Instead of attempting some semblance of balance, the new SEP entry author Chiara Cordelli, a professor of political philosophy at the University of Chicago, used this platform to air her own personal grievances with capitalism as an economic system. The resulting product gives scant attention to proponents of free-market economics. By contrast, Cordelli’s article is loaded with content from the Marxist or socialist far left. Space devoted to critics of capitalism far outpaces even basic descriptions of the economic concept, and proponents of capitalism are reduced to shallow parodies.
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Cordelli’s prose functions as an anti-capitalist advocacy piece rather than a neutral and descriptive encyclopedia entry. It breaks with the normal format of the Stanford Encyclopedia of Philosophy, in which a concept or a philosopher’s work is usually described in its component parts to give a better view of the whole. While other entries usually offer space for debate and criticisms of the author or subject, they seldom comprise the majority of their verbiage.
Cordelli’s barrage of critiques against capitalism is almost twice as long as her description of capitalism’s supporters. Marxist accounts of capitalism account for three times the combined word count of Cordelli’s descriptions of market capitalism and institutionalist theories of capitalism. The author was clearly more concerned with highlighting every minute facet of anti-capitalist academic writing imaginable than with helping readers understand what the concept means, or the reasons that people defend it.
The resulting product is even more egregious when one considers the track records of these competing perspectives. Whatever criticisms may be offered of capitalism, its underlying economic theories have coincided with an unparalleled rise in prosperity and well-being between the late 18th century and today, often known as the Great Enrichment. By comparison, the Marxist perspectives that dominate Cordelli’s work carry the ignominious baggage of mass atrocity and economic ruin in the 20th century, though the phrase “Soviet Union” never appears in her entry. Neither do any of its catastrophic copycat regimes, from Maoist China to recent socialist experiments in Venezuela. Economists of any non-Marxian or socialist stripe are relegated to a minimal presence, and where their ideas are discussed at all, a socialist or anti-capitalist critic is almost always brought in at the end and given the last word.
The bizarre result is something akin to an encyclopedia entry about “astronomy” in which the majority of consulted sources are astrologers, and furthermore their horoscope readings are privileged over the empirical calculations of actual scientists who study star movements.
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The Stanford Encyclopedia of Philosophy’s unwillingness to select an author for the entry on capitalism who could provide a charitable or even neutral assessment of the concept is ultimately unscholarly. In the 20th century, socialism resulted in the deaths of tens of millions of people, and capitalism and free markets were the critical factors for lifting billions out of poverty, and yet it is socialism that received the positive encyclopedia entry and capitalism that garnered the hate. Such imbalances could only emerge from an academic environment in which an ideological echo chamber supplants rigorous peer review, and the fashionable socialist perspectives of the professoriate lead it to mistake bad caricatures of a market economy for descriptive fact.
Michael Strain summarizes the myths of the “China Shock.” A slice:
Economic theory suggests that trade liberalization should have little effect on aggregate US employment because job losses from import competition can be balanced by job gains in export-intensive firms and sectors. The economist Robert Feenstra and his coauthors attempt to account for both sides of the ledger.
In a 2019 paper, Feenstra and his colleagues confirm the “China shock” result, finding that 1.9 million jobs were lost between 1991 and 2011, owing to import competition from China, with more jobs lost to competition from global imports. But they also find that a roughly equivalent number of jobs were gained due to export expansion.
One should also consider that manufacturing’s share of total US employment followed a relatively smooth downward trend from the early 1950s until the 2008 financial crisis, when falling productivity actually caused the trend to slow. The decline predates the “China shock” by decades. And there was no obvious trend break in manufacturing’s employment share in 2000 or 2001, which is consistent with the view that, over the long term, declines in manufacturing employment have been driven mainly by productivity growth, not by trade competition.
Finally, the US did not decide to open trade with China in the 1990s in the same way that I decided to have a third espresso this morning. The decision wasn’t nearly so simple or singular.
Yes, China was granted permanent normal trade relations in 2000 and entered the World Trade Organization in 2001. But the US had annually renewed China’s normal trade relations status since 1980, and US trade with China grew rapidly over two decades prior to its WTO accession. According to my calculations, China’s share of total US imports grew during the 1980s, hit 2.5% in 1989, had more than doubled to 5.4% by 1993, and stood at 8% in 1999.
The trend continued following China’s WTO accession. China’s share of total US imports doubled again, from 8.2% in 2000 to 16.4% in 2007. But even this overstates the role of US policy in facilitating the so-called China shock. China’s exports continued to grow in part because the US eliminated the uncertainty created by the pre-2000 annual renewal of trade-policy parameters. They also grew because of China’s internal, pro-market reforms—including a reduction in its own tariff rates.
Nor was the US decision to trade with China made by a shadowy elite. China’s exports to America grew as a result of millions of decentralized, individual decisions. During the 1980s and 1990s, US consumers and businesses increasingly chose to purchase goods made in China, a trend that continued following China’s entry into the WTO.
It is wrong to present the “China shock” as evidence that trade liberalization hurts the working class, or that a powerful, murky, nefarious elite is making deliberate, isolated choices that hurt the majority of Americans.
The Economist reports on what sees as, well, the banality of much of Daron Acemoglu’s research and commentary. Two slices:
More worrying is that his grand thesis of institutions may not reveal very much. Nations prosper when institutions are good, and stagnate when they are bad. True. But what, exactly, is an institution? Rules, norms, enforcement, culture—everything, really. Where do institutions come from? From “critical junctures” and “institutional drift”, whatever that means.
