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Why People Don’t Trust Free Markets

January 2008
The new science of evolutionary economics offers an explanation for capitalism skepticism

In his magnum opus on the power of free markets, Human Action, the Austrian economist Ludwig von Mises noted: “The truth is that capitalism has not only multiplied population figures but at the same time improved the people’s standard of living in an unprecedented way. Neither economic thinking nor historical experience suggest that any other social system could be as beneficial to the masses as capitalism. The results speak for themselves. The market economy needs no apologists and propagandists. It can apply to itself the words of Sir Christopher Wren’s epitaph in St. Paul’s: Si monumentum requires, circumspice.” If you seek his monument, look around.

Capitalism may not need apologists and propagandists, but it does need a vigorous scientific and rational defense as evidenced by the fact that so many people still distrust free markets. Market solutions to social problems are generally received with skepticism. Businessmen are distrusted, corporations looked at askance, and there is a well-known resentment against those who have most benefited from markets. (As one New Yorker cartoon featuring two people in conversation reads: “I hated Bill Gates before it became so fashionable.”) Why do people distrust free markets?

Part of the answer can be found in our history. Because we lived for so long in small groups of a couple of dozen to a couple of hundred people in hunter-gatherer communities in which everyone was either genetically related or knew one another intimately, most resources were shared, wealth accumulation was almost unheard of, and excessive greed and avarice was punished. Thus, we naturally respond to a free market system in which conspicuous wealth is paraded as a sign of success with envy and anger. Call it evolutionary egalitarianism.

Throughout most of the history of civilization as well, economic inequalities were not the result of natural differences in drive and talent between members of a society equally free to pursue their right to prosperity; instead, a handful of chiefs, kings, nobles, and priests exploited an unfair and rigged social system to achieve gains best described as ill gotten.

People also have a remarkably low tolerance for economic ambiguity. Free markets are chaotic and uncertain, uncontrollable and unpredictable. Most of us have little tolerance for such environments, and we have learned to expect that social institutions such as the government will bring a level of certainty to society. People who cannot afford (or who choose not to purchase) insurance against acts of God typically expect acts of government to save them.

As well, there is well-documented liberal bias in the academy and the media against free markets. A 2005 study by the George Mason University economist Daniel Klein, for example, found that at two of America’s leading institutes of higher learning Democrats outnumbered Republicans among the faculty by a staggering ratio of 10 to 1 at the University of California, Berkeley and by 7.6 to 1 at Stanford University. Measuring political attitudes through voter registrations among faculty in twenty different departments, in the humanities and social sciences the ratio was 16 to 1 at both campuses (30 to 1 among assistant and associate professors), and in some departments, such as anthropology and journalism, there wasn’t a single Republican to be found.

In another 2005 study on “Politics and Professional Advancement Among College Faculty,” Stanley Rothman, S. Robert Lichter, and Neil Nevitte discovered that only 15 percent of those teaching at American colleges and universities describe themselves as conservative while 72 percent said they were liberal, and that figure climbed to 80 percent in such departments as English literature, philosophy, political science, and religious studies, with only five percent labeling themselves as conservative. In a 2005 publication in the Georgetown Law Journal, Northwestern Law Professor John McGinnis reviewed the faculties of the top 21 law schools rated by the 2002 U.S. News & World Report graduate-school rankings and found that politically active professors at these top law schools overwhelmingly tend to be Democrats — 81 percent contributed “wholly or predominantly” to Democratic campaigns while just 15 percent did the same for Republicans.

In a manner and potency matching academia, the bias in the media is against free market economics. A comprehensive 2005 study conducted by UCLA political scientist Tim Groseclose and University of Missouri economist Jeffrey Milyo, published in the Quarterly Journal of Economics, measured media bias by counting the times that a particular media outlet cited various think tanks and policy groups, and then compared this with the number of times that members of Congress cited the same groups. “Our results show a strong liberal bias: all of the news outlets we examine, except Fox News’ Special Report and the Washington Times, received scores to the left of the average member of Congress.” Not surprisingly, the authors discovered that CBS Evening News and the New York Times “received scores far to the left of center” and that “the most centrist media outlets were PBS NewsHour, CNN’s Newsnight, and ABC’s Good Morning America.” Interestingly, USA Today — that ne plus ultra of pop print media — was closest to political center of all newspapers.

The strongest reason for skepticism of capitalism, however, is a myth commonly found in objections to both the theory of evolution and free market economics, and that is that they are based on the presumption that animals and humans are inherently selfish, and that the economy is like Tennyson’s memorable description of nature: “red in tooth and claw.” After Charles Darwin’s The Origin of Species was published in 1859, the British philosopher Herbert Spencer immortalized natural selection in the phrase “survival of the fittest,” one of the most misleading descriptions in the history of science and one that has been embraced by social Darwinists ever since, applying it inappropriately to racial theory, national politics, and economic doctrines. Even Darwin’s bulldog, Thomas Henry Huxley, reinforced what he called this “gladiatorial” view of life in a series of essays, describing nature “whereby the strongest, the swiftest, and the cunningest live to fight another day.”

If biological evolution in nature, and market capitalism in society, were really founded on and sustained by nothing more than a winner-take-all strategy, life on earth would have been snuffed out hundreds of millions of years ago and market capitalism would have collapsed centuries ago. This is, in fact, why WorldCom and Enron type disasters still make headlines. If they didn’t — if such corporate catastrophes caused by egregious ethical lapses were so common that they were not even worth covering on the nightly news — free market capitalism would implode. Instead it thrives, but just as eternal vigilance is the price of freedom, so too must it be for free markets, since both are inextricably bound together.

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144 Comments to “Why People Don’t Trust Free Markets”

  1. Chris R. Says:

    I have noticed that few of the comments have much to do with the title of the piece: “Why People Don’t Trust Free Markets.” Instead, it seems to have diverged into a discussion of the merits and flaws of free-market economics.

    I was reading recently (sorry, I don’t recall the source, possibly Cialdini’s “Influence”), that cognitive science had determined three forms of exchange that seem to be natural to humans: giving without obligation (usually restricted to families or very close friends), reciprocity (exchange of favours: I give you something now, you give me something later) and barter. Note that none of these typify arms-length free-market exchanges. Essentially, capitalism does not come naturally to humans.

    Families essentially operate in a manner akin to communism. Family members are expected to contribute to the degree they are capable (thus older children are expected to do more and harder chores than younger), and receive from the family based on need (e.g., caring for the sick). I think this helps explain why communism has been especially popular in countries that had never experienced a free market system.

    One commentator was absolutely correct in saying that the rule of law (especially property rights) is essential for a functioning free market economy. People will not pool capital and take risks if they cannot expect to enjoy the fruits of those efforts. However, history shows that while you can have a free-market economy without democracy (and vice-versa), it’s not a stable situation. Free-market economies lead to prosperity, and prosperity leads to demands for increasing political freedom. It has happened in Malaysia, South Korea, the Philippines (among others), and will almost certainly happen in China as well.

