Why We Bite the Invisible Hand

Philosophical defense of capitalism combined with a psychological critique of its detractors.

Foster is no stranger to contentious economic dispute. A veteran financial journalist, he’s also the author of Self-Serve: How Petrocan Pumped Canadians Dry (1992), which won Canada’s National Business Book Award. In his latest effort, he ambitiously attempts a rehabilitation of capitalism, both as a motor of prosperity and as a moral account of human relations. While the book begins polemically, criticizing the populism of President Barack Obama and New Jersey Gov. Chris Christie, it is far more historically and philosophically oriented than centered on contemporary political debate. Foster aims to revive the spirit of Adam Smith, who, in the 18th century, defined our understanding of capitalism as a “system of natural liberty.” Astutely, the author fleshes out the basic theoretical underpinnings of capitalism, often oversimplified in public discourse, and explains the intended meaning of the notorious “invisible hand” of market decision-making. Foster also tries to explain the motivational psychology behind the vehement resistance to capitalism despite its global success as well as the persistence of those who, following the likes of John Maynard Keynes, remain devoted to the view that government intervention is the primary stimulant of economic growth. Sometimes his accounts of those opposing capitalism can seem reductive, belying the book’s overall rigor: “Income and wealth gaps are inevitably the object of envy, a moral sentiment that evolved to express disapproval of, and motivate action against, those thought to have more than their ‘fair share.’ From this perspective,” he says, “envy of those who grow wealthy in relatively free capitalist societies through their success in serving others amounts to a cognitive ‘error.’ ” Overall, though, the book is admirably free of ax-grinding political allegiances; it isn’t often such an unabashed endorsement of free markets also includes reservations about Ayn Rand.

Lucid, thoughtful defense of free market competition.