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Au Contraire, Monsieur Piketty

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BarbWire has linked to several critiques of Thomas Piketty’s book Capital in the Twenty-First Century, and the American Spectator just posted another. This one is by Andrew B. Wilson, and its subtitle is “Mises Rebuts Piketty (and others of the same ilk).” After the fall of communist Russia over twenty years ago and the proven failure of socialism throughout history, you would think we’d be beyond this debate in 2014. Unfortunately, due to the failure of Republicans and conservatives to successfully articulate the superiority of free market economics, we’re not.

Here’s an excerpt from Wilson’s article:

Ludwig von Mises — a mentor to Friedrich Hayek and a major figure in economics in his own right — set out his views on capitalism and inequality in a slender book (just 113 pages) called The Anti-Capitalistic Mentality. First published in 1954 — and readily available at Libertarian Press for $9 a copy — it is well worth reading today.

Mises’ treatise on why capitalism sits in the dock, falsely accused of various crimes against humanity, is a classic: bravely saying what still needs to be said. It offers a robust rebuttal to the jaundiced view of capitalism found (most recently and conspicuously) in Thomas Piketty’s Capital in the Twenty-First Century.

