The Future of Capitalism

[Editor’s note: Amidst a global financial meltdown and an increasingly activist federal government in Washington, it’s become fashionable to assert that the days of free-market capitalism are numbered. Despite the historical failure of governments based on his theories, Karl Marx is suddenly in vogue as the voice of economic reason. On his new website,, Ira Stoll surveys the economic scene and finds that the conventional wisdom is wrong: reports of the death of capitalism are very much exaggerated, while the causes of the current economic downturn are often misunderstood. The author of Samuel Adams: A Life, Stoll was vice president and managing editor of The New York Sun, which he helped to found. He lives in New York City. Ira Stoll joined Front Page to discuss the roots of the economic crisis, Friedrich Hayek’s legacy, the illusions of ObamaCare, and much more.]

FPM: How did you get the idea for the site and what do you hope it will accomplish?

Stoll: The closing months of the New York Sun were some of the most dramatic months of the financial crisis, and, at the time, the paper’s editorial stance on the Bush administration’s actions was quite an unusual one. Senators McCain and Obama, Secretary Paulson, Speaker Pelosi, President Bush, the Wall Street Journal, the New York Post, Mayor Bloomberg, Senator Clinton, and Rep. Barney Frank all supported TARP. The New York Sun opposed it with editorials like this one. While other papers were cheering on the administration’s seizure of Fannie Mae, which Secretary Paulson has since conceded was an “ambush,” we were opposing it with editorials like this one and this one.

When the Sun closed, I wanted to stay with this story, which seems to me to be one of the hottest of our day and one in which I have a point of view that isn’t widely expressed elsewhere in the press. seems like the best way to do it. I hope it will challenge some of the dominant narratives about the financial downturn, help people better understand some of the issues involved, expose some of the self interest and hypocrisy and moral obtuseness among some of the others speaking out on these issues, and help defend the system of private property rights and rule of law and freedom that has helped allow America to prosper.

FPM: One of the immediately interesting things about your site is the title, Future of Capitalism, which goes against the brooding consensus on some quarters of the Left and the Right that capitalism has no future. For some on the Left, the financial downturn and the ongoing recession is evidence of capitalism’s demise. For some on the Right, the government takeover of banks, automobile companies, and possibly even one-sixth of the economy through an expanded role in health care, is a sign that capitalism is dead and socialism has arrived. What is your prognosis for capitalism?

Stoll: I think it has a future, because it is better than any of the known alternatives at generating innovation, growth, and prosperity. But there are all kinds of varieties of capitalism out there – crony capitalism, Chinese Communist-style state capitalism. The critics have taken to calling real capitalism “unrestrained market capitalism” or something like that. I think that a capitalism in which most of the decisions on allocating capital are made by individuals, rather than the government, does have a future. At least, I am trying to do my part to make sure it does.

FPM: You recently highlighted a useful piece of wisdom from the economist Friedrich Hayek. He observed that “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” Based on its handing of the economy to date, do you think the Obama administration appreciates Hayek’s insight?

Stoll: Well, it’s ironic, because one of Obama’s top economic aides, Lawrence Summers, was quoted in the Boston Globe in 2004 reaffirming his 1998 statement,

“What’s the single most important thing to learn from an economics course today…What I tried to leave my students with is the view that the invisible hand is more powerful than the hidden hand. Things will happen in well-organized efforts without direction, controls, plans. That’s the consensus among economists. That’s the Hayek legacy.”

Hayek did write in favor of both a safety net and social insurance. And the Obama people will argue that by not nationalizing the banks, and by supporting a health care overhaul that neither makes all doctors immediately federal employees nor replaces all health insurers with a federal “single payer,” they are respecting markets and avoiding the arrogance of central planning. But in an interview collected for Hayek biographer Bruce Caldwell told me he thought Hayek would have opposed ObamaCare. Hayek had a son who was a doctor in Britain’s National Health Service and hated the bureaucracy.

It does seem to me that Hayek’s insights have been insufficiently heeded, not only by the Obama administration, but by the Bush administration, which, in its treatment of Fannie Mae and AIG shareholders, was as heavy-handed and misguided in my view as anything Obama has done. In holding over Timothy Geithner and Ben Bernanke, the Obama economic policy has really been in many ways a continuation of Bush rather than a radical departure from it.

FPM: One of the biggest recent economic stories is the continuing saga of health care reform. How do you think the Obama administration has handled the process of passing the legislation and what do you make of the health care legislation that we’ve seen so far?

Stoll: As I noted in the review of the book Health Care Turning Point on the site, it’s amazing that they’ve gotten as far as they have. The federal government can barely afford the Social Security and Medicare entitlements it is already committed to. Yet Obama got both the House and the Senate to pass bills of 2000+ pages significantly expanding government’s obligations to fund health care.