    By the way, I have noticed a tendency to conflate the two meanings of the word “capitalist”. The first is simply someone who promotes capitalism; the second is the common use of the term to someone who invests capital in an enterprise for a return. The reason that this is important is that capitalism, and thus capitalists in the first sense, promote a free market. But capitalists in the second sense do not necessarily want a free market: they would much prefer to have a monopoly, or at least an oligopoly. Free markets work (at least in theory) because they drive price down to marginaly cost, and thus profits to zero. This tendency encourages innovation and efficiency, and so leads to increased prosperity for all. However, capitalists (and companies), as profit-maximizers, want to keep profits high. This is most easily achieved by limiting competition, which is why we have anti-trust laws. Thus the behaviour of capitalists in the second sense is not necessarily the best indicator of the effects of free markets.

    The main critique of free-market economics, in my mind at least, is that they are based on the assumption of “homo economicus”, the person who always acts to maximize his or her own economic self-interest. While this greatly simplifies analysis, it means that theory and practice necessarily diverge. Until we are able to more fully understand “human nature” and incorporate this understanding into economic models, we shall have to accept (to paraphrase Churchill) that the free market is the worst economic system, except for all the others that have been tried from time to time.

  2. Garry Says:

    “I have noticed that few of the comments have much to do with the title of the piece: “Why People Don’t Trust Free Markets.” Instead, it seems to have diverged into a discussion of the merits and flaws of free-market economics.” – i agree!

  3. Alan McCrindle Says:

    Michael makes a lot of use of the idea of evolution, emergence and complex adaptive systems in his book.

    Emergent complex adaptive systems are governed by negative feedback loops that maintain long term stability (co-operation) and positive feedback loops that drive short term change (competition). Both are necessary and the end result needs to be homeostasis otherwise the system will fail.

    The free market is an example of a short term positive feedback loop. But without negative feedback loops it will naturally lead to inequality, and an over adaptation of the environment and eventual collapse.

    Free markets are a cultural evolute not a biological evolute. They do not come pre-packaged with built in negative feedback loops as do biological complex adaptive systems. They are blind to anything that cannot be objectified and quantified – such as the externalities they exclude. As such they are blind to long term limits and the long term consequences of their behaviour.

    So we humans will need to build in negative feedback loops otherwise the human race will join the list of the other 99.99% of the species that have ever lived on this planet. It is premature to claim the great leap forward either as a great achievement or predicated on the free market alone. It is built on our capacity to harness energy and right now we are living unsustainably as a species on this planet.

    It is not surprising therefore that some people should be afraid of “unregulated” free markets.

    Claire Graves did some very interesting work on the “emergence” of human value systems, cultures and the systems that they are embeded in. This has since been popularised in the book spiral dynamics.

    According to this theory, free markets, democracy, reductive objective science, individualism, competition and multiplicity are part of an express-self meme. The value systems that precede and follow this value system are both co-operative, communal, sacrifice-self memes. So I would expect people located in these value systems to be suspicious of free markets.

    So in my opinion – while free markets are an advance from command and control they are insufficient by themselves because they fail to provide us with the feedback we need for long term stability and survival.

  4. Torkel Says:

    I like Shermer’s other works but am equally puzzled by his highly unskeptic views of free markets as the many other commentators.

    If history has thought us anything about economic systems it is that unregulated capitalist markets has been one of the most destructive forces for human right and liberties.

    Just look at countries like Chile during the seventies, which instituted one of the most free market societies ever and the result of which is often touted as a economic miracle. Another result was a HUGE increase in poverty.

    One thing free market proponents forget is that freedom involves more than your right to vote, there a human right of health care, of eduction, of clean water, of the right to express yourself without fearing a libel lawsuit (you might have used a company logo in your drawing).

    And the idea that mainstream media is “left” or anti-capitalist is ludicrous. Whenever I watch american media (fox, cnn, etc) I get sick, how can you stand such political pro-corporate propaganda?

    Reading Skeptics comments also makes me sick, what reality do you come from? The reason the working people of the west industrialized countries have it better than third world countries (be that capitalist or communist or dictorships) is that we have had (in the past) a strong labor moment, consumer and activist movement that has pushed for labor laws and price regulations to make life livable for average working people.

    Another reason we have it so good in the west is because of constant exploitation of the third world (through colonial wars, slavery, sweatshops, economic strangualtion and enforced privatization, etc).

    What also makes me upset is the reasoning “pure free markets or communism”, like there is no middle ground. Mixed economies like in Sweden who has a strong socialistic movement is rated the best place to live in studies after study (best education, best health, best human rights, wealth).

    The US is one of the most unregulated capitalist economies and is rated very low in UN studies on health, wealth and education (even lower than Cuba in health studies).

    And as many have commented, there is nothing free about markets in today’s capitalist societies. The power multinational corporations hold over democratic socialites is stunning and should make any citizen skeptic about the dangerous of unregulated free markets.

    I could go on and on, please Shermer wake up, be skeptic, there are great rational reasons people don’t trust free markets!

  5. Justin Says:

    It’s depressing that neo-liberals have smuggled themselves into skepticism and appointed themselves the only voice in the movement. And yet, no one notices it despite how obvious it is.

    But what’s more distressing is that anyone who disagrees with or actively opposes free-market capitalism is labeled a “Marxist” or hates liberty. It’s that kind of anti-rational (in the name of reason) POV that makes me strongly distrust followers of Hayek, Rand, and von Mises. Either/or fallacies don’t cease to be fallacies even if they gain popularity. Ironically, it reminds me of a more benign version of Bolshevism: if you belong and/or believe in the party you’re good, if you don’t then you’re bad. It’s the ultimate joke of the last century. In the end, free-market capitalism is as much of a religion as Marxism is: their god is the invisible hand of the market and the belief that it can do no wrong.

    My opinion on capitalism is closest to George Orwell’s (a socialist critic of all forms of oppression–including free market capitalism and Soviet communism):

    “The liberty of the individual is still believed in, almost as in the nineteenth century. But this has nothing to do with economic liberty, the right to exploit others for profit.”

  6. Randy Bessinger Says:

    I just read Thomas Franks book “The Wrecking Crew”. I didn’t see any mention of Saipan in Dr. Shermer’s essay and what went wrong in that experiment in capitalism. From reading Thomas Frank’s book I don’t see much difference between the far right and libertarianism except for the far right’s fascination with policing morality. When it comes to business they favor little to no govenment intervention or regulation other than the market itself.

  7. Scott Says:

    I just read The Mind of the Market with great interest. So trade seems to improve happiness… But the success of trade is highly dependent on the hyper-marketing that leads buyers to believe they need things that they don’t (i.e, become materialistic). Shermer acknowldeges this. He also notes that such materialism does not increase happiness. So how does the “trade improves happiness” theory reconcile this? Also, I didn’t see mention of opportunity costs with regard to trade. The capacity/opportunity for gainful trade is profoundly unbalanced across the globe (and in the U.S.). How has this been treated? To the extent that it has been successfully managed, hundreds of millions of people still live well below every definition of poverty and do not have the opportunity to trade themselves or even benefit meaningfully from trade. I guess one answer is to educate the globe so we can learn to be better capitalists. But how does one do that without funding education in some way at the outset? I suppose Hobbes and Locke have something to say about this question.

