Misunderstood Capitalism

A recent article at the Wall Street Journal takes a look at the realities of capitalism and how it relates to the current financial crisis.

It is one thing to say that corporate America’s compensation systems are flawed. It is quite another thing to say that this flaw caused the financial crisis.In short, people are right to be dissatisfied with prevailing economic arrangements. But they have been persuaded by their intellectual leaders–including, unfortunately, most defenders of “capitalism”–to think that the status quo is capitalism, rather than a system in which the most fundamental feature of capitalism–competition–has been seriously undermined by a thick layer of regulation laid over capitalism during the last 150 years. There is no better example of how misleading it is to blame “capitalism” for the resulting problems than in the case of the financial crisis, which was in fact a regulatory failure par excellence.

The author looks at three myths of the current financial crisis and takes them apart, laying a very clear case for the argument that the current crisis was not caused by unrestrained capitalism, but by over-burdening government regulation.

Jim Stuart at American Thinker comments on the article.

Unfortunately, -and thanks to neglect and a preponderantly socialist academic establishment, – the concept of capitalism and its benefits are not taught in our schools, and we are now paying the price.  The simplistic notion of government bureaucrats inventing and disinterestedly applying beneficent rules for the rest of us to follow is an easy concept to understand, whereas the complex dynamics of capitalism requires more effort, particularly when the capitalism we experience on a daily basis is riddled with self-interested government intervention and regulation, and the messes these interventions cause is blamed by the politician-authors on capitalism and “greedy capitalists”.

This widespread misplaced mistrust in and ignorance of capitalism explains to a very large extent the popularity – to the extent that it exists – of Obama’s leftist initiatives.  They are in alignment with those who believe government bureaucrats, rather than free market competition, are a more trustworthy answer for society’s problems.

Read the whole thing here, and Stuart’s commentary here.


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