I think the resistance they are running into is partly skepticism from the public, which quite sensibly doesn’t believe you can give 40 million more people health insurance without it costing the government more money. In fact, Obama would have us believe that we can cover 40 million more people and at the same time have it be deficit neutral or even bend the cost curve down. The ability of majorities in both houses of Congress to accept that proposition is a testament to something, maybe the power of wishful thinking.

But again, a point not often made, but one I have tried to make at, is that the Bush administration didn’t exactly cover itself with glory on the health care front, either. Total federal, state, and local government health spending in America grew to $1,036 billion in 2007 from $597 billion in 2000, an increase in the government’s share of overall spending to 45% from 43%. Those expenditures will grow further as more of the population ages into Medicare.

FPM: A running theme on your site seems to be the low opinion in which the left-wing American elite, including the Obama administration, holds the American public. For instance, everyone from the president to administration friendly journalists are fond of saying that health care legislation has stalled because the public is insufficiently informed to appreciate its merits. Are they wrong?

Stoll: Obama has given at least 52 health care speeches since taking office. If the public is insufficiently informed, maybe the president isn’t as brilliant a communicator as he is given credit for. I actually think the public has a quite accurate sense of what the general direction of the president’s proposed changes will mean, though if they are uncertain of the details, it may have less to do with their alleged denseness and more to do with the fact that the Democrats have chosen to write 2000-page bills, the details keep changing amid the scramble for individual votes, and the texts of the bills sometimes aren’t released until the last minute.

FPM: In the past you’ve noted that many of your colleagues in the press have, at best, mixed feelings about capitalism. How does that impact economic coverage in this country?

Stoll: Adversely. On the other hand, all sorts of incentives in journalism tilt the playing field toward negative coverage in all fields of endeavor, not just economics or business. You can sell more papers and get higher ratings and win more prizes by exposing corrupt politicians or horrible criminals than by profiling honest, law-abiding citizens. So it’s not just the businessmen who fall victim – Bill Clinton got some rough press coverage there for a while, too.

FPM: A subject that you’ve often explored on the site is that role that religion plays in people’s understanding of capitalism. We saw a demonstration of that most recently during the Bernie Madoff scandal, which triggered a bout of anxiety from Jews concerned about how the story might play into classic anti-Semitic stereotypes. What are your thoughts on that aspect of the Madoff case and, more broadly, how religion colors people’s perception of capitalism?

Stoll: I didn’t really see the Madoff case that way because so many of his victims were also Jewish. In my review on the site of Jerry Muller’s book Capitalism and the Jews, I wrote about what Professor Muller calls “The Long Shadow of Usury.” I think a lot of popular hostility toward financial capitalism is driven by age-old, mainly Christian, hostility to usury and its association with Jews, a theme that was taken up by both the Communists and the Nazis.

FPM: You’ve recently editorialized against the so-called soda tax, which New York’s Gov. Patterson, among others, have suggested passing on sugary soft drinks as a way to fight obesity. Why do you object to the tax – particularly since, as you note, you don’t even drink soda?

Stoll: New Yorkers already bear one of the highest state and local tax burdens in the country. The politicians ought to be trying to find ways to cut our taxes, not dreaming up new taxes to impose.

FPM: At the risk of ending on a bleak note, let me ask you about local politics. You seem somewhat pessimistic about the political and economic future of New York State. What would it take to put the state on the right track?

Stoll: Well, the best thing would be new leadership in Albany that understands that New York is competing for human and financial capital, both globally and within the laboratory of the states, and that acts accordingly. The big costs in the state budget are education and health care, and workers in both fields are represented by powerful public employee unions. But even with the right leadership in Albany, New York will have a hard time succeeding if Washington is targeting the financial industry, which is a big job engine in New York.

FPM: Ira Stoll, thanks very much for joining us.

  • Larry D. Crumbley

    Maybe I am old-fashioned but I feel that capitalism is not evil. It is the people that make it that way. It seems that "OUR" society has flourished over the years with the help of capitalism, and it is at the very core of "OUR" civilization. Ladies and gentlemen we are under attack in this nation by people that have no idea how to run a government, little long how to operate a business. When push comes to shove who would you stand up for your country or the loons on the far fringes of the left that are trying real hard to destroy everything that this country was built on? What are you going to do when it comes right down to it folks? We are under attack, and it will not stop until everybody is given a death sentence to be carried out by this administration by way of YOUR MONEY-YOUR PORTFOLIO-YOUR STOCKS-YOUR CD'S-YOUR MONEY MARKET ACCOUNT-, DO I NEED TO GO ON. THE QUICKER THE BETTER IN GETTING RID OF THEM, AND I SAY THIS NOVEMBER IS A PERFECT TIME TO GET STARTED. IT SEEMS THEY CANNOT EVEN MAKE THERE OWN HOUSE IN ORDER. IT SEEMS EVERYBODY ELSE IS SUPPOSE TO PAY TAXES, AND SUCH BUT FOR THEM THE COAST IS CLEAR TO CHEAT, AND TO GET AWAY WITH HIGHWAY ROBBERY. THERE MOTTO IS———-


