much courage to “inject liquidity” after a monetary crisis hits. It’s taught in every money and banking class in college. But it does take wisdom and discipline to prevent a bubble from forming in the first place. And on that level both Greenspan and Bernanke failed.

Will American Capitalism Survive?

There has been a long-standing debate about the dynamic model that made America great. Can it continue? Schumpeter was pessimistic. “No,” he wrote, “I don’t think it can. Can socialism work? Of course it can.”

G&W disagree with Schumpeter on both counts. Socialism has failed wherever it has been tried. And they reject the pessimistic “secular stagnation” thesis of Robert Gordon, Tyler Cowen, and Larry Summers. America’s fading dynamism isn’t written in stone—our political leaders can take actions that will restore productivity if we address the entitlement and infrastructure challenges of our time, and reject protectionism and excessive regulation. G&W use Sweden as an example. After its 1991 fiscal and monetary crisis, the Swedish government introduced a succession of measures, including privatizing its social insurance company and cutting marginal taxes, so that the size of government has fallen from 67 percent to 49 percent of GDP. Sweden is now “the crown jewel of Europe.”

G&W are rightly worried about America being trapped in an “iron cage” of excessive taxation, regulation, and entitlements. They promise a daring escape, but first they need the right set of keys. The real question is, are there any statesmen left in America who are willing to use those keys?

Mark Skousen is a Presidential Fellow at Chapman University and was recently awarded the Triple Crown in Economics. He is the author of The Making of Modern Economics, and the producer of FreedomFest, “the world’s largest gathering of free minds,” in Las Vegas every July.

47 Comments (Open | Close)

47 Comments To "Can American Capitalism Survive?"

#1 Comment By FL Transplant On February 6, 2019 @ 10:04 pm

Roosevelt Johnson’s “massive expansion of the entitlement state” occurred because of the failures of capitalism. Elderly in abject poverty lead to Social Security. The inability to access medical care because of an inability to pay lead to Medical and Medicaid. Hunger in America particularly in Appalachia, lead to food stamps/SNAP.

I don’t see where moving from the gold standard to fiat currency isn’t capitalistic, but perhaps someone can educate me. Same with the creation of the EPA (and I assume the Clean Water and Air Acts)–I’m missing the argument here, unless the argument is that any government regulation/restriction represents a nefarious throttling of capitalism.

Perhaps capitalism could have resolved these issues–the the hard, cold facts is that it didn’t, significant problems emerged because of the failing, and the government took action to address those issues. I’ve yet to see any serious “capitalistic” solutions offered as an alternative, beyond the normal “kill the programs and let the free market work its magic”. It didn’t before; why would it do so now? Those arguments to me are like those who argue that the various Civil Rights Acts were an infringement on the ability of the market, and if left alone the market would have solved the problems the federal laws addressed. The only problem with that argument–the market had had a century to address those issues, and it had failed for that century.

The most socialistic government program I’m aware of is spending on military and VA health care. That’s true socialism–government paying for government-provided services. Care to tell me how you plan to fix that?

The deficit isn’t a problem of capitalism or socialism; it’s the inability of our political leadership to make the necessary decisions to raise the funds to provide for the programs the populace wants and it established. I’ll issue the challenge to conservative leadership to bring the budget and spending into alignment. About half of the federal budget is transfer payments to the elderly–Social Security, Medicare, and the portion of Medicaid that covers nursing home care for those who can’t otherwise afford it. A bit over 20% of the spending goes to national defense–DoD, the intelligence agencies, the Dept of Energy’s nuclear weapons activities (which is over half of the Dept of Energy’s budget), and the VA. About 10% goes to interest on the national debt. When all is said and done the rest of the federal government costs about 15% of total annual spending. So, what’s the conservative plan to cut spending through reducing payments to the elderly, spending on defense, and interest on the debt?

#2 Comment By Steven Scott On February 6, 2019 @ 10:32 pm

“G&W are rightly worried about America being trapped in an ‘iron cage’ of excessive taxation, regulation, and entitlements.”