  8. Greg Watson Says:

    It has been pointed out earlier: The vast and highly profitable fields of advertising, marketing, and public relations are indeed the apologist and propoganda wings of the so-called free market system. We overlook that at our peril.
    One of the primary roles of commercial/consumer advertising is to manipulate emotion and create a need where a need did not previously exist. That’s an arsey-varsey, not to mention unethical, way to go about providing people with, ahem, free market access to the things they want.
    Advertising, marketing, and public relations tend to celebrate avarice and greed. They foment social disquiet and a sense of unease based upon the quantification of acquisition. The more stuff you have, the better person you are; the happier you will be; the more love you will gain.
    Automobile manufacturers still sell cars with the promise of a a zipless fuch.
    We humans are so very easily manipulated through emotional trickery and trigger pulling. Advertising, marketing, and public relations firms take full and complete advantage of this.
    To downplay or ignore, as Shermer (and Skeptic) seems to do, the power, both in terms of real wealth and political influence, and in terms of the usually mendacious play on emotion, perceived need, and social control and manipulation exerted by advertising, marketing, and public relations firms is to ignore the elephant in the room.
    Furthermore, I would argue that the premise of the argument is fuzzy in the first place. The people in the dirt, the majority at street and grass roots level, the oft-times “victims” of the negative effects of the so-called free market system do not mistrust free markets, or free market solutions. By and large they aren’t even actively thinking of such fuzzy concepts.
    The majority mistrusts the physical and tangible major corporations, the executives therein, and the political policy makers who as a matter of course develop policy that clearly benefits the wealthy and the powerful first and foremost over most of the truly important needs of the people who have less good fortune.
    To hide the real target of mistrust behind the amorphous and intangible fog of concept, the “Free Market,” does a small disservice to truth and argument. It tends to shift the focus from the tangible, as in civilian casualties, to the amorphous, as in collateral damage.
    But then that’s public relations in a nutshell, isn’t it?

  9. Skeptic Says:

    >>>>>>>Clearly this is not the case. Capitalism has developed the biggest and most sophisticated propagandist industry ever known to human civilization.

    Presumably Stalin and Pol Pot were paid by this propaganda industry, since obviously the best advertisement for capitalism is not pro-capitalist “propaganda”, but the 100,000,000+ killed and billions whose lives were ruined by socialism’s attempt to create a brave new world.

    Indeed, socialism failed so miserably, with such horrendeous consequences, that even if capitalism was far worse than it is, it would still be preferable to socialism. I mean, a 100-meter olympic sprinter doesn’t really *need* propaganda to prove to people he is faster than a slug, does he?

    >>>>>>>Last year, 124 countries had economic growth of 5% or more. 124 X 5% is 620%. If the accumulation of wealth is a zero sum game, then the rest of the world has to be 620% less rich now due to the growth in these 124 countries.

    (Scratches head) er… that must be the “NEW MATH” version of doing percentages, I guess… :)

    >>>>>>>Skeptic, you’re wrong on most counts from a historical perspective. The lower classes were quite involved with anti-capital movements (populism in the nineteenth century and socialist, communist, and anarchist societies in the early twentieth) before WWII,

    I’m quite aware of it, but–as you said–it was mostly *BEFORE* WWII. *SINCE* WWII, indeed since the 1920s (after the first world war) those giving the tone to socialism–and supporting mass murderers such as Lenin, Stalin, and Mao–were mostly western intellectuals, who rarely came from the working class.

    >>>>>>>>Another reason we have it so good in the west is because of constant exploitation of the third world (through colonial wars, slavery, sweatshops, economic strangualtion and enforced privatization, etc).

    Nonsense. This is simply the latest Socialist excuse to why Capitalism succeeds and Socialism fails when “everybody knows” it should be the other way around. In reality, the more “economically exploited by evil multinational companies” a country is, the *higher* the standard of living there usually is. See my post above (#48) about this issue.

    >>>>>>>If history has thought us anything about economic systems it is that unregulated capitalist markets has been one of the most destructive forces for human right and liberties.

    Yes, we all heard of those awful dictatorships like England, the USA, 19th-century Europe, etc.–as opposed to those free places like, say, Maoist China.

    (But frankly, Torkel, it seems clear you care more about “feeling sick”–that is, feeling self-flattering outrage which proves, to you, your moral and intellectual superiority–than you care about the facts.)

  10. Skeptic Says:

    >>>>>>>Advertising, marketing, and public relations tend to celebrate avarice and greed. They foment social disquiet and a sense of unease based upon the quantification of acquisition. The more stuff you have, the better person you are; the happier you will be; the more love you will gain.

    Indeed so. The end result? Everybody produces more and consumes more, but everybody HAS a hell of a lot more than they would have otherwise.

    In the capitalist system, you have greedy, evil cooperations giving you (say) 517 different types of cell phones for their own private benefit. 400+ or them have features that are totally unnecessary and are only kept going for a while with agressive advertising, before the companies that make them go bankrupt, and you’re left with–say–100+ choices. (Made-up numbers, but you get the idea).

    In the socialist system, however, you MIGHT have ONE type of government-issued cell phone that PERHAPS compares with the shoddiest and lousiest western-made ones, and tends to break down within a week. (No motivation on the government’s part to care about the consumer). Of course, you probably won’t even have that, since some government beaurocrat probably decided cell phones are an unnecessary trinket “the people” don’t need and is just a way for evil western companies to make money using their evil advertising methods.

    Incidentally, the government beaurocrat in question also usually makes an exception and allows (capitalist-made] cell phones to be owned by government beurocrats just like him, so the result is that you *can* usually get *some* cell phones in the socialist country–at about 10 times the cost, after bribing some officials, and, naturally, only if you have connections.

    Call me a naive capitalist brainwashed tool, but I sort of prefer the former way, with all its abuses.

    Incidentally, the idea that advertisement somehow determines demand is terribly naive. Sure, it helps. But there are numerous examples of products “everybody would buy” that totally failed–in fact, the *great majority* of products fail–because they do not convince the public they really need them. This 90%+ or so failure rate of new products is rather strange, if advertisement is such a fail-safe propaganda method for the evil capitalist bosses, isn’t it?

  11. Randy Bessinger Says:

    How does the fun recent events and the mass govt intervention to save a run on the banks figure into this. Inquiring minds want to know.

  12. Weekly Economics Lesson: Walter Block on the Environment Says:

    […] the free market and economics in general. The famous scientist and skeptic Michael Shermer has written an article and a great book, The Mind of the Market, about this issue. The majority of people seem to think […]

  13. time to eat these words? Says:

    this article, written by someone who attempts to spend his life devoted to rational thinking, really blew my mind in its blatant disregard for rationality, history, current events, critical thought, and reality.

    its so perfect and timely to read it today, 12 hours after the bailout bill was finalized.

    will this bizarre sect of libertarian skeptics like penn gilette and apparently shermer learn anything from this entire experience, now that we’re finally experiencing the fruits of a free market on a larger scale?

    something tells me no, the cult of free markets and globalization will find a way to live on their minds, like any other virus born of religiosity.

  14. Responsibility? Says:

    Its not anyones job to regulate the market, the better suited and better educated will succeed and the uneducated and less able will utterly fail and their failure will provide money for the wiser. If you want freedom be prepared to lose out to the better suited because they are free to pursue whatever ways to make money possible and therefore your well being is of no concern. compassion for the weak only slows down the free market and clogs the wheels of effective government, allow the market to regulate itself and the those unable to compete or unable to change with the market will lose everything.