  • Right in Left World

    Capitalism is the greatest innovative engine every devised. It goes hand in hand with person and political freedom. Once control of the economy goes, there goes your freedom to decide a numerous amount of things, such as what to eat(becaue the gov't willbe deciding what is produced), where to work(because the gov't will be the job creator). The list goes on and on. STOP THIS

  • USMCSniper

    Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.

    No politico-economic system in history has ever proved its value so eloquently or has benefited mankind so greatly as capitalism—and none has ever been attacked so savagely, viciously, and blindly. The flood of misinformation, misrepresentation, distortion, and outright falsehood about capitalism is such that the young people of today have no idea . . . of its actual nature.

    In a capitalist society, all human relationships are voluntary. Men are free to cooperate or not, to deal with one another or not, as their own individual judgments, convictions, and interests dictate. They can deal with one another only in terms of and by means of reason, i.e., by means of discussion, persuasion, and contractual agreement, by voluntary choice to mutual benefit.


    Why do you persist in using the term 'capitalism'? The Texas school board now refers to it as the 'free market'. And by the way, they downgraded Thomas Jefferson as an intellectual.

  • Paul Beaird

    The 3 quotes from USMCsniper are from America’s moral philosopher, Ayn Rand’s book Capitalism: The Unknown Ideal, one of the 4 great books on Capitalism. The other 3 are:
    Human Action by Ludwig von Mises
    Capitalism: a Treatise on Economics by George Reisman
    The Capitalist Manifesto by Andrew Bernstein

    There is no point in ignorantly advocating or ciriticizing Capitalism without knowing what it is from those who advocate it and see it as the fountainhead of human well-being. To learn, those are the 4 books to read.

  • TheAgedP

    Good stuff – so why are we so quiet about the implosion of Communism in Europe?

  • eerie Steve

    The entire notion is prosperous. The death of capitalism. Might as well have "the death of work." Oh wait, I forgot, we, the US, already sort of dead that when we outsourced all our jobs that kill people to China.

    Someone needs to read Adam Smith again. In my view, capitalism is a natural right, and wow what a natural right it is. For Christ sake. The Nation of Israel under war broke the copper barrier, something science once thought was impossible. Capitalism is going nowhere. Puh-lease. It's been said before, and looked what happened to the naysayers.

    Capitalism makes you honest. I'm more of a follower of this guy's policy:

    • netwit

      "The entire notion is prosperous." Possible meanings: The entire notion is preposterous. The entire nation is prosperous. Or (best): The entire nation is preposterous. ("Copper barrier?" Is that the one that keeps the slugs of our tulips? Eerier and eerier, Steve!)

      • netwit

        "…slugs OFF our tulips." Now I'M doing it!


    It's pathetically obtuse to say something as simple as "Capitalism is evil" or to assign any other such label to Capitalism. Morally speaking, it's neutral. Unlike Marxism or fascism, capitalism makes no demands of people or societies.

    Capitalism and free markets are the methods by which free people satisfy each others needs. Barring fraud or force, interactions in a free market system leave BOTH parties satisfied. When wealth is REDISTRIBUTED by the state, one person has been victimized for the benefit of the other. I think I'll take Capitalism and free markets ANY day! Here's some help for you leftists out there:

  • netwit

    Right on cue, Alex Cockburn over at Counterpunch was among the first to start gloating over Capitalism's imminent demise. The left always will count its turkeys before they hatch.


    I entered a comment here a few hours back. There were no profanities or insults.
    What happened to it?

  • A Bit Profound

    The Marxist Humanists (Progressives — really Regressive) consider Capitolism unfair: even aggressive & oppressive & want to make the poor feel Victimized & Oppressed to cause revolution. They see humans as basicly good & therefore deserving of all basics and full equality in every way. Penalizing the productive to enable the lazy is what seems most fair to their Godless degenerate minds rather than seeing that the hard working & talented, not only in becoming prosperous, provide work for others, but have a right to keep the fruits of their labor. Christians believe human nature to be corrupted and in need of change. To bring success teach & preach morals, ethics, values, personal responaibility, personal reliance, honesty & disipline. Capitalism is failing only because that is being replaced with an entitalment mentality which will "progress" all the way to tyrany. (110 million, mostly their own, killed by Communists) (Only to be out done by Islam – 270 million)