Whenever I hear of politicians and pundits calling for less regulation, I wonder which regulations they would like to see axed. We would have been much better off had we had more effective controls over the sub-prime mortgage industry (including mortgage-backed securities and CDOs) prior to the 2007/2008 economic crisis. And speaking of the EPA, I am no fan of the Trump administration’s weakening of environmental laws and regulations. Too many of our present day “robber barrons” would gladly poison our air and water in their quest for profit. The impact on their health and well-being would be negligible given their ability to live in enclaves far removed from the pollution affecting the poor and disadvantaged. Airborne pollutants are not only responsible for respiratory disease, but have been shown to increase rates of cardiovascular disease and diabetes. Thank goodness that many of the poor are eligible for the “Medicaid entitlement”, or they would be even worse off.

#3 Comment By EliteCommInc. On February 7, 2019 @ 2:28 am

When i started this article, i assumed immediately that Henry Ford would serve as a center-piece for what capitalism should and can do.

Once I read, it was non-existent, any notion of making the purchase faded.

Also missing, it seems, is any mention of Adam Smith’s — moral imperitive — trust. Which Mr. Greenspan references more than once in previous works. Without a chapter of failed trust, it sounds a bit corporate fare advertising.

#4 Comment By Former GOPer On February 7, 2019 @ 4:50 am

By eliminating SALT, Trump and the Republican Congress raises my taxes significantly. This author lobbied for “entitlement reform,• without getting into details. The result will be shifting millions of middle class Americans intro extreme poverty. I am sure entitlement reform refers to cuts or elimination of social security, a shift to a voucher system or some other downgrade for Medicare recipients, and other horrible policies which will only benefit bankers. I naively voted for Republicans in the 80s and 90s. That will never happen again. Slash the military budget and end our involvement in these overseas conflicts . Why isn’t this mentioned?

#5 Comment By S On February 7, 2019 @ 6:46 am

The greatness of the US capitalist system is reflected in the fact that the corporate shield protects any number of criminals from going to jail. Even if they kill people by selling them unsafe drugs (Vioxx, Oxycontin), steal homes through fraud(robo-signing), launder money for drug cartels(HSBC/Wachovia), defraud the government on bond issues (Goldman Sachs), defraud clients by betting against them(Goldman Sachs) et al, no one goes to jail. They don’t even need to admit guilt in many cases. The ongoing ecological catastrophe is also part of this greatness which externalises costs to others. The kind of capitalism advocated by Randian acolytes like Greenspan is a curse for humanity and has nothing to do with the US being great. It has everything to do with the kind of capitalism that turns away from God and nature and eats the seed corn while entertaining pretentions of greatness and grandeur.

#6 Comment By Duke On February 7, 2019 @ 6:47 am

The answer to your last sentence is, No, not with all of the dumbkoffs in the Congress we have today.

#7 Comment By Youknowho On February 7, 2019 @ 7:06 am

About regulations, can you explain what happened with Romaine lettuce?

Step 1) Trump removes health regulations in farms.

Step 2) Some people get sick after eating contaminated lettuce

Step 3) People are warned about Romaine. Restaurants and grocery stores pull the lettuce from the menus and shelves. They do not buy anymore

Thus the offending farms that allowed the contamination to occur are punished. So are thousands of innocent farms.

Because refusal to punish the guilty leads to persecution of the innocent.

Before long farms, in self-defense, create a body to inspect and certify the wholesomeness of their produce. They recreate the regulation on their own. The difference is that now it costs them more, because they do not share the cost with all other taxpayers.

In the words of Anne Russell “You are exactly where you started a thousand hours ago!”

#8 Comment By cka2nd On February 7, 2019 @ 7:07 am

The most distressing change in The American Conservative over the last few years has been the uptick in articles featuring your standard, mainstream Conservative, but actually Libertarian, arguments for a laissez-faire, free trade, deregulated and, let’s be real, low-wage economy. Almost gone are the days when TAC writers bemoaned de-industrialization and called for the return of high-wage manufacturing jobs to America. Granted, they could never bring themselves to call for the re-unionization of the private sector, but they got pretty close to parroting union talking points. As I used to tell people, Pat Buchanan and I may have come to our opposition to free trade agreements from very different ideological starting points – economic nationalism vs. a somewhat apostate form of proletarian internationalism – but at least I could have worked with him in opposing NAFTA and the TPP.

