1971

http://www.futureofcapitalism.com/2011/11/1971

A reader-watchdog-content co-creator-participant-community member passed along a piece about Occupy Wall Street by Richard Brodsky, a Democrat who served in the New York State Assembly from 1983 to 2010. Mr. Brodsky writes, "Forty years ago lots of folks, myself included, were part of an effective, hierarchical set of movements that changed the world."

The Brodsky essay isn't particularly illuminating, but I do think this nostalgia on the left for 1971 can be helpful for the rest of us in understanding the present moment. After all, a lot of us remember the 1970s as a time of stagflation, urban decay, crime, and a decline in American global prestige.

The other piece, from a different end of the ideological spectrum, that reminded me of 1971 is this essay by Henry Hazlitt, titled The Future of Capitalism. It was published in 1971. I was unaware of the essay when I picked the name for this Web site, but it's a wonderful essay, just as relevant now as when it originally appeared 40 years ago. It begins, "At the present time the outlook for capitalism is far from hopeful. This is not owing to any inherent defects of capitalism considered as a system, but to the fact that great evils and injustices are attributed to it and that its merits are so little understood. As a result it is being maligned, thwarted, sabotaged, and slowly regulated to death."

It goes on, "Perhaps the biggest threat to free enterprise today is the demand for more equality of personal incomes....If excessive government spending is in itself a threat to the free enterprise system, such spending not paid for by taxation, but financed by deficits and inflation, is still more of a threat. A mild inflation in its early stages may seem to be a stimulus to production, but inflation is always a false stimulus; it leads to malinvestment, malconsumption, gambling, waste, cynicism, and corruption, and is as debilitating to a nation as the drug-habit is to an individual...."

And it concludes:

The saddest part of all this is that big business has lost the courage to defend itself even from direct attack. The late Joseph A. Schumpeter commented upon this acidly a generation ago, in his pessimistic book, Capitalism, Socialism, and Democracy published in 1942. He maintained the thesis that "in the capitalistic system there is a tendency toward self-destruction." And as one evidence of this he cited the "cowardice" of big businessmen when facing direct attack:

They talk and plead—or hire people to do it for them; they snatch at every chance of compromise; they are ever ready to give in; they never put up a fight under the flag of their own ideals and interests—in this country there was no real resistance anywhere against the imposition of crushing financial burdens during the last decade or against labor legislation incompatible with the effective management of industry (p. 161).

So here is the outlook. Capitalism, the system of private property and free markets, is not only a system of freedom and of natural justice—which tends in spite of exceptions to distribute rewards in accordance with production—but it is a great cooperative and creative system that has produced for our generation an affluence that our ancestors did not dare to dream of. Yet it is so little understood, it is attacked by so many and intelligently defended by so few, that the outlook for its survival is dark.

It may still be saved, but only if its merits come to be understood by the masses before it is too late. The world is now in a race between true economic education and catastrophe.

by Ira Stoll  |  Nov 4, 2011 at 11:42 am Related Topics:  Definition of Capitalism, New York receive the latest by email: subscribe to the free futureofcapitalism.com mailing list