Peter Coclanis isn’t favorably impressed with John Cassidy’s new book, Capitalism and Its Critics. Two slices:
Over the past 200 years or so, capitalism has ushered in levels of economic growth, development, and overall human flourishing unknown and well-nigh inconceivable to our species anywhere in the world at any earlier point in time. It has been responsible for an explosion of wealth creation over the centuries covered by Cassidy. In the developed world, people today are roughly 25 times richer in real terms than they were in A.D. 1800. In the developing world they are roughly eleven times richer. Even during the frequently derided capitalist era we have just lived through—that of neoliberalism, or hyperglobalization, or what have you—we find very significant economic gains worldwide, huge declines in the proportion of the world’s population living in extreme poverty, and impressive increases in living standards, educational levels, and human health, particularly in the developing world. Cassidy knows this and grudgingly acknowledges it from time to time. He even includes an astonishing graph showing the spike in global average GDP that capitalism precipitated. But that doesn’t stop him from lamenting the persistence of the world’s most successful economic system for the better part of 600 pages.
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Cassidy has little time for neoclassical economics or marginalism. He gives Jevons and Walras a single mention and Menger none at all. He sees neoclassicists as apologists for capitalism, and he seems to rue the fact that “[a]fter 1890, when Alfred Marshall, a professor at Cambridge, published his Principles of Economics, most economists used supply and demand curves, rather than the labor theory of value, to explain how market prices get determined.” It is not surprising, then, that Cassidy treats later adherents of “orthodox” economics—dissimilar figures ranging from Hayek and Friedman to Paul Samuelson and Robert Solow—with distaste or aversion. For Cassidy, the only acceptable camp to be in is that of managed capitalism. He deplores the laissez-faire eras in capitalism’s history, to wit: everything from circa 1770, when he begins, to the 1930s, plus the neoliberal era stretching from the late 1970s or early 1980s until the financial crisis of 2007-09 and beyond, some would say almost to the present day. It is during these long periods, Cassidy believes, that capitalism’s shortcomings have been most egregiously on display. That leaves only the period of managed capitalism—give or take 40 years, between the mid-1930s and the mid-1970s—to praise or emulate.
One can challenge the idea that another era of “managed capitalism” is even possible: not for nothing does leftist historian Jefferson Cowie refer to the 1930s-70s in the U.S. as “the great exception.” But Cassidy’s interpretation of capitalism’s long-term trajectory is seriously flawed as well. As numerous scholars over the years have pointed out, capitalism has been responsible for an explosion of wealth creation over the centuries covered by Cassidy. In his view, none of this can make up for what he considers capitalism’s worst flaw: inequality, particularly the inequality represented by the so-called 1%.
The Congressional Budget Office projects that in 10 years, the nation will annually be spending more than $2 trillion (two thousand billion) just on debt service, which already is the fastest-growing part of the budget. The national debt will exceed $40 trillion by the end of October, the Peterson Foundation projects.
The debt has doubled in the 10 years since Donald Trump, on March 31, 2016, vowed to eliminate the debt in eight years. He did not try, but if he had, he would have been stymied by this grinding political dynamic:
The fastest-growing age cohort is people 65 and older. They are high-propensity voters because the more government subsidizes them, the higher are the stakes of politics for them. And because of their powerful incentive to vote (in order to defend and enlarge their benefits), the political class has a permanent incentive to intensify the elderly’s incentive by enriching those benefits. Last year, the president’s One Big Beautiful Bill Act increased the standard tax deduction for seniors — and only for them.
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Kevin R. Kosar of the American Enterprise Institute says the 50-year (1975-2025) average of annual budget deficits as a percentage of GDP has been 3.8 percent. Since 1946, that average has been surpassed only eight times. Three of those, however, were 2023, 2024 and 2025.
The Editorial Board of the Wall Street Journal reflects on the unfortunate legacy of the late Paul Ehrlich. Two slices:
The Stanford biologist Paul Ehrlich, who died Friday at age 93, made his most important contribution to the world by losing a bet. It helped educate millions that his ideas about scarcity and human ingenuity were wrong.
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It was really a wager over human beings and free markets. If Ehrlich was right, and people were devouring the Earth’s resources, then the price of those resources would go up. If Simon was right, human beings would respond to shortages with ingenuity, and prices would, in the long term, go down. In 1990 Simon won the bet and Ehrlich paid up.
Today the nations such as China that embraced population control most wholeheartedly are now worried about a birth dearth. Ehrlich’s life is a lesson that brilliant men can become captive to bad ideas that become intellectual fashion and do great harm. At least he honored his bet.
Colin Grabow warns again of the folly of the Jones Act.
The law was supposed to encourage more domestic shipbuilding. But outside of mobilization during the world wars, commercial shipbuilding has not been one of America’s strong suits for 150 years, despite — or perhaps because of — near constant protectionism since the founding of the country.
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The costs the Jones Act imposes are significant in the aggregate. Repeal would save U.S. consumers $769 million per year on petroleum alone, according to a 2023 study. But these savings would be barely noticeable at the level of a gallon of gasoline, probably only a few cents in the regions most affected.
And Colin Grabow tweets: (HT Scott Lincicome)
Waiver less than 24 hours old and foreign ships are already being chartered. Each of these voyages represents a cost savings. If cheaper Jones Act-compliant alternatives were available, they would have been used. Shows the existence of demand the JA fleet couldn’t meet.