  15. Balak Says:

    The End Of American Capitalism?

    By Anthony Faiola
    Friday, October 10, 2008; A01

    The worst financial crisis since the Great Depression is claiming another casualty: American-style capitalism.

    Since the 1930s, U.S. banks were the flagships of American economic might, and emulation by other nations of the fiercely free-market financial system in the United States was expected and encouraged. But the market turmoil that is draining the nation’s wealth and has upended
    Wall Street now threatens to put the banks at the heart of the U.S. financial system at least partly in the hands of the government.

    The Bush administration is considering a partial nationalization of some banks, buying up a portion of their shares to shore them up and restore confidence as part of the $700 billion government bailout. The notion of government ownership in the financial sector, even as a minority stakeholder, goes against what market purists say they see as the foundation of the American system.


  16. Yahzi Says:

    Hey, Skeptic… now you can respond to the rabid rantings of Responsibility and his “If you’re poor its because you’re stupid and God hates you!” argument. You know, just to show people what balance looks like.

    Free market systems leverage risk for reward. This is great because it maximizes reward. However, there are some areas – like the food supply, political rights, military defense, etc. – that we are unwilling to tolerate any risk in. We don’t want to double the food supply for only a 1% chance of having no food at all next year.

    So it should be pretty self-evident to anyone that capitalism is great for some areas, and not in others. I’m pretty sure Skeptic has acknowledged that capitalism requires regulation, moderation, and is not a universal panacea for all areas of human existence. I think that puts him solidly in the reasonable camp. Balak, Responsibility, et al… would you care to join us?

  17. Steve Schuler Says:

    I would like to see an update by Dr. Shermer on this article in light of the recent crisis in U.S. and world financial markets and the governmental responses to it. Considering the scale of the public funds allotted to help stabilize the markets is it fair to say “We are all Socialist now”?

  18. Mark Deneen Says:

    Everything in the essay is true if you accept the following:

    1. 1/3 of the world must eternally suffer to provide what in other terms is profit.

    2. Enormous uncertainty of existence. Something humans perpetually fight as a natural condition of evolution and survival.

    3. The meaning of life is to be a physical economic gear in an external machinery.

    Otherwise, real deep thinking here.

  19. theraccoun Says:

    Socialist values = good (in general)
    Capitalist value = bad (in general)

    Socialist systems = BAD (in general)
    Capitalist systems = GOOD (in general)

    {excuse the vast oversimplification above}

    The U.S. school system generally reenforces capitalist values (even though most teachers have liberal slants).

    Modern teaching pedagogy, starting largely with Dewey, encourages group work, CREATE(ive) thinking, and NOS. Modern schools aren’t producing innovators. They are producing the wide gap we see in society today. (education is one of my fields, so please argue this point with me)

    Why have our school systems not evolved? Or, better yet, why have they not evolved more rapidly?

    Capitalism, unlike socialism, has the ability to rapidly evolve.

    The U.S. does not have a capitalist system. FAR from it actually

    Deenen, I should hope that people do move away from their addiction and happiness to the material world.

    Let’s get our school systems to start developing this. Then, let’s let an actual capitalist system allow it to thrive.

    {that point seems contradictory to the socialist}

    Deenen, your job is to read “Capitalism and Freedom” by Milton Friedman.

    Skeptic, your job is to brush up on Marx and Einstein’s socialist paper.

    Schuler, your job is to consult a libertarian think tank on how they saw the development of the current economic crisis.

    My job is to go to sleep now and pretend like actually just accomplished something

  20. Russell Says:

    Though I greatly admire your work and thought process, you lost me at the second paragraph (life is short, can’t read on once I find a fatal flaw in argument):

    Businessmen are distrusted, corporations looked at askance, and there is a well-known resentment against those who have most benefited from markets.

    Corporations are created by the state – one can argue their benefits, but Austrians (like Mises) don’t equate corporations with the free market. I think you have conflated corporations and entrepreneurs. They are most certainly not the same thing.

  21. Michelle Says:

    I’m relatively horrified to find this essay and the one on scientology after it on your website. I would have absolutely expected better from you.

  22. Jason Says:

    I wholeheartedly agree with many of the points in Michael Shermer’s article and Skeptic’s posts.


    “# MJ Says:
    March 1st, 2008 at 1:05 am
    >>>> I notice you didn’t mention much about peoples ignorance about fiat currency versus having a free competing currencies backed by gold silver or something of agreed value.
    # Skeptic Says:
    March 1st, 2008 at 8:44 am
    >>>>> That might have to do with the fact that the “fiat currency” conspiracy theorists are ignorant fools who have no earthly idea about basic economics. Nobody who matters agrees with them, for several very good reasons.”

    Er, Michael Shermer quotes von Mises and Austrian School Economics in the beginning of the article. The Austrian School has a VERY coherent, fairly simple explanation of why a DEBT-BASED Fiat currency system, manipulated by interest rates controlled by a cartel (the central bank aka the Federal Reserve), creates bubbles, booms, and the inevitable bust (recession). See Austrian School Economist Murray Rothbard’s books “The Case Against the Fed” and “The Mystery of Banking”:

    The creation of the FED was simply “regulation” designed by the biggest banks of Wall St. in 1910, (nominally competitors) in order to enable cartelization of their banks to address the rising competition and market share of small country banks, and to control the money supply through a central bank (very profitable), in the model of the European central banks. They lobbied Congress and propagandized the public, convincing them that this “regulation” was for their own good. It is no more a “conspiracy” than say, the corn-ethanol-fuel tax break mandate which benefits the corn processing giants. (It was lobbied by pseudo scientific “think tank” papers funded by them).

    The privately-owned FED is a government-granted monopoly with huge central planning powers over the money supply. This in itself is against free market principles. It actually resembles Socialist central planning more than the free market. In fact, one of Marx’s 10 Planks is a “centralized system of credit”.

    The FED institutionalized huge leverage ratios (fractional reserve banking) resulting in massive expansion of credit (aka debt) in the roaring 20’s, and this led to the crash of 1929 and the Great Depression. (Sound familiar?)

    In addition, a DEBT-based fiat currency system with high leverage ratios features rapid contraction of the money supply (actually credit/debt), which accelerates recessions and makes them more severe, whenever there is a market correction to the bubble. Such a rapid contraction is not possible with either a DEBT-FREE fiat system of currency issuance, nor with an asset backed system, nor a system with 100% reserve requirements on demand currency deposits. (None of which are possible with the Federal Reserve Act). Keynes advocated government borrowing from the FED to “stimulate” the economy during recessions, but, guess who his employer was… you guessed it, the FED. Funny, really. The owners of the central bank make a tidy profit from the interest payments government makes on borrowed fiat money.

    Cartelization is against the principles of free markets; Corporations do it by lobbying for laws to erect artificial cost barriers to startup competition (which is by its nature, the best “trust buster”). Such laws distort the free market and destroy the level playing field which is necessary for the free market system to be the most fair system for all. Enron for instance spent big money on lobbying for regulation…

    On the progressive’s complaints… a lot of what the “progressives” call the “evils” of the free market, are really the evils of CORPORATISM (aka Fascism). The common theme again is that these corporations lobby for favors from government. The free market is the VICTIM in this economic crisis, not the culprit. Corporations can and do have a legitimate function, but they should compete on a level playing field, not one shaped in their favor via their lobbying.

