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Two Letters on the Market

Today’s edition of USA Today published this letter of mine:

Commentary writer Alan Webber applauds the idea of the so-called social business — one that “has a social cause, not just a financial goal.” Webber also tells us: “Think of it as capitalism with a human face” (“Giving the poor the business,” The Forum, Wednesday).

I don’t question Webber’s uncritical assumption that social businesses will work.

I do, however, question his hackneyed suggestion that the face of for-profit capitalism is inhuman.

No other economic system but capitalism has lifted billions of people so decisively out of poverty.

Economist Joseph Schumpeter noted this fact in 1942: “Electric lighting is no great boon to anyone who has money enough to buy a sufficient number of candles and to pay servants to attend them.

“It is the cheap cloth, the cheap cotton and rayon fabric, boots, motorcars and so on that are the typical achievements of capitalist production, and not as a rule improvements that would mean much to a rich man.

“Queen Elizabeth owned silk stockings. The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort.”

And today’s edition of the Baltimore Sun published this one:

Julie Sensat Waldren eloquently explains the difficulties of “being green” (“It’s not easy being green,” Commentary, May 17).

For example, consumers cannot possibly know how the environmental impact of disposable cups compares with that of ceramic cups whose production consumes lots of energy.

Contrary to a profusion of claims by naive pundits, the economy is far too complex for any person or even a committee of geniuses to trace the full environmental consequences of any of the hundreds of ordinary decisions consumers and producers make daily.

Economists since Adam Smith have taught that the best we can do is to have well-defined property rights that owners use and exchange as each judges best.

The unplanned result isn’t an earthly paradise, but it’s vastly superior to what emerges when people consciously aim to bring about a specific outcome in the overall pattern of economic activities.