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Capitalism is best understood as the modern ambition to order and value all available resources solely on the basis of market principles. As an “ism,” it functions as an ideal. We never achieve the all or the solely. At various stages in many countries, however, great efforts have been made to realize the ideal, with dramatic consequences for the way we live. In his classic historical study, The Great Transformation, Karl Polanyi documents the paths by which capitalism invades and reorganizes traditional forms of life. The agricultural village becomes tenements surrounding cotton mills. Old ranks of honor give way to new hierarchies of wealth. The meaning and function of family relations change. Anyone reading Polanyi comes away with the conviction that the power of the market should never be underestimated.
There are two lines of argument favoring the imperial ambitions of capitalism. The most common is utilitarian. As Friedrich Hayek observed at a time when far too many were infatuated with socialism, markets allocate resources more efficiently than planners do. But more important to Hayek was what he regarded as the moral superiority of the price mechanism. Buyers and sellers are drawn together by mutual interests. Thus, Hayek argued, markets maximize freedom by organizing society in a non-coercive way. Milton Friedman puts this claim at the center of his influential book, Capitalism and Freedom. […]
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The Public Square has featured a column by the editor of First Things since our inaugural issue in March 1990. This article appeared in our December 2022 issue.
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