Heck, for a magazine that used to have its own Center for Public Transportation, and that currently has a New Urbanist project, I almost expect to see Cato Institute-like panegyrics (Holy Moses, I got the spelling right at the first go!) to the automobile, highways and suburban sprawl. For a conservative magazine that is not unremittingly hostile to the presidency of Donald Trump, a man who campaigned on expanding Social Security benefits, has there been even a single piece published over the last two years supporting that position? I can’t think of one, but here’s yet another one attacking “entitlements.” Also not surprisingly, word searches in this article drew a blank for “monopolies,” economic or corporate “concentration” or “consolidation”, and, of course, “anti-trust.” It’s sad to see how libertarians have reconciled themselves to the concentration of corporate power and near monopolization of market share, but then you can always count on libertarians to return to the world of abstracts and theories after their all-too-brief forays into the real world.

Back in the years following the invasion of Iraq, TAC was a big tent for dissenters from the conservative and Republican mainstreams when it came to war, civil liberties and economics. Libertarians found a space in TAC that had been closed to them in other conservative publications for their defenses of civil liberties and criticism of foreign interventionism. On the other hand, those conservative publications, not to mention the libertarian press, were never closed to libertarian arguments for free trade, deregulation and the wholesale ending of social welfare programs, up to and including Social Security and Medicare. What makes the current leadership of TAC and the American Ideas Institute think that TAC needs to publish pieces like this that could be published in almost any other conservative or libertarian magazine or on 90% or more of the conservative and libertarian websites on the internet? Goodness, will TAC call for federal tax cuts if the United States invades Venezuela?

I continue to appreciate some of the libertarian writers on foreign policy and individual rights published by TAC, as much as I often disagree with them. They help TAC maintain a link to its founding principles. But, as much as I may never expect to see my kind of Marxian economics reflected in the pages (or webpages) of TAC, I do miss the times when I could shake my head and say, ruefully, “I could work with them on this [economic policy]! For totally different reasons, and coming from a wildly different perspective, but there’s enough here for me to agree with them on this [policy, trade deal, piece of legislation].” I’m not sure when was the last time I had that revelatory moment reading a piece in TAC on economics.

Ah, well, it’s still The American Conservative on two out of the three issue areas on which it was founded.

#9 Comment By Johann On February 7, 2019 @ 7:36 am

Its ironic that Greenspan believed that a politburo of technocrats could centrally manage the financial and monetary aspects of a free economy, including interest rates. They get it wrong more than half the time. Time to end the fed’s mandate to “manage” inflation and unemployment rates. They should only be a lender of last resort. Period. Interest rates will naturally go up when times are good and people want to expand their businesses, and go down when economic times are bad.

#10 Comment By Lars On February 7, 2019 @ 8:04 am

My, what a chirpy chamber-of-commerce piece. And what is the Triple Crown in Economics? It seems it was awarded to Mr. Skousen by Steve Forbes at a FreedomFest conference if that gives you a clue.

I didn’t get one, but it’s evident to me that capitalism is heading for a crisis.

#11 Comment By ControlE On February 7, 2019 @ 8:24 am

Everyday I read TAC and everyday it seems like I encounter a new “low” of an article.

This one… oh boy… I’m not sure if the author is this deluded, or thinks the TAC readership is this across-the-board stupid. Demonizing FDR and spinning for robber barons? I’m just not even sure what to do here.

#12 Comment By Mccormick47 On February 7, 2019 @ 9:19 am

Mindless cheerleading from a libertarian perspective.

#13 Comment By Richard On February 7, 2019 @ 9:46 am

No mention of student loan debt, the gig economy, digital sharecropping. Hmmm.

