Capitalism is under attack. Defenders say that capitalism has raised billions of people from
poverty. But a central activity of capitalism today Wall Street style is speculation
(gambling) using other people's money and privatizing the profits while socializing the
debts. Skeptics argue that capitalism has redistributed the wealth of the planet in favor of a
very few meanwhile leaving the planet in bad shape and leaving billions of people out in the
cold. Wealth is now extremely mal-distributed opportunity is far from equal and upward social
mobility has declined significantly in recent decades. This book reviews the evidence and
arguments pro and con in considerable detail.The evidence is mixed. The main virtue of
capitalism is its emphasis on competition as a driver of innovation and thus of economic
growth. It is true that economic growth has accelerated in recent centuries and it is true
that billions of people have been lifted from poverty. But it is not necessarily true that
intense winner take all competition in the marketplace is the explanation for growth.
Neoclassical economic theory posits that self-interest is the primary motive for all economic
decisions leaving little room for cooperation and even less for altruism. The theory applies
to an unrealistic model of human behavior known as Homo economicus or economic man whose
characteristic activity is buying or selling. The reason for using the adjective word social -
as in socialism or social service or social democracy -- is essentially to deny those
postulates of standard economic theory. Real humans are not rational utility maximizers
(whatever that is) and very often do things that are not in their own personal best interests.
This can happen because other interests such as family loyalty professional religious or
patriotic duty may take precedence. Real people rarely behave like Homo economicus who has
rivals but no friends. He (or she) does not trust anyone hence cannot cooperate with others
and can never create or live in a viable social system (or marriage). Yet social systems
ranging from families and tribes to firms cities and nations do (and must) exist or
civilization cannot exist. A viable social system must not allow winner takes all. It must
reallocate some of the societal wealth being created by competitive activities to support the
young the old and the weak because all of those people have equal rights if not the same
luck or the same skills. Both competition and cooperation have important roles to play. A
hybrid capitalism involving both is the only viable solution. The book ends with a specific
suggestion namely Universal Basic Income or UBI.
