Why Does Capitalism Have Such a Bad Name?

I was tempted this morning to jump into the discussion on prematurity in science, but instead as I read the Washington Post I was struck by the storyline "Venezuela Poised to Hand Chavez Wide-Ranging Powers."  I read on and learned of sweeping nationalizations of key industries and that Chavez will radically reshape Venezuela's politics and economic system to be "an alternative to US capitalist policies."

How is this possible?  Haven't we been there and done that to the tune of economic stagnation and political tyranny in the Soviet socialist experiment?  Are we so oblivious to the evidence on the political economy of socialism that the delusional and romantic rhetoric of socialist economic planning, egalitarianism and global justice can still ignite fires in the minds of men?

The problem might be slightly different than that and instead be related to the bad faith policies engaged in by the capitalist countries of the US and UK --- especially the US.  Do we really follow "capitalist policies" in the US?

My colleague in the School of Public Policy Hilton Root --- actually Hilton and I were fellows together at the Hoover Institution on War, Revolution and Peace in 1992-93 --- has a new book manuscript The Curse of Alliances which directly challenges the presumption that the US has promoted open markets and democracy throughout the world. Instead, our foreign aid/foreign policy record is one of proping up autocratic tyrants and dolling out contracts to politically favored international corporations.  Crony-capitalism has discredited true capitalism, and geo-politics has prevented the rise of freedom.

Once we think seriously about these issues --- and I think Chris Coyne's After War is one of the most serious efforts in recent years to challenge the presumptions of US foreign policy --- we come to the conclusion fairly quickly that whatever we may be doing with US policy, we certainly are NOT promoting open markets and open politics in countries throughout the world.  No wonder capitalism doesn't inspire the populations of many less developed economies.  Open markets and open politics can be inspiring forces in the world, but special cronyism and geopolitics rather than inspire can fuel hatred and resentment through generating a sense of outrage at the injustice of it all.

Comments

[Rafe Champion]

Mises on "The Anti-Capitalist Mentality" may shed some light though not on the specific topic of alliances. I seem to recall a nasty story a few years back about a small South American nation with a fledgling free enterprise movement which was sold out by the US administration at the time, presumably for some short term gains from placating the local ruling party. Like "feeding the crocodile", but you still get eaten when you run out of friends to feed to the beast.

The biggest problem is the spin that has been put on all economic events from the Industrial Revolution to the present time. Hence the importance of Hutt's demolition of the anti-capitalist mythology of the factory system that was one of the Mises daily papers recently. The paper has been on line in the Rathouse for some time.

http://www.the-rathouse.com/Revivalist4/RC_FactorySystem.html

Due to the spin, all problems in so-called capitalist countries have been attributed to capitalism not to interference with markets. One example was the reaction of Arthur Koestler, starving in Germany while farm produce was destroyed in the New Deal. That was the last straw that drove him into the arms of the communist movement.

Tyler Cowen's deconstruction of the Marshall Plan showed that the aid did not really help and at the same time he demonstrated the bloodyminded opportunism of the US interest groups who fed on the Plan. It had a funny side, for those familiar with the custom of going back to England after WW2 with tins of the fat that dripped from roasting meat as presents. The Chief of food procurement in Germany reported that the US Dept of Agriculture was pushing sales of peanuts to the Plan (due to a surplus) and so hundreds of millions of pounds of peanuts were shipped to Europe instead of the lard that he had requested.

http://catallaxyfiles.com/?p=1511

[goblin]

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[Fundamentalist]

Not only does US policy not promote capitalism, the system in place in most third-world countries is not capitalism, either, but ignorant socialists call it that. In Venezuela, like most of the third-world, the wealthy kept monopolies on most business through bribes to government officials. As a result, the rich did get richer while the poor starved (they couldn't get poorer). The wealthy and powerful also steal the savings of the middle class by forcing banks to make loans to them and then never repaying the loans.

What Venezuela has experienced is a traditional economy, one that has existed from the beginning of time until the advent of capitalism. But socialists like to call it capitalism because it makes capitalism look bad to ignorant peasants and paves the way for their socialist coup.

[Dain]

"Crony-capitalism has discredited true capitalism, and geo-politics has prevented the rise of freedom."

As an attempt to convince leftists that the "real", more "kind" form of capitalism hasn't yet been tried, this may fall flat. After all, many would say that Crony-Communism prevailed in the twentieth century at the expense of the genuine article.

Thus, to ask whether people haven't learned from the past 100 years that Socialism doesn't work begs the question. Leftists, though not all, see in Chavez and Morales to a lesser extent an attempt at "21st Century Socialism".