#14 Comment By JohnT On February 7, 2019 @ 10:04 am

Sir Mike, perhaps wandering away from the perfumed halls of academia and its near endless collection of sycophants with their own dreams of profitable publications would lead you to reality, if only briefly. At the core of American “capitalism” has been, is now and, best I can tell, will likely always be, corruption. But, hey, that reality doesn’t sell and selling is the moral imperative, ain’t it? Particularly if one wishes to be honored with one’s name placarded on the front pews at church.

#15 Comment By Liam On February 7, 2019 @ 10:22 am

The world only spins forward. That doesn’t mean socialism, but it does mean the return to the world of 1920s evoked by that photo is not possible.

First, the American version of the 1920s was not just the product of American capitalism in pure form, but American capitalism (industrial and financial) mightily fattened by the profits of imperium and the fact that only two major powers “won” World War I: the USA and the Empire of Japan (read Adam Tooze’s “The Deluge” for beaucoups details).

Second, even at that time, it was known that that Arcadia (in Paul Johnson’s metaphor) would not last. The course of the 1910s saw the end of America as majority rural. The results revealed in the 1920 census so alarmed the GOP that it stonewalled reapportionment – for *nine* years – until the size of the House was capped (a foolish thing we live with to this day). When the agricultural depression hit later in the 1920s, followed by the financial and then industrial depression of the Hoover debacle, there were still enough Americans who had grown up subsisting off the land and/or who had family/networks that still did that some of that destitute population could return to destitute peasantry for the time. That world is now *long* gone with the wind, as our agricultural base was meanwhile consolidated and industrialized in scale and finance. We have urban/suburban “peasantry” now, and any civilization of note of the past would remind us now that such folks are *not* the same as true peasants but represents much greater threats to order and stability of whatever elite rests atop them. You need the modern equivalent of bread and circuses for them. If you consider that socialism, so be it, but it’s a perfectly predictable product of . . . capitalism.

#16 Comment By Jack On February 7, 2019 @ 11:00 am

This article must have been originally intended for publication in The Weekly Standard before its demise.

I think it would be wise for TAC to avoid publishing this sort of thing, unless it wants to share the The Weekly Standard’s fate.

#17 Comment By Cornel Lencar On February 7, 2019 @ 12:11 pm

Apparently Adam Smith mentioned the “invisible hand”
only three times in his Wealth of Nations, but had a full treaty on morality that was intended to be read prior to the Wealth of Nations. The scene described by Smith in which capitalists gather and collude is never mentioned in the apologetic literature dedicated to “capitalism”.

A couple of days ago there was another article on what GOP could do to win over the Millennials. The comments were devastating and for some reasons the article is not there anymore.

The responses for this article are also devastating, and nobody is clamoring for “socialism”. Will the article be pulled? My main fear is that the same trend that happened all over will ultimately happen here, there will be no comments section, which is the best part usually of any article, posted by any journal/magazine. One can really see what people think. And one can see (assuming the moderators don’t in fact censor) that there quite a large spectrum of opinions and furthermore, that on many important issues the opinions are like the polls, tilting in a direction away from what MSM and TPTB want us to go. So panglossianism and fear mongering are the dish of the jour (Goering was right).

But as one commentator said, TAC is still true to some of the things (2 out of 3) so not too bad. The Economist for that matter has become a yellow, jingoistic magazine that doesn’t allow comments any longer for quite some time. For UK the big game never ended and they are really loosing it…

#18 Comment By hooly On February 7, 2019 @ 12:36 pm

All I know is I live in California and we are taxed to the hilt. Too much of our Cali tax dollars leave California and disappear into Federal coffers. Let’s face it, America is divided into States that are economic dynamic (like California, a blue state) and give in taxes more than it takes, and States that are stagnant (like Alabama, a red state) that take more than they give in taxes. How about keeping more tax dollars in California to fix California’s problems instead of wasting California tax dollars on corn subsidies for Iowa, oil subsidies for Alaska, etc, etc ???

#19 Comment By CLW On February 7, 2019 @ 12:59 pm

You are perpetuating a cruel lie by inferring that anyone could achieve greatness via raw individualism, if only meddling regulators would get out of their way. This is pure fantasy, and completely ignores that today’s “invisible hand” is actually the often highly visible domination of corporate interests over every aspect of economic life in America, facilitated by like-minded politicians.

