More generally, my only
significant critique of A Capitalist Manifesto
is that it is too brief in certain respects. It offers
promising introductions to a variety of economic ideas,
but leaves some significant questions arising from those
areas unanswered. Wolfram introduces the history and
function of the corporation but does not discuss the
principal-agent problem in large, publicly traded firms
with highly dispersed ownership. To anticipate and
answer (and perhaps partially acknowledge the validity
of) criticisms of the contemporary corporate form of
organization, commentary on how this problem might be
overcome is essential. Wolfram explains the components
and computation of Gross Domestic Product and the
Consumer Price Index but devotes only a small discussion
to critiques of these measures – critiques that are
particularly relevant in an electronic age, when an
increasing proportion of valuable content – from art to
music to writing to games – is delivered online at no
monetary cost to the final consumer. How can economic
output and inflation be measured and meaningfully
interpreted in an economy characterized partially by
traditional money-for-goods/services transactions and
partially by the “free” content model that is funded
through external sources (e.g., donations or the
creators’ independent income and wealth)? Moreover, does
Wolfram’s statement that the absence of profit (sufficient
to cover the opportunity cost) would result in the
eventual decline of an enterprise need to be qualified
to account for new models of delivering content? For
instance, if an individual or firm uses one income
stream to support a different activity that is not
itself revenue- or profit-generating, there is a
possibility for this arrangement to be sustainable in
the long term if it is also justified by perceived non-monetary
value.
Wolfram’s discussion of
inflation is correct and forms a strong link between
inflation and the quantity of money (government-issued
fiat money these days) – but I would have wished to see
a more thorough focus on Ludwig von Mises’s insight that
new money does not enter the economy to equally raise
everybody’s incomes simultaneously; rather, the
distortion due to inflation comes precisely from the
fact that some (the politically favored) receive the new
money and can benefit from using it while prices have
not yet fully adjusted. (This can be logically inferred
from Wolfram’s discussion of some of the “tools” of the
Federal Reserve, which directly affect the incomes of
politically connected banks – but I wish the connection
to Mises’s insight had been made more explicit.) Wolfram
does mention that inflation can be a convenient tool for
national governments to reduce their debt burdens, and
he also discusses the inflationary role of fractional-reserve
banking and “tools” available to central banks such as
the Federal Reserve. However, Wolfram’s proposed
solutions to the problems of inflation remain unclear
from the text. Does he support Milton Friedman’s
proposal for a fixed rate of growth in the fiat-money
supply, or does he advocate a return to a classical gold
standard – or perhaps to a system of market-originated
competing currencies, as
proposed by Hayek? It would also have been
interesting to read Wolfram’s thoughts on the prospects
and viability of peer-to-peer and digital currencies,
such as
Bitcoin, and whether these could mitigate some of
the deleterious effects of central-bank-generated
inflation.
Wolfram does discuss in some
detail the sometimes non-meritocratic outcomes of
markets – stating, for instance, that “boxers may make
millions of dollars while poets make very little.”
Indeed, it is possible to produce far more extreme
comparisons of this sort – e.g., a popular “star” with
no talent or sense earning millions of dollars for
recording-studio-hackneyed “music” while genuinely
talented classical musicians and composers might earn
relatively little, or even have their own work remain a
personal hobby pursued for enjoyment alone. To some
critics of markets, this may well be the reason
to oppose them and seek some manner of non-market
compensation for people of merit. For a defender of the
unhampered market economy, a crucial endeavor should be
to demonstrate that truly free markets (unlike the
heavily politicized markets of our time) can tend toward
meritocracy in the long run, or at least offer people of
merit a much greater range of possibilities for success
than exists under any other system. Another possible
avenue of exploration might be the manner in which a
highly regimented political system (especially in the
areas of education) might result in a “dumbed-down”
culture which neglects and sometimes outright opposes
intellectual and esthetic sophistication and the ethic
of personal productivity which is indispensable to a
culture that prizes merit. Furthermore, defenders of
markets should continually seek out ways to make the
existing society more meritocratic, even in the face of
systemic distortions of outcomes. Technology and
competition – both of which Wolfram correctly praises –
should be utilized by liberty-friendly entrepreneurs to
provide more opportunities for talented individuals to
demonstrate their value and be rewarded thereby.
Wolfram’s engaging style and
many valid and enlightening insights led me to desire
more along the same lines from him. Perhaps A
Capitalist Manifesto will inspire other readers to
ask similar questions and seek more market-friendly
answers. Wolfram provides a glossary of common economic
terms and famous historical figures, as well as some
helpful references to economic classics within the
endnotes of each chapter. A Capitalist Manifesto
will have its most powerful impact if readers see
it as the beginning of their intellectual journey and
utilize the gateways it offers to other writings in
economics and political economy.
Disclosure:
I received a free copy of the book for the purposes
of creating a review.
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