    The answer is not Socialism nor more regulation, it’s dismantling all Corporatist regulations that are anti-free market disguised as being “for the common good”, and stamping out corruption in the form of selective enforcement (e.g. see SEC never investigating complaints about Madoff, nor about “naked short selling”).

  23. Matt Says:

    I believe the problem lately is Republicans. They interfere in the markets as much if not more than the Democrats. Unfortunately they claim to be champions of the unregulated, free market. So when their reckless spending and pointless regulations screw up the economy, and corporate types pay for special favors impossible in a free economy, people blame it on the free markets.

  24. Cthulhu Says:

    I’m puzzled as to why Shermer only talks about capitalism as ‘free markets’. Free market capitalism is but one way to use the economic construct; capitalism does not entail free markets. No one is afraid of free markets (at least none that I know), they just see how ideological free markets are. There has never been a ‘free market’; ever. Regulation has always existed within capitalism; even though the amount of regulation has varied. Communism failed because Humans are naturally greedy and lazy. I’m sure many agree with this notion, so then why can’t people tie this notion to free markets? I could never understand this. Free markets fail for the same reasons communism fails, and yet people don’t realize this, or refuse to accept the reality. There will always be federal regulation as long as the state system is in use. Even if free markets were established, it wouldn’t be long until they devolved back into their regulated corporate selves. Free market capitalism is an interesting and positive ideology, but much like the Utopia of communism, it will never be successfully implemented (for good or for worse). I guess the only way for it to work would be to indoctrinate every Human being into fair, hard working people. Oh, the irony…

  25. John O'Grady Says:

    Michael Shermer is a capitalist? Now I’ve seen it all.

  26. Famous Mortimer Says:

    It’s fascinating to watch supposedly Skeptical individuals froth at the mouth at even the mention of free market ideals. Shermer’s essay didn’t merely inspire balanced debate on the topic, it inspired obviously polar views on the issue that provide little promise for a future of more reasoned debate.

    The reason that Shermer is not dedicating a relatively short essay to highlighting every negative aspect of Capitalism is because that sentiment is already expressed in ample quantity by his audience: The Skeptical Community. The responses on this thread tends to reinforce that impression.

    It jives with my theory that many Skeptics come into the fold as rabid Atheists, and then learn that there’s a whole host of other issues to be skeptical about. This proves to be incredibly frustrating, and pedantic, and so they revert to the fingers in the ears strategy. Ad Hominem attacks soon follow.

    It appears that many Skeptics, and Academics seem to have faith in some utopian ideal of human interaction that I believe is childishly absurd, and, in the end, is incredibly damaging to human progress. People have entirely too much confidence in their own world view, and I have found that righteousness to be most common in supposedly Skeptical circles.

    Anyhow, Capitalists critiques are necessary, but individuals, or groups who still pray for the demise of Capitalist systems will be looked upon in the future with the same sense of awe as “The Flat Earth Society.”

    History, and therefore, the future, is not on their side.

  27. Famous Mortimer Says:

    “Communism failed because Humans are naturally greedy and lazy.”

    Soviet Communism failed because people wanted more than their neighbor, and soon realized through an increase in information that their “beastly” Capitalist enemies actually had a higher quality of life. Their government lied to them through their control of the media, and intense disinformation campaigns. “Greed,” although you seem to use it in the perjroative sense, is certainly at work here, but laziness has little to do with it. Most people are “lazy” under conditions that do not ultimately benefit them, or the people closest to them. However, I consider that perfectly rational, and well, empowering.

    Not everyone wants to be a member of some wider society. Many people have their lives, and they want to dedicate their resources, and time to that life. They should be allowed to do so, without constant meddling.

    It’s easy to be “lazy” when the government has provided you with a sure path to a dead end job. Again, it’s the lack of understanding of basic human behavior that seems to galvanize these naive views about what human beings want, need, and will tolerate over long periods of time.

    This is what is at the heart of Michael Shermer’s thoughts on the topic, and as usual, it seems to soar directly above the heads of already indoctrinated idealists.

    People talk of socio-economic experimentation in democratic societies as if such systems can be maintained, and instituted in every election cycle. In democratic societies, political strategies constantly come in and out of vogue due to the public’s ability to hire someone new.

    This is why the system which allows for the greatest amount of freedom tends to be the most favored over other systems that institute wide social strategies, or experiments through government coercion. The reality is, such ideological systems cannot be sustained democratically over long periods of time. The government must then find ways to maintain control over the system.

    You could fight tooth and nail to win a single election that promises you your wonderful social scheme. However, it could all be (and would likely be) replaced after the next election unless state tampering was involved. So, you’ll have to do more than groan on about every possible imbalance derived from Capitalism. There isn’t a perfect strategy that benefits all individuals. Freedom, even when it results in some people not benefiting from it, is still better than a system that drags the masses down with it.

  28. Vichy Says:

    Morality is nonsense, and self-interested materialism reflect the facts of reality. Egalitarianism is for monkeys and ants.

  29. Paul Patton Says:

    Michael Shermer’s essay defending free market capitalism has some refreshing aspects. Rather than justifying capitalism by an appeal to “human nature”, he admits that it is completely foreign to the evolutionary egalitarianism of our hunter gatherer past. He also acknowledges that “Free markets are chaotic and uncertain, uncontrollable and unpredictable.” and that people have little tolerance for this uncertainty. While conceding these major points to free market skeptics, he then resorts to the usual tired dogma of free market supporters.

    Shermer tells us that while in all other forms of society economic inequalities occur when elites “exploited an unfair and rigged social system to achieve gains best described as ill-gotten”, capitalism is uniquely different. Inequalities like the billion dollar paychecks of some corporate CEOs, we are supposed to believe, are the result of “natural differences in drive and talent between members of a society equally free to pursue their right to prosperity”. Shermer offers us no evidence to support this remarkable assertion.

    Former ExxonMobil CEO Lee Raymond earned a salary of $1.7 billion dollars annually. Could it really be that Raymond has 40,000 times the “drive and talent” of a university professor earning $40,000 per year? If so, Mr. Raymond must be truly remarkable. Is he perhaps a superhuman with mutated muscles and neurons that allow him to accomplish tens of thousands of times more work than the human norm? Maybe this is so, but I can think of another possibility. Perhaps Mr. Raymond is simply an ordinary mortal, and capitalism in practice is just like all those other forms of human society in which an unfair and rigged social system produces ill-gotten gains.

  30. Miles White Says:

    It’s such a simple concept really. Markets have been a natural phenomena of human nature since the dawn of man. It’s obviously necessary to accumulate private property for ones own survival. To criticize Capitalism, is to criticize economics. I’d like to see a nation thrive and prosper without wealth to be produced, or traded period. Communist and socialist idealists fall flat on their faces when they encounter this argument. Mises’s economic calculation problem really explains it all. It makes me sad to see intellectuals in this day in age allow themselves to be duped by the same tired old fairy tale utopias.