#20 Comment By PostTenebrasLux On February 7, 2019 @ 1:17 pm

More and more TAC supports the Libertarian abuse of Capitalism. Both the Socialist side of the left and the Randian side of the Right conflate Capitalism with Libertarianism. Libertarians have more in common with John Stuart Mill and Herbert Spencer than they do Adam Smith or the values of a Republic. Augustine said something about the abuse of a thing does not require its disuse. Socialists rightly see Libertarianism as a destructive force against community, but they equate this with Capitalism proper. And Libertarians think it is Socialist to have any civic duty above “free markets”.

A pox on both houses.

#21 Comment By bgone On February 7, 2019 @ 1:18 pm

We need a Bull-ward.

The uniquely American strain of “capitalism” is The American Con, P4, the public-private “partnership” for profit, the Clintonian scam of outsourcing essential government services to private “industry” hence subsidized by public spending, the presidential-congressional-military-industrial complex built and almost honestly named by Eisenhower – the state that works hand-in-pocket with the incorporated oligarchy of war-profiteering elites and their retainer mouthpieces – with one of the best tells being their use of the word “entitlement”.

Yes, tax payers are entitled to functional, uncorrupted governance. The whole purpose of government is handouts.

The core pathology of all governments, in all political systems, is that once we have established a system for collective action – be it by consensus, or majority rule, or “experts”, or inbred wealth and/or inherited networks of power – collective action has to commandeer resources and labor. One purpose is war, defensive or not, one means is the draft. Another means is taxation, and yet another is the printing of money, and another is government borrowing for public spending. The problem with the latter is that, unlike the draft and the men and women it affects, money is pliable and malleable.

Hence governments will concentrate national wealth into public revenue, which is then expended by the decisions of the few, claiming to act on behalf of the many. That is how governance financed by money works.

This in turn makes government and its funds a resource, if not natural than inevitable. Like any other resource concentrated by forces f nature – erosion, sedimentation, diffusion – it is this ore made of debts, fees and taxes that attracts the greedy and corrupt. Industry is distorted, diverted and becomes malignant in its attempts to strip-mine public funds as efficiently and profitably as possible. Elected representatives and appointed officials become corrupted facilitators of this profit-extraction process. Existing inequality in wealth, influence, power is amplified as those that can best channel into their pockets the most.

As a consequence, public accountability – which exists for government but not for incorporation – is thus neutralized, eroded, abolished, and instrumentalized as another vector of corruption of democratic process and republican institutions.

Nowhere in the world has this process advanced as far and as baroque as in the US. The “National Securities” interest profiteers of the presidential-congressional-military-industrial complex have managed to claim half of our discretionary spending and feel “entitled” to it. But the financial industry managed to engineer a mortgage bubble around government-subsidized housing markets first, the government bailouts second, and is now benefiting from the Federal Reserve orchestrated redistribution of fixed income savings into inflated stock market valuations that will soon lead to Great Recession 2.0.

Health insurance – mandated by a government that claims authority without direct responsibility for the services, see also veteran health care – and education inflated by credentialism and backed by government-backed student loans, to feed for-profit colleges and public-private “vocational training partnerships”, charter schools and taxes converted into vouchers, even car loans, and, worst of all, the consultant-campaign-congressional complex that has turned our elections into a billion dollar racket of incompetent profiteers delivering negligent and exhausted voters to Judas Goat candidates of those “billionairie” paragons of capitalistic virtue, with entire armies volunteered and trained to deliver their daily MBAnality of publicly traded Evil.

This is the essence of The American Con – take an essential need of human life – health, safety, shelter, knowledge, purpose, autonomy – and manufacture a “service” that, instead of being delivered by a public accountable, transparent government bureaucracy, is outsourced to a multi-national corporation shielded by “due process”, “the rule of law”, a 1st Amendment protection of their right to lie, deceive and defraud and “advertise”, by secret transnational trade agreements and backdoor arbitration processes, with justice for all that can afford it, and impunity against those that can’t. This is the modern US version of that public-private partnership for profit that removes the separation between capital and state, just like was attempted in planned economies and corporate states in the years of European facism. That essential American Con shares many of the same pathologies, and will inevitably fail for similar reasons.

