Capitalism: The Movie

Why Americans don’t value markets enough—and why that matters

Capitalism is not much loved, even in the parts of the world it has served best. If only one country were to dote on free enterprise, America surely ought to be it. With world-beating companies, breast-beating CEOs, a timid political Left, dwindling and unpopular labor unions, and extreme prosperity (by international standards), one might expect the prevailing climate of opinion to be ardently pro-capitalist. But no. American enterprise has its spokesmen, brasher than most, just as it has its critics, as fierce as any. In the main, however, when intelligent Americans with no axes to grind contemplate the market economy, they are neither angry nor adoring, just wary and distrustful. It was ever thus.

Seen a movie lately? Watched television or read a newspaper? The culture that speaks to Americans, and hence to the Western world, radiates suspicion of free enterprise—cordial and restrained, as a rule, but dubious nonetheless. Yes, the system does work, says this culture, and there appears to be no alternative. But what a shame this is, it continues, because capitalism rewards our worst and most selfish instincts. “Greed is good” may stock the shelves, but is somewhat less than inspiring.

Popular culture understands that the market economy creates material prosperity, albeit for some more than others. It seeks out and worships business celebrities. But at the same time it sees the system as spiritually—and politically—corrupting. As viewed from Hollywood, workers are usually downtrodden, bosses are usually grasping, consumers are usually gulled, and shadowy global finance is always calling the geopolitical shots. We manage to prosper, most of us, but this system of ours is not very noble.

What is most striking, so far as the movies’ treatment of capitalism goes, is not the hostility of films whose main purpose is actually to indict corporate wickedness (Wall Street, Erin Brockovich, A Civil Action, The Insider, The Constant Gardener, and so forth). It is the idea of routine, reckless corporate immorality—maintained as though this premise were inoffensive, uncontroversial, and hardly worthy of comment—that drives movies whose principal interest lies elsewhere, whether in the human drama of contemporary geopolitics (Syriana, to cite a recent instance), knockabout comedy (Fun with Dick & Jane), children’s fantasy (Charlie and the Chocolate Factory), star-crossed romance (In Good Company), or, classically, in some dystopian near or distant future (Alien, The Terminator, Blade Runner, Robocop, and many others).

The point is not that such movies, or the culture more generally, argue that capitalism is evil. Just the opposite: it is that they so often merely assume, innocently and expecting to arouse no skepticism, that capitalism is evil.

In this, of course, the culture is not really driving attitudes. It is expressing widely held (though not very closely examined) beliefs; it is itself responding to demand. And disenchantment with commerce goes back an awfully long way. Samuel Johnson was already confronting an age-old tradition 250 years ago when he said, “There are few ways in which a man can be more innocently employed than in getting money.” So was Adam Smith, shortly after, when he wrote, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Smith was not praising selfishness, by the way; he did not believe that greed is good. He was explaining how commerce can spontaneously harness a base worldly instinct to an enlightened social purpose—an idea that people, one Industrial Revolution later, still find implausible.

Capitalism is prey to excesses, self-evidently, and it creates, or leaves unattended, a host of problems that decent societies must address by other means. Even so, the prevailing culture of suspicion and disappointment is at odds with the facts. Mainly, what is missing is awe. Premodern scholars (Karl Marx is an exception) could scarcely have imagined the material advance that capitalism has delivered. Certainly Adam Smith never dreamed that his “invisible hand” would arrange things so well.

In the late 1980s, as Mikhail Gorbachev embarked on his perestroika program of economic reform, Soviet officials were sent abroad to see how things were done in the West. One visited London’s main vegetable market. He asked how the market was organized, and how prices were set. He was told that the individual traders bought whatever quantities they wished, and set their own prices, and that these fluctuated throughout the day as the balance of supply and demand changed. At this, the Soviet visitor laughed. He said he understood that this was the official line—but, please, how did the market really set prices?