    “Communism doesn’t work because people like owning stuff.” -Frank Zappa

  31. Paul Adel Says:

    “The meek shall inherit nothing” – Frank Zappa

  32. Paul Adel Says:

    Without comparison to the efficiency of communist/socialist systems (they dont represent a particularly admirable reference point), it must be admitted that capitalism as manifested in the US has a tendency to be plagued by waste and product mediocrity. There is considerable incentive to incorporate planned obsolescence in product design, and convenience of use often translates to wasteful design. Having expressed these criticisms, I still prefer a free market to a managed market, and I prefer democracy to other social structures.
    Democratic capitalist free market systems are a breeding ground for avarice and glorification of power (again, not bothering to compare to communist/socialist systems, which are no better in this regard). The only protection from serious abuse is regulation. Fortunately, our system of government, is built on a system of checks and balances. It is self regulating to a far greater degree than other social structures, with a greater ability for self correcting its course. The greatest challenge faced by the American society is balancing regulation with deregulation. A lot of either is bad. Not enough of either is just as bad. The second greatest challenge is that such a system is prone to hurt the most vulnerable. Altruism is not a positive attribute for participants in a strictly free market sytem. True libertarianism is great for those that can afford it. At the time the constitution was drafted, there was not as much separation between the haves and the have nots (neglecting for the moment the plight of slaves). Libertarianism had less potential for causing harm when there a more even playing field. Noblesse Oblige and tikkun olam are not integral tenets of the libertarian philosophy. Without them, capitalism, free market economy and democracy will continue to make the few more comfortable and the many less comfortable. A republic (a representative democracy) cannot avoid accumulating power in the hands of the few. Lastly, the US political system has reached the point of being entirely motivated by desire for control. The truth, the welfare of the public and the long term consequences of today’s actions have gone by the wayside. The two party political system has outlived it’s usefulness.

  33. jayrayspicer Says:

    I don’t dispute that capitalism has raised our standard of living and enabled society to do great things. I agree that people operating in their own rational best interests has the best chance of making the world the best possible place.

    However, there are three problems with free-market economics that the article does not address. One, people are very, very often not particularly rational in their economic choices, allowing emotional considerations to overtake them. Two, even when they try to be as rational as possible, consumers very rarely have enough information to make the decision that is truly in their own best interests (and producers tend to like it like that). And three, our accounting systems are woefully inadequate to the task of incorporating market externalities into prices. Taken together, this results in, at best, suboptimal societal outcomes. Markets must be regulated to prevent fraud and obfuscation (false advertising), or consumers have no real chance to be equal participants. Accounting systems must be expanded to completely capture and represent all costs.

    So, yay capitalism, great so far, but we have a long ways to go to achieve truly free markets of fully informed, rational participants, and I submit that that would be impossible without government regulation.

  34. Scarlette Says:

    Skeptic said: “The anti-capitalists aren’t, for the most part,the poor. Sure, they would like to *be* rich, sure, but for the most part do not consider the rich, let alone capitalism in general, to have unfairly exploited them.

    The anti-capitalists are usually dissatisfied intellectuals–people who discover that their academic training does not get them what they consider to be their “just reward” or “true worth” in the free market system–that are envious of the rich.

    It is this envy–essentially envy of social status, not envy of money per se–that usually motivates anti-capitalists in the USA. It is envy based, not on the belief that in a just world they would have more money, but on the the belief that, in a just world, they would be the world’s leaders instead of those awful rich people.

    The real cause of anti-capitalism, at least my experience shows, is almost invariably not poverty, but frustrated self-importance–the kind confined (in its more virulent forms, at least) to teenagers and professional intellectuals. The poor, in general, have better sense.”

    I agree with Skeptic. I have been saying the same thing about Robespierre for years now. When you read about him and read some of his writings, it seems that he felt highly offended that he was not in charge and that instead, people that he considered inferior buffons – the aristocrats – were above him in status. These people are very narcisssistic and very dangerous. They must be exposed as often as possible.
    I have also observed that many intellectuals seem to be enamoured with their own thought process and believe that those thought processes are somehow superior to the thought processes of those they consider to be lesser beings. They think that their ideas are unique, they are not, many people have them but most people are not so impressed with their own ideas that they think that they should write books about them. I am not anti-intelectual and do enjoy many of their writings but it is clear to me that some are bitter narcissits. Sartre, De Beauvoir, Nietzsche, Chomsky come to mind.
    Sartre appealed to me when I was a teen-ager, I grew out of it. Sartre never did.

  35. Scarlette Says:

    I forgot to mention my favorite malcontent: Jean-Jacques Rousseau. He was one angry, bitter and resentful man, he spent a lot of time writing about it also. Talk about needing a chill pill!

  36. Paul Says:

    “Why do people distrust free markets?”, writes Shermer.

    It’s easy to state a few hypotheses, and we don’t need to hide behind buzzwords (“new science”) or get thrown off the “evolutionary” trail by a distracting old trope about “liberal bias in the academy”.

    Hypothesis #1: Skeptics have figured out that “free markets” is a buzzterm used by knaves and dupes who shy away from stipulating precisely what a free market is, and is not. Heartland Institute of Chicago, for example, ought to be notorious in this regard. Joe Bast and his crew have been at it for more than twenty years, but if you ask them to explain “free markets”, a spokesman will tell you that he has to ponder your question before getting back to you. When he does get back to you–a day later–he confesses that “free markets” is an imprecise term, that the people who use it approvingly know what it implies. Yet they don’t spell it out in detail so that you can pin them down.

    Hypothesis #2: Skeptics of “free markets”, whatever that is, have actually worked at places like MCI Worldcom, e.g. in business development. They are familiar with the culture of aggressive go-getting. Basically, anything goes so long as it’s not overtly illegal, margins are good, NPV is positive, and IRR is equal to or greater than the target. If a sales mgr or rep doesn’t make quota for too many quarters in a row, he’s shown the door and replaced by a younger gunslinger. But his family still needs food, shelter, etc., so ethics takes a back seat in the mind of the most experienced people. Simply stated, the culture of business militates against ethics.

    And maybe skeptics are familiar with the businesspersons’s doubletalk about regulation. For example, at WCOM, when we didn’t want to extend to a customer some particular term and condition of contract, it was popular to hide behind the FCC’s and local telcos’ regulations, not to mention the firm’s own tariff filings. And it was popular to complain about regulation when we wanted to do something contrary to regulations.

    Of course, forests and mazes of regulation are an excellent way to discourage news entrants and thus limit competition.

    Hypothesis #3: Skeptics of “free markets” know that there’s plenty of market rigging in autos (via indirect subsidies, e.g. roadbuilding, or direct ones, e.g. bailouts for Chrysler and GM), in widebodied passenger aircraft and jet engines (financed in part via militarism), in medicine (state-sponsored trade unions for doctors), for legal services (state-sponsored trade unions for lawyers), in road building and related construction (remember autos?), in airport building (sponsored and financed by various states), in the construction of some sports stadiums, in the prison industry, etc, etc.

    In other words, skeptics have noticed that commerce in America and elsewhere is a set of an organized crime rackets that operate under color of law. You won’t overcome that with scientism, with tripe about a “new science of evolutionary economics”.

    Hypothesis #4: Banking cartels arranged by legislatures at the behest of businesspeople. The Bank of England and Federal Reserve System are examples. Now if virtually every transaction uses the cartel’s bank notes or electronic equivalent, and if the cartel wouldn’t exist without statist intervention, and the state has passed legal tender laws, where’s your free market? A few people like Ron Paul and Murray Rothbard have opposed this, but you won’t find much support for abolishing banking cartels among the product of business schools.