#22 Comment By EliteCommInc. On February 7, 2019 @ 1:22 pm

“US capitalist system”

Those are violations of capitalism, not capitalism. What they reflect is a mercantile system.

#23 Comment By Kent On February 7, 2019 @ 2:02 pm

“To “make America great again,” the nation, they advise, must address the more difficult problems of entitlement costs, our failing infrastructure, and the never-growing national debt. Most importantly, we must enjoy a vibrant financial sector with a stable monetary system.”

I get it. Throw Grandma into the street and give her money to the bankers. Typical Libertarian drivel.

#24 Comment By JeffK On February 7, 2019 @ 2:13 pm

@Cornel Lencar says:
February 7, 2019 at 12:11 pm

I noticed that TAC articles disappear too.

To find an article that disappears from TAC google something like the title of the article, and then add The American Conservative. The results usually have the article right at the top.


#25 Comment By One Guy On February 7, 2019 @ 2:23 pm

hooly is right. One only has to compare the economies of California (a very Blue state, and one of the richest) with Mississippi (a very Red state, and one of the poorest).

#26 Comment By Stephen Gould On February 7, 2019 @ 2:34 pm

Yes, Henry Ford raised wages for his workers – and was successfully sued for doing so by the Dodge brothers, who were shareholders. Odd that the reviewer didn’t see fit to mention this.


#27 Comment By Lee Green On February 7, 2019 @ 2:56 pm

Taxes, regulations, unions… those are inconveniences to capitalists, not threats to capitalism. They threaten capitalists’ interests, they do not threaten capitalism as an economic model.

The great threat to capitalism isn’t the iron cage of anything. The threat to capitalism is its own wretched excess.

Capitalism is fundamentally inhumane, willfully blind to its inhumanity, in fact actively in denial of the importance of human needs and human nature in making any economic enterprise stable for the long term. A century ago a credible threat of socialism* frightened the robber barons enough to allow capitalism to evade demise by its own hand. What will save it this time? Certainly not any insight from within; some external influence will be necessary.

*actual socialism, not the nonsense spouted on Faux News by hyperventilating commentators who couldn’t even define the term well enough to pass a high school social studies exam

#28 Comment By Todd Pierce On February 7, 2019 @ 2:59 pm

Good Lord,

Ayn Rand, the Straussian Hillsdale College, Alan Greenspan, and Mark Skousen himself, whom I’d once read until I came to know his libertarian lunacy, all condensed into an article of half-truths and propaganda by omission, and half-baked economics, with nary a word of the vast Military Industrial Complex and foreign military interventions sucking the well being of Americans from the very marrow of our bones, in the name of “Freedom.” Let’s have another year of slashing any and all domestic spending, except for the military, and slash the taxes of the war profiteers and the unregulated Titans of Wall Street for their next round of bringing us to our knees, and leaving us poorer folk to pick up the economic pieces and fight the wars, out of economic necessity. Sounds like a plan, unfortunately. A lot of good, and negative comments, however, leaving me with some faith in these readers. Neoconservatism in foreign lands, and libertarian dogma at home to make it appear we’re paying for our wars, and enabling reelection of all those who support the wars. It gets no better than that, for the warmongers.

#29 Comment By MM On February 7, 2019 @ 4:09 pm

hooly: “How about keeping more tax dollars in California to fix California’s problems instead of wasting California tax dollars on corn subsidies for Iowa, oil subsidies for Alaska, etc.”

As a California resident, I’m in agreement with you that residents are taxes to the hilt.

But you’re wrong on this point, as many people are.

State governments don’t remit tax revenue that they collect to the federal government. Individuals who live in those states do that themselves, by filing their federal tax returns and having payroll taxes dedcuted.

Because the federal government spends more than it collects in taxes overall, people think that states that are net receivers are being subsidized by larger, wealthier states, but they’re not.

According to the California Legislative Analyst’s Office:


“California Receives $0.99 in Federal Expenditures Per Dollar of Taxes Paid.”

