Good and Bad Capitalism

PARIS – The reality of market exchange – direct transactions between merchants and customers – appeared gradually 3,000 or 4,000 years ago. In this novel social relationship, the customer was free to buy whatever he wanted, whenever and from whomever he chose, often bargaining with the seller about the price.

Because of these features, the free market is part of a basic freedom that is rooted in everyday life. It remains dominant today, as all efforts to establish an alternative, even totalitarianism, failed. Indeed, it has been 20 years since the former communist countries of Eastern Europe rejoined the world of market exchange, a step taken as early as 1946 by social democrats around the world.

For several thousand years, the free market was comprised of individuals: craftsmen, traders, and consumers. Capitalism when it arose three centuries ago was simply the same activity on a larger scale. Because of steam engines and electricity, a large number of people were enabled to work together, and corporations could attract a large number of small savers, who became capitalists.

This system is fantastic. By the time of the French Revolution, the standard of living had hardly doubled since the Roman Empire. Today, it is 150 times higher.