Reviewing one of Mr Acemoglu’s books in 2011, Tyler Cowen of George Mason University noted that the institutional changes it describes only seem to come from other institutional changes, making the core argument regress for ever—turtles all the way down. Duncan Green of the London School of Economics has argued that the framework works mainly in hindsight. Francis Fukuyama of Stanford University has argued that the book waves away the example of China, which has seen blistering economic growth alongside institutions that can quite plausibly be described as extractive.
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Mr Acemoglu’s influence in the AI debate is clear in a recent statement, signed by dozens of prominent economists, which argues that “we must act now” to “steer AI in a direction that complements humans and benefits society”. Who is the “we”, exactly? The Trump administration? And who is to decide what sort of AI does and does not complement humans? Even economists who signed the petition say they are not entirely sure. So great is Mr Acemoglu’s stardom that it can sometimes blind the critical faculties.
Politicians are addicted to making promises that require sources of money they don’t have. Their failure to control spending remains one of the biggest threats to the country. If only the $40 trillion milestone [of government indebtedness] could be a wake-up call.
GMU Econ alum Nikolai Wenzel is a fan of Stephanie Slade’s new book. Two slices:
Fusionism, a new book by Stephanie Slade, a Senior Editor at Reason, attempts to make sense of the seemingly incoherent New Right. Although Slade proposes a renewal of fusionism as a remedy to conservatism’s drift and the challenges facing a divided Republic, the book’s greatest strength lies in its analysis of the trends to date.
The Republican Party, for all its faults, was supposed to understand (instinctively, if not always intellectually) limited government, rule of law, and the basics of economics. From its elected leaders, though, we have gotten tariffs, increased public debt, dodgy respect for habeas corpus in immigration enforcement, and the Saturday Night Live tragicomedy of DOGE (a virtue-signaling, clumsy, and cruel flash in the pan destined to die on the vine when it removed entitlements from the chopping block). The coalition that constitutes the New Right has abandoned conservatism, and instead sells its own form of populist interventionism.
Slade starts by painting a rather glum sketch of the contemporary scene. Within the convoluted and heterogeneous mess she labels “the Dissident Right,” she identifies three major strains:
- the predominant national conservatives, who are eager to use the coercive power of the modern administrative state to advance (allegedly) conservative causes and push for national primacy;
- the theocons, who dream of “immanentizing the eschaton” by creating a state theocracy to impose (their understanding of) a transcendent moral order;
- the neoreactionaries, the Pajama-Boy Nitzscheans who have been given legitimacy to spew their blend of vitriol and conspiracy.
The NatCons have turned their back on the basics of markets and skepticism about administrative power (how sad in this 250th anniversary year of The Wealth of Nations!). The theocons would repoliticize salvation after three centuries of religious tolerance within Christendom. And, beneath all that, the country’s baser instincts toward power and suppression are flourishing within the neoreactionary right. On the other side, the interventionist excesses of American socialism, with DEI, cancel culture, and continued growth of the administrative-welfare state, are equally horrifying. To paraphrase Richard Nixon, we are all interventionists now.
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Today’s classical liberals are, indeed, alone in a two-front war. The paternalistic Left and the Dissident Right both aggressively push for social and economic control. Liberty, limited government, and free markets have few defenders. Fusionism is an appealing alliance, as Slade proposes it. But who will be the fusionist warriors for individual liberty? Where are the moderates to defend private property? Where have all the pro-business, small-government, free-trade conservatives gone? We can hope that there is a Nockian Remnant out there, biding its time while the dissident storm passes. In the meantime, the libertarian wing of fusionism stands alone, as core agreements have largely been abandoned by those who still call themselves conservatives, but now need hyphenations to distinguish conservatism from their preferred flavor of interventionism.
Indeed, few developing nations have grown rapidly over time without simultaneous increases in both exports and imports, and virtually all developing countries that have grown rapidly have done so under open trade policies or declining trade protection.
Nations trade with each other because they benefit from it. Other motives may be involved, of course, but the basic economic motivation for international trade is that of gain. The gain from international trade, like the gain from all trade, exists because specialization increases productivity. We are familiar with fruits of specialization and the division of labor in trade between regions of a single country, or between persons in a town, but we may not perceive that the same benefits exist in international trade. The political boundaries that divide geographic areas into nations do not change the fundamental nature of trade and the benefits it confers on the trading partners.
The social function of economic science consists precisely in developing sound economic theories and in exploding the fallacies of vicious reasoning. In the pursuit of this task the economist incurs the deadly enmity of all mountebanks and charlatans whose shortcuts to an earthly paradise he debunks. The less these quacks are able to advance plausible objections to an economist’s argument, the more furiously do they insult them.
Price controls are often implemented with the goal of fighting inflation. But this, incorrectly, assumes that all wage-price increases are the result of inflation. In an unhampered market economy, there are constant, genuine changes to supply and demand conditions that will often lead to real price increases and relative price increases. The existence of price controls distorts the ability of the price mechanism to communicate this information by treating all price changes as if they are the result of inflation. The result is that scarce resources will not be reallocated to meet changes in the real, underlying economic conditions. Thus, due to persistent resource misallocations, standards of living will suffer.