    Hypothesis #5: Shermer noted that “corporations [are] looked at askance”. Well, since when is this statist institution a free-market phenomenon? Well, it’s not…not even close…and you don’t need to hear the term limited liability more than a few times to figure out why investors were so eager to participate as shareholders when this clever institution was hatched centuries ago. Not even shareholders trust each other, hence their disdain for partnerships. So what foolish outsider would trust their businesses? Furthermore, once unburdened of personal responsibility, it’s so much easier for a corporation’s founders to obtain capital and thereby attain economies of scale less easily attained by sole proprietorships and partnerships.

    Now, cheerleaders for capitalism and personal responsibility, you’ve been been cheering away for decades. It’s time for you to put up or shut up. Either you oppose the corporation and do so loudly and clearly and consistently, in which case you have a plausible claim to being an advocates for free markets, or you do not, in which case you are advocates for rigged commerce.

    Hypothesis #6: Cheerleaders and apologists of untrammeled capitalism make excuses for the corporation, not to mention for schemes to subsidize or cartelize this or that industry. Or they clam up in order to avoid having to defend what is so obviously crooked. Or they trot out red herrings in order to poison the well. (For example, they might insinuate that these objections are tainted since they were typed on a computer made by a corp and transmitted by one or more corporations, etc. But such objections are irrelevant, as even Shermer is aware.)

    At any rate, the advocates of capitalism discredit themselves with their excuses or connivance.

    Hypothesis #7: There’s no data to support claims, like Shermer’s, that “[f]ree markets are chaotic and uncertain, uncontrollable and unpredictable”.

    But how would he know? Does he have ANY empirical support, any at all, for the sweeping generalization? As already noted, markets are rigged. They have been for centuries, so if he can’t substantiate his claim a prioristically, he’d better move to a pure, parallel universe to collect the data he needs.

    Hypothesis #8: Cheerleaders for “free markets” reify what does not exist, thereby leading people to confuse this world of racketeering with a world of free markets and honest dealings not sponsored by the state and its monopoly on aggressive violence. But some cheerleaders are so busy cheering that they don’t even notice how foolish they look with bullet wounds in their own feet.

    Hypothesis #9: Businesses everywhere are self-evidently rapacious, scouring life from the seas, chopping down forests, gouging up the ground to get at precious minerals, spreading pollution, and creating an ugly world of trash and litter as fast as they can. They behave less childishly when compelled to do so; from time to time they adopt popular fads like environmentalism for PR.

    Sure enough, the cheerleaders tell us that plunderers have a vested interest in protecting nature, that capitalism is good for prudent management of resources, etc.

    Hypothesis #10: Capitalists make huge fortunes, a share of which is donated to politicians. A little time passes, then rafts of new laws are passed. Some legislators actually confess that they don’t even read the thousands of pages of bills they pass. It’s not hard to figure out what’s going on there.

    Meanwhile, advocates of “free markets” condemn the manifest evil before going back to telling you how good capitalism and free markets are for you and to inveigling you to doubt your own doubt.

    Hypothesis #11: Obamacare. Jacob Sullum of reason magazine described well enough why insurers will like it. But efforts like his fade from memory quickly. What lingers is the fact that capitalists are eager to cash in on demand for medical goods and services through market rigging if they have to.

    Hypothesis #12: The wealthiest and most productive cliques of capitalists are menacing and threatening each other, their enemies, and the world with their armies of mercenaries, their nuclear weapons, and so on. The #1 clique, the USA, has its mercenaries spread throughout the world under the rubric of self-defense. To the personal credit of some advocates of capitalism, the aggressive militarism is condemned unequivocally, and the terrorist attacks of 9/11 attributed to blowback which the USA brought on itself. Naturally, the right wing in America rewards them with sneering and spite.

    Meanwhile, the vast majority of go-getters in Europe, China, and the USA speak loudly and clearly with their silence about their personal definitions of capitalism. Skeptical people conclude that capitalism is perverse.

    We could go on, but 12 ought to suffice.

  37. Brook Andreoli Says:

    Paul’s opinion (above) makes use of a tried and true liberal artiface used everyday in the pages of the “mainstream” and ultra liberal press – the strawman argument.

    So lets get real and leave out the strawman.

    Hypothesis #1: Free markets are EASY to understand, ie, the buyer and seller determine price for a good or service. That all there is to it.

    Hypo #2 illegal activities at companies; hypo #3 market rigging; hypo #4 market rigging w/ legislative assistance; hypo #5 evil corporations; hypo #6 more evil corporations; hypo #7 more market rigging; hypo #9 racketeering; hypo #10 politicians can be bribed: all have nothing to do with free markets. These activities usually fall under illegal and/or unethical practices and occur under every economic system.

    We have three hypos left.

    In hypo #8 Paul seems to be arguing that free markets are bad and that they have never existed. What?

    In hypo #9 he talks about Obama care – definitely not a free market idea.

    Hypo #10 is largely a lot of liberal huffing and puffing about how this country is an evil force without, I might add, providing what the great countries are. More of the USA is evil can be found any day in the “news” section of the “centrist” NY times.

    To be fair, I realize that what Paul is probably trying to say is that a free market system allows or devolves into a system that allows the evil practices he sees. So what.

    No rational argument uses the poor conduct of a few to discredit an economic system – or any other system for that matter.

    If we found out that Ben Franklin was a bank robber no rational person would argue that we should cease using lightening rods (which he invented). Regardless of any of Ben’s shortcomings the lightening rod would still work.

    Likewise, the legal lapses at WorldCom, et al have absolutely no bearing of the efficacy of free markets. They work, as Schermer so eloquently pointed out, the evidence is all around you.

  38. John Steinsvold Says:

    An Alternative to Capitalism (which we need here in the USA)

    The following link takes you to an essay titled: “Home of the Brave?” which was published by the
    Athenaeum Library of Philosophy:

    John Steinsvold

  39. Gordo L-C Says:

    Hey I just wanted everybody here to know that I have been sitting here for the last hour reading this entire comment thread and it has been very educational. Even the nastiness. Awesome debate.

    I come at this from a used-to-be-virulently-anti-capitalist-now-trying-to-clearly-and-rationally-consider-the-facts viewpoint. I have completely opened myself to the very real possibility that I have been wrong in my anti-capitalist beliefs, and have been spending a lot of time and effort trying to get to the bottom of all this. So, the words of every single person here have been immensely helpful. Thank you all for your spirit and for your generally eloquent and well-thought out comments.

    One little side-note, if I may, is directed at the guy above screennamed “Skeptic”: though he makes a lot of excellent points, he relies too much on a couple of bad arguments:

    a). Every criticism of capitalism is wrong because the worst dictatorships of the 20th century were wrong. Dude, you gotta come up with some better material than that, for real.

    b). Everybody who is not a libertarian is a naive, pampered, idealistic middle-class kid from the burbs who never worked a day in his or her life. <—That's just stupid, and you and everybody reading this knows how stupid that is. One might be tempted to return your frequent "college boy" insults by referring to you as a frat boy…

    Skeptic, you make so many excellent points and then obscure them by comparing critics of capitalism to Stalin, or making bigoted generalizations about them which obviously you can't really know. I mean, come on, just because a type of person you don't like (college kid, idealistic, middle-class, etc) believes something it doesn't follow that the belief is automatically untrue (I know you are aware of this, and were just being a jerk on purpose, but still it hurts your argument).

