Phil Magness is, shall we say, not favorably impressed with Sven Beckert’s new doorstop-of-a-book, Capitalism: A Global History. Two slices:
Adam Smith, widely considered the first major theorist of capitalism, abhorred the institution of slavery. “Whatever work [a slave] does…can be squeezed out of him by violence only, and not by any interest of his own,” he wrote in 1776. In an earlier lecture, Smith indicted laws that “strengthen the authority of the masters and reduce the slaves to a more absolute subjection.” The plantation system at the core of this economy was not a competitive market; planters had secured a state-sanctioned “monopoly against all the rest of the world” and “indemnif[ied] themselves by the exorbitancy of their profites for their expensive and thriftless method of cultivation.” Smith singled out the exceptional cruelty found in the British colonies of “Jamaica and Barbadoes, where slaves are numerous and objects of jealousy [and] punishments even for slight offences are very shocking.”
Yet in Capitalism: A Global History, Sven Beckert calls colonial Barbados “an almost perfectly Smithian economy, with utility-maximizing individuals creating a newly productive division of labor”—indeed a model of market capitalism. A simple contrast of those two characterizations is enough to raise the question of whether Beckert bothered to consult what Smith actually wrote about West Indian slavery.
In the 19th century, slaveowners and abolitionists alike noted the tensions between the emerging industrial economy and the plantation system. The former depended on freedom of movement and on choice in career and industry. The latter grafted elements of feudal hierarchy and coerced labor onto a fixed model of agrarian mass production. Proslavery theorists such as George Fitzhugh saw the two systems as irreconcilable. “Laissez faire,” he argued, was “at war with all kinds of slavery, for they in fact assert that individuals and peoples prosper most when governed least.” Such testimonies complicate Beckert’s interpretation of slavery as a fundamentally capitalistic institution.
Beckert’s book, a sweeping 1,300-page history, synthesizes bits and pieces of the academic literature to recount the emergence of capitalism over the last millennium, tracing it from the port cities of Yemen in the Middle Ages to the global economy of today. But that literature is uneven and selectively curated. Standard works on the “Great Enrichment”—the sustained worldwide explosion in wealth and living standards over the last two centuries—receive scant mention. Despite the centrality of slavery to Beckert’s narrative, he relegates the vast body of empirical analysis on this question to a single footnoted reference to an unremarkable synopsis by another author.
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Beckert’s account repeats many common errors of this genre. He depicts 20th century trade liberalization as the quintessential neoliberal project, ignoring that its main institutional faces, the General Agreement on Tariffs and Trade and later the World Trade Organization, grew out of the New Deal. While characterizing the “neoliberal” postwar economy as an institutional veneer for coercive economic violence, he almost entirely neglects its historical context amid a geopolitical struggle with the Soviet Union’s coercive applications of Marxist doctrine. And in a final twist, Beckert cannot resist impugning capitalism with another form of violence. “Fascism never broke with a fundamentally capitalist organization of economic life,” he contends, citing its alleged entrancement with the “commodification of inputs, outputs, and labor” and, above all, private property.
These features transmitted into “neoliberalism” after the war, he argues, because of the “absolute primacy of securing the workings of the price mechanism” in its doctrines. This produces a high “neoliberal” tolerance for authoritarianism, even “admiration for fascism”—a point he attempts to sustain with an out-of-context quotation by Ludwig von Mises in 1927 that credited interwar fascist governments for halting Marxist political violence.
Compare that with Beckert’s assessments of Sombart, whom he praises as “incisive” and visionary. Beckert omits the final turn in Sombart’s career. In 1934, this student of Schmoller, former correspondent of Friedrich Engels, and prophet of capitalism’s evolutionary procession would forever discredit the reputation of the German Historical School by linking it to the Third Reich. Sombart’s Deutscher Sozialismus demarcated this moment as an “age of late capitalism, which at the same time is early Socialism” and prophesied the rise of a new socialist economic order rooted in a Germanic “Volksgeist.”
University of Chicago economist Tomas Philipson’s letter in today’s Wall Street Journal is excellent:
Your editorial “By All Means Raise Mitt Romney’s Taxes” (Dec. 22) correctly stresses that the rich pay a disproportionate share of taxes. Mr. Romney still argues that people like him should pony up even more. This view is central to socialism and frequent among economists, such as Thomas Piketty, who seem confused about how markets work. They assume government has a monopoly on service, neglecting that private business owners are more generous than the most progressive of tax schedules.
In the private sector you can only sell things if you help others—that is, if customers benefit more than they pay. If you’d cough up $100 for being able to brush your teeth but a toothbrush costs $5, you benefit 20 times as much as the sticker price. That sum, what economists call “consumer surplus,” averaged across industries is about 95% of the social value created by a business.