That, in fact, was the reaction of an intelligent man. It is fantastically improbable that markets work, at scale, as well as they do. It is astonishing that in an economy of America’s size—to say nothing of the world economy as a whole—a limitless variety of goods and services is continuously offered at prices people are willing to pay, without persistent gluts or shortages, entirely without central direction. That the system also calls forth an endless flow of innovation and improvement is a miracle. The man from Moscow was right to be incredulous.

And it gets better, because this infinitely complicated, decentralized system has an obvious affinity with personal liberty, in a way that a centrally directed system never could. Market exchange, after all, is voluntary; under central planning, you are told what to do—or else. Europe’s newcomers from the former Soviet empire need no reminding of this. But people in Western Europe and the United States, who never had to endure the alternative to a market economy, see little or no force in the connection between economic and political liberty. Often it seems that those in the West who are most concerned with defending political or civil freedoms are least concerned with the economic kind, even to the point of being outright opposed to them. They argue as though political freedom is the real thing, whereas economic freedom is merely a cloak for injustice. In the end, as socialism in practice showed, the two are indivisible.

But does it matter, really, if people are less comfortable with the idea of capitalism than they might be, or should be? Up to a point, to be sure, this skepticism serves a purpose, drawing attention to ills and injustices that might otherwise be ignored. But there is a cost: the mood of discomfort and suspicion is a pity in itself, to the extent that it is unwarranted. Also, it fosters a demand for, or tolerance of, frivolous or wasteful interventions by government.

In comparison with other rich countries, America tends to think of itself as lightly taxed and lightly regulated. This is an illusion. Taxes in America are admittedly lower than in most of Europe—though this is partly because the Bush administration is borrowing so much (a state of affairs that cannot last), and partly because the United States, unlike almost every other rich country, has not fully socialized its health-care system. Even making no allowance for health expenditures, the government currently absorbs about as much of the national income (37 percent) as in Australia (36 percent), Canada (40 percent), Ireland (36 percent), Japan (37 percent), Spain (39 percent), and Switzerland (37 percent), and none of these is regarded as a champion of free-market economics. America regulates its labor market more lightly than Europe, hence its low rate of unemployment; but in many other areas, especially so far as risk, product safety, and the environment are concerned, America’s economy is at least as heavily regulated as those in Europe.

Whether any particular spending program or regulatory intervention makes sense must be judged case by case. One could point to wasteful and unjust interventions (farm subsidies, for instance) or make a solid case for new ones (a gas tax to curb demand for oil, for example). But if a democratic country is to think these things through, it should do so with a mature understanding of the material and nonmaterial advantages of the market system. A background presumption against market forces is a poor basis for policy.

It is difficult to see where any heightened appreciation of the market system is going to come from. Economists, presumably, ought to be supplying it. Unfortunately, in most cases, communicating a sense of wonder is not among their gifts. In some ways, teachers of economics are probably making matters worse. As practiced in universities, economics continues to turn inward, with ever more emphasis on math, quantitative methods, and narrow specialization. You can make a case for that, but it silences the discipline on the thing that matters most. Also, people are suspicious of economists: they see them as agents of a suspicious doctrine. And it so happens that a variety of studies have shown, notoriously, that training in economics inclines people to be more “rational”—that is, more selfish and less inclined to cooperate. This does not commend economics to the rest of us.

Corporate leaders and right-of- center politicians who set up as spokesmen for free enterprise are worse. They speak of capitalism’s virtues, then get down to the real business of subsidies, import protection, tax relief, and other favors. People see through it, and find their prejudices confirmed. The conflation of the interests of business with the interests of the nation is virtually an organizing principle of the Right. Yet in reality those interests are usually opposed—as Adam Smith again pointed out. What best serves a nation’s economic interests is competition—it’s why markets work, when they do. But competition hurts individual businesses, and most CEOs hate it. Don’t look there for intellectual enlightenment.

How about a movie in which a firm prospers under threat of competition by selling things that people want at an affordable price, paying its workers the market wage, and breaking no laws, thereby advancing the common good? Well, you see the problem.