    And your assertions that anyone who has any criticisms of the USA should then not live here is the worst kind of fascist, anti-democratic, anti-American thinking, really, I mean think about it.

    Having said that, I nevertheless kinda admire your style :D

    Okay comrades, time to call it a night. Thanks again!

  40. Mike A Says:

    I would argue that corporate scandal is so prolific that they don’t even report on it – that is been my personal experience. So by your very metric, capitalism is on the decline. However, I am a proponent of free markets, so I hope not, but free markets and totally unregulated free-for-alls are not the same thing. I believe we need a hybrid model that provides for some oversight, and thats really the only stand I am prepared to take right now.

  41. David Olifant Says:

    Over the past six months I have been reading Murray N. Rothbard’s magnum opus “Man, Economy and State/ Power and Market”. It is a long read, but begins with an explanation of economics, based on individual priorities and builds up to a complex economy with long involved production stages. It is clear that the vast improvements in life have occurred from the buildup in capital over generations. Technology has helped, but, without capital, available technologies cannot even be deployed (look at much of Africa).

    Any governmental intervention in the free market obscures the self correcting process that rewards correct entrepreneurial foresight with profit, and punishes poor insight with losses. Capital naturally flows to the best entrpreneurs. The USA used to be lazzies faire, but is currently so bound up in regulation and “tax incentives” as to distort the decision making and feedback processes. If you study economics enough, you realize that the “robber barons” were really not. It is the government that gives advantages to preferred businesses and actually promotes monopolies, rather than breaking them up!

    If you really want to understand economics you must go to and start reading. Government is actually a parasite on freedom. Our democratic republic is perhaps the best invented so far, but the government that is best is that which governs the least. People and businesses all try to use government to give them an advantage (lobbyists). The free market allows people to vote with every purchase what they want. We don’t need to be told by big brother what we should want.

    I was so glad to see Mr. Shermer is a Mises reader!

  42. ullrich fischer Says:

    Megacorporation ethical lapses may be sufficiently uncommon to still warrant outraged comments in the news, but unfortunately, the main flaw in capitalism which Marx pointed out has still not been successfully addressed.

    I completely agree that free markets are a Very Good Thing.

    Unfortunately, they only remain free until one or a few large corporations manage to get their minions in the roles of regulators of their industries and/or pay off politicians to drop “troublesome” regulations. The slow motion collapse of the US “free market” which began with the Reagan era religion of deregulation has so far reached a low point with the collapse of the too-big-to-fail banks. Unless there is an effective anti-oligarchy (which prevents the rise of the “too big to fail” corporations) mechanism in place, Capitalism seems to inevitably lead to kleptocracy. Look how quickly the former USSR degenerated from a “Free Market” (kinda, sorta, wink, wink) democracy to a full-on kleptocracy.

    The US and western democracies had some hard won constitutional protections which slowed the progress of this degeneration, but evidently have not ultimately been able to prevent it. One possible solution might be to change how corporate governance works. Maybe member-owned co-ops could provide the opportunities for progress and competition without the (apparently) inevitable outcome under which the world is currently suffering.

  43. Michael Miller Says:

    Ultimately, all apologia for Capitalism ignore the power of centralization, inheritance and class.
    Like it or not, Capitalism is only a continuation with refinement of the Feudal system of exploiting the wealth creating labor class, often unto death. A serf in the fields was hardly worse off than the guard ringed laborers of Capitalist China’s dorm-filled sweatshops. In both cases, wealth is centered, rather than created, by groups of already wealthy individuals, with only their own gain being of interest.

  44. Lowba Says:

    This has been fascinating reading. I have responded quite late but anyway it needs to be known though (which you may know) that capitalism comes from Western Culture. Western Culture is all about exploitation of something (environment, people, etc) for more power and control. Western Culture views the human as owner of the planet rather than a part of it, in which if you are a part of it then there is real biodiversity. Western Culture is from of course most of Europe, and that is how colonialism took hold in the first place because Western Culture thought it were superior. Well, it still does, and this problem. Back to the biodiversity theme, today’s young culture being based quite solely on technology and mediocrity is opposite to what almost every culture before it came from: the environment. People’s disconnection from the environment spiritually is producing a very narrow minded way of life that to me isn’t fun. I don’t want to create a competition, Western Culture has a lot of great achievements as well. The problem is that when the world is viewed in such a way that ‘sucess’ means earning money then the ‘meaning’ of everyone’s life in Western society is gone, it’s all about more, more, more. Look at the disposition between Bangaladesh with the factory crash that few too many have cared about, they are slaves to the mostly Western First World nations for they give us cheap clothes for little pay, about $36 a month, only a little more than a dollar a day. But even the worst perpetrator’s are slaves to their own dream of mammoth power, in this culture (except in the brilliant aspects of art, science, literature, thought, etc.) no one wins.

    As an Australian, I can’t help think of how the culturally rich countries are only thought of mostly as ‘poor’ and us rich? Rich in what? Yes you have safety (food, water), if your rich plentiful of possessions but even the capitalist rich are exploiting themselves that is what is sad. They rely on constant pleasure from money but their lives have little meaning and in effect benefit no one: Rupert Murdoch, etc and many companies. Success should mean giving use to people’s lives, giving meaning, and giving meaning to their own lives unto which the capitalists don’t and mostly can’t in such a culture.

    What can change this? A change in culture and in the way money is used or even getting rid of it, farmers can farm, people can run shops (of benefit of course), people can take what is required for their lives and focus on creating a magnificent culture, technological advance can continue for science and actual worth, not ‘ease of use’, ‘perfection’ and so that further make pointless and mechanical our lives. I’m not thinking of any political system, it’s just that then cultures can be respectful of each other as cultures, not the empty Western one dominating because it wants power, pleasure pretty much. The indigenous of Australia survived for around 60’000 years in beautiful connection to the environment, biodiversity, sure they were hunter-gatherers but I’m not ridding the idea of farming, farmers can still farm, the population won’t keep exploding because it doesn’t need to in something like this, there are no poor families who need more kids to work for more money in survival.

    Does Western Culture need to stay, to see progression in terms of bigger, bigger towers, bigger cities, more power in which not only has decimating effects on the environment but people’s minds, or can countries discard it and focus on developing incredible cultures, art, life that has meaning. Science can still progress and discover space, but humanity can just focus on not being First World or “civilised”, just enjoying actual ‘life’, progressing in it culturally in things that are a far more real progression than more power, more money, more infrastructure, more people, more possessions (basically more pleasure, which isn’t lasting). If you think more of something artificial will make you happy, like food, money or power than you are as deluded as Shakespeare’s character Macbeth. The problem is directly in the culture that thinks it is so much better than any other culture, imagines itself in a future technological haven which can only be intuitively and emotionally suffering, and just wants more and more. Western Culture can only be drastically changed over time or decided upon to stop. Are we going to keep chasing lustful dreams of pleasure that render our lives meaningless or wake up to this modern tragedy and try to actually ‘survive’ on this planet.