But this is only part of how company owners help others. On average 60% of sales are wages, the best welfare program invented. Put differently, 98% of the value of starting a risky business benefits others, presumably more than the “fair share” of the rich’s labor than even communists dare propose.
Many politicians nevertheless act as if the only help that matters is given through the public sector, with them as middlemen. Never mind that help to the poor is often reduced by taxing the rich—money that would have been administered more effectively via private donations. The 250 billionaires of the Giving Pledge, launched by Bill Gates and Warren Buffett, are donating half their fortunes—surely more helpful than a 50% wealth tax.
If reformers understood markets, they would get out of the way of the superrich who are benefiting the public and resist any disincentives to their generosity. Their contributions to others are reflected proportionally in their accumulated wealth.
GMU Econ alum Dan Mitchell reports on some of the consequences of Trump’s tariffs punitive taxes on Americans’ purchases of imports.
Andrew Stuttaford warns of how nanny-staters, intoxicated with their own supposed moral superiority, are tendentiously using the concept of “externalities” to justify policies to restrict Americans’ access to alcohol.
Peter Suderman is correct: “Zohran Mamdani didn’t run on ‘affordability.’ He ran against prices.” A slice:
It’s not surprising that a self-declared socialist would make price controls a central part of his economic program. The conceit at the heart of socialism is that when it comes to the economy, politicians and bureaucrats know best. But prices, when they are allowed to work, are signals that provide decentralized information. Price controls don’t solve economic problems; they disguise them, making it harder to know what’s happening. Prices are messages, and Mamdani wants to shoot the messenger.
Consider one of Mamdani’s most notorious ideas, a pilot program to set up five city-run grocery stores because “food prices are out of control.” Mamdani pitched those stores as a way to alleviate high food prices by exempting them from rent—and by eliminating markups and profits. As he put it, these stores would be prohibited from “price gouging.” That’s just another way of saying that, in addition to tax and infrastructure advantages, they would be prohibited from charging market prices, especially in emergencies and times of great need.
Price gouging laws already exist in many states, often targeted at emergency situations such as natural disasters. When they are enforced, they tend to result in shortages. After a hurricane, for example, it can be difficult to get food, water, and generators into an impacted area. When prices are capped by law, there’s no market incentive to make an extra effort to increase supply.
Charging higher prices in times of extreme demand isn’t a form of exploitation. It’s a way of allocating scarce resources more efficiently, and bringing more supply online.
Jonah Goldberg explains that Tucker Carlson, Candace Owens, and other of today’s peddlers of whackadoodle conspiracy theories are part of a long (and not-so-admirable) American tradition. A slice:
They feed the audience just enough to get hooked in pursuit of the big reveal that is never quite revealed. Mixed in is relentless gossip about how other personalities are responding to the allegation du jure or each other. It’s equal parts soap opera, conspiracy, gossip, taboo violation and fearmongering.
The market for such titillation and tripe never went away. What vanished were the post-WWII technological and institutional roadblocks to providing it at scale. Also vanished: the willingness of enough responsible people to condemn it.
Kevin Gentry talks with my GMU Econ and Mercatus Center colleague Tyler Cowen.
Here are the 14 most-read articles in 2025 at AIER’s Daily Economy.
Political activists sometimes juxtapose property rights and “human rights” as mutually exclusive phenomena. But “property” is that over which an individual human, or association of humans, exercises some specified priority of action with respect to other humans. Only humans (and perhaps a few other animal species, notably chimps), but not property, can be recognized as allowed to act without reprisal from others. The emotional appeal of the slogan, “human rights, not property rights,” appears to stem predominantly from an egalitarian ethic that seeks to dispossess those who are “propertied.” Yet the essence of property rights is the right to the product of one’s own labor and to the further productive yield generated by the savings from that product.
If it be admitted that a man possessing absolute power may misuse that power by wronging his adversaries, why should not a majority be liable to the same reproach? Men do not change their characters by uniting with one another; nor does their patience in the presence of obstacles increase with their strength. For my own part, I cannot believe it; the power to do everything, which I should refuse to one of my equals, I will never grant to any number of them.
Simply put, there is no reason to produce other than to consume, and there is no reason to produce anything that people do not want to consume.
Ukraine’s approach to dignity was an attempt at a positive-sum game of liberal values – individual freedom and consent of the governed at home, voluntary international trade, and mutual respect of sovereignty with other nations. The murderous Putin’s approach to dignity was a zero-sum game, bolstering Russia’s national dignity by taking away Ukraine’s. It came after centuries of the West’s own zero-sum game of coercion of people in the Rest in the name of progress.
