The worst enemy of capitalism is…capitalism.
That is one takeaway from financial adviser Smick (The World Is Curved: Hidden Dangers to the Global Economy, 2008), the founder and publisher of International Economy magazine. One of the lessons learned from the recent presidential election is that there is a hunger for populism in the United States, whether of an authoritarian or a libertarian nature. Thus the Bernie Sanders campaign, which held capitalism as an economic system to be the chief author of our woes. However, writes the author, the culprit is not so much the system of private profit for goods and services, but a global machine that has become much larger and more entrenched than anyone might ever have imagined. “In recent decades, a Corporate Capitalism of inside deal-making, elite special privilege, and dominance by large institutions has...exerted a stranglehold over the U.S. economy,” writes Smick, going on to say that this kind of capitalism is not the kind that we ought to preserve. In its place the author advocates for “Main Street Capitalism,” characterized by openness of access and entry and favoring entrepreneurship and small business, the historic engines of most economic growth. Smick is long on both diagnosis and prescription; he offers detailed notes, for instance, on how tax policy favors the big players, with a private equity firm on Wall Street paying 15 percent capital gains while a family-owned dry cleaner down the road would pay half that. Populist sentiment aside, and though there's really not a whole lot new here, the author is clearly on the side of capitalism against any other kind of -ism, in the interest of which he proposes a “14-point plan” that leverages political compromise, tax and educational reforms, a modest minimum wage hike, and other measures to level a playing field that is indisputably tilted.
Is all this pie-in-the-sky thinking? Perhaps so, but Smick’s call for a fairer capitalism makes for bracing reading for students of the modern economy and polity.