The state is break even with regard to federal taxes paid vs. received.

And what does states like California and New York spend the federal taxes they do receive? An inordinate about of welfare, in fact:


In fact, the amount spent on assistance for the poor in California, about $100 billion annually, is over half the entire state budget.

This complaint of yours is both incorrect and hypothetical.

That’s not how the flow of federal tax revenues and expenditures actually work.

California has a lot of problems, including being ranked as the poorest state in the country, and the least educated. But it’s not because the federal government is ripping off it’s tax revenue.

#30 Comment By Mark On February 7, 2019 @ 4:18 pm

If I want to read fiction, I’ll bet I could find a more entertaining piece than this book.

Still, it might give me a better understanding of the alternate reality Alan Greenspan lives in. One where asset bubbles (dot-com, housing) either don’t exist, or do exist as friendly, fluffy puppies.

#31 Comment By Charron On February 7, 2019 @ 4:18 pm

The Democrat Party is not the only party that encourages idiotic ideas.

#32 Comment By Supply Guy On February 7, 2019 @ 4:27 pm

There aren’t any Statesmen that can fix the entitlement death spiral because politicians are beholden to their constituents. And unfortunately, our fellow citizens are willfully blind and ignorant to the death spiral that we are on due to entitlements. Just read the ignorant comments here posted by the “socialists.”
We have the government we deserve and we will one day get what we deserve when it all collapses.

#33 Comment By John Doe On February 7, 2019 @ 5:06 pm

“Entitlement” reform? Ok, sure. But first reimburse me all of the payments I’ve made to social security over my lifetime. I already know where I want to invest it. Because if you don’t give me back my money (with interest? one can only dream) – AND you kill social security – then that is outright theft, my good sir.

#34 Comment By M. Orban On February 7, 2019 @ 5:59 pm

Reading the comments here, it is clear to me that capitalism is safe in the USA.
Austrians on the other hand wilt fast, once taken out from academic hothouses.

#35 Comment By MM On February 7, 2019 @ 6:20 pm

SG: “our fellow citizens are willfully blind”

No, not really. Economically-educated Gen X and Millennials know that progressives will be hitting them up for higher payroll taxes to fund entitlements. And they know a Green New Deal will mean a decline in their standard of living, through higher energy prices and taxes.

Younger generations aren’t as uniformally progressive as has been claimed. There are already conservative and libertarian branches in Gen Y that have appeared.

This continued push for more “socialism”, basically just a lot more bureaucratic statism with new window-dressing, may have unintended side effects on the electorate in that regard.

#36 Comment By Atlas Shrugged On February 7, 2019 @ 6:26 pm

People throw around all these labels when in fact the USA is some convoluted mess of every type of economic theory. Fighting back against the true reality illiterates like AOC is job #1 to save this great experiment.

#37 Comment By dbrize On February 7, 2019 @ 6:44 pm

Bottom line is empire even if de facto, requires militarism on steroids, a national security state and other elements of mercantilism. Throw in global policing as policy and EliteComminc has it right.

#38 Comment By Snow Shovel On February 7, 2019 @ 8:17 pm

I didn’t read the article – sorry – but IMO the biggest threat to capitalism is crony capitalism. You’ve distorted it into something unworkable for the average person yet still call it capitalism when it’s clearly very much not. No wonder people are looking for other options.

#39 Comment By EliteCommInc. On February 7, 2019 @ 8:27 pm

“Capitalism is fundamentally inhumane, willfully blind to its inhumanity, in fact actively in denial of the importance of human needs and human nature in making any economic enterprise stable for the long term.”

It’s clear that you don’t understand capitalism. i would encourage you to take a breather from youtube videos about capitalism and dive into what Adam Smith described as capitalism. If anything government interference, even socialist interference encourages irresponsible financial misbehavior — the socialist states often touted as models did no less if bailing out bad actors than the US (a supposed capitalist system) and oddly enough they did not bail out consumers anymore than the US did.

Until our system of government behaves as fair arbiter as opposed to supporting whatever the financial system does regardless the supposed economic model — we will continue to have what we have until, the matter reaches its crisis point and then heads will roll and they will roll literally.

#40 Comment By Ksw On February 7, 2019 @ 9:51 pm

Unbridled capitalism, I.e. the brand of libertarianism espoused by TAC would lead to comcentration of wealth akin to the Middle Ages, and the bottom decile living like medieval serfs.

Regulated capitalism is he only way to ensure a decent standard of living for those who inhabit the left side of the intelligence belt curve. The alternative is periodic revolution that will bring down the aristocracy every few generations.

#41 Comment By cka2nd On February 7, 2019 @ 10:53 pm

Liam says: “The results revealed in the 1920 census so alarmed the GOP that it stonewalled reapportionment – for *nine* years –…”

I did not know that!

Liam says: “…until the size of the House was capped (a foolish thing we live with to this day).”

Yep, totally agree.

Cornel Lencar says: “The responses for this article are also devastating, and nobody is clamoring for ‘socialism’.”

To be fair, I am “clamoring for ‘socialism’,” but I’ve been TAC’s house Trotskyist for over 10 years now (it sounds worse than it is). Hell, I’d settle for a return to some version of the New Deal or European-style Social Democracy at the moment, with a dash of land-grant university like higher ed. And while I’ve been banned from commenting at Daily Kos for calling out liberal imperialism, I’ve only had the occasional comment held back here by Daniel or Rod, and I think I’ve pretty much always known which line I had crossed to warrant it.

#42 Comment By john On February 8, 2019 @ 4:25 am

Wake up. American capitalism has already died. The bailouts of Long Term Capital Management then the bailouts of Wall Street, the Banks and of some corporations along with quantitative easing that transferred money at zero interest from the bank accounts of individuals and from union pension funds, and now the FED’s halt in increasing rates proves that capitalism has been replaced by a centrally managed economy that socializes banking, Wall Street and corporate losses while it privatizes their gain. The rich get welfare and the rest get austerity. The French are in revolt, but don’t expect that in post-America America.

#43 Comment By JeffK On February 8, 2019 @ 8:48 am

“Can American Capitalism Survive?” In it’s current form, does American capitalism deserve to survive? Especially when the top 1% of society owns 40% of the country’s wealth?


#44 Comment By MM On February 8, 2019 @ 11:28 am

“In it’s current form, does American capitalism deserve to survive?”

America is only 60% capitalist. The federal, state, and local share of the pie is 40%. Funny how nobody questions whether the state deserves to survive, despite ample evidence of massive waste of taxpayer dollars i.e. workers’ hard-earned labor.

But there’s nothing stopping well-off Americans who call themselvesl liberal or progressive from volunarily sharing their income and wealth directly with the poor, or donating to worthwhile government programs.

The only thing stopping that is personal hypocrisy, and you can’t blame capitalism for that.

#45 Comment By MM On February 8, 2019 @ 12:23 pm

cka2nd: “Hell, I’d settle for a return to some version of the New Deal.”

At the height of the New Deal, government spending at all levels was 20% of GDP. And in inflation-adjusted dollars, the New Deal cost about $650 billion during the 1930s:


Today, government spending at all levels is almost 40%. The last major stimulus, President Obama’s ARRA, cost $840 billion back in 2009.

You got your second New Deal, and then some.

Now I’m reading about new wealth tax proposals, calls to totally eliminate private health insurance (half of which is non-profit), and a Green New Deal and the elimination of almost 90% of existing sources of energy in the U.S., all of which would cost trillions more and push the government/GDP ratio higher and higher.

I’ll cut to the heart of the matter, because there really is just one fundamental question that should be asked of every statist proposal:

How small should the private sector be reduced to?

#46 Comment By the the On February 9, 2019 @ 6:16 pm

No. Demographics are destiny. We are a latino nation now. We just don’t know it yet.

#47 Comment By Joe Cogan On February 10, 2019 @ 8:18 pm

Greenspan’s fantasy-world Randian economics proved entirely inadequate to either anticipate, prevent, or recover from the 2008 economic crisis, indeed, they were largely responsible for it.