In the 1940s, economist Friedrich Hayek said in his book, “The Road to Serfdom,” that the road to serfdom was socialism. Economist Joseph Schumpeter, in “Capitalism, Socialism, and Democracy,” feared that socialism would displace capitalism even though capitalism was a better system.
In the 21st century, self-proclaimed socialists like Sen. Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) are keeping the fears of Hayek and Schumpeter alive. Those fears are misplaced. The biggest threats to capitalism aren’t socialists, they are capitalists.
While socialists float aspirational ideas for a better society, capitalists conspire with the political class to enact policies that benefit the political and economic elite at the expense of the masses.
The result is that business profitability increasingly comes from political connections rather than by satisfying the demands of consumers, undermining free markets and the capitalist system.
This is widely recognized, if not widely understood. People talk about cronyism, corporatism, the division between the 1 percent and the 99 percent and the threats of the military-industrial complex. In my recent book, I call this phenomenon “political capitalism” and explain how it undermines the market system and threatens capitalism.
When capitalists tout pro-business policies, they inevitably are talking about policies that use trade barriers and regulatory impediments to give themselves advantages over competitors.
Read the full article at The Hill
Watch Dr. Holcombe’s talk on Political Capitalism from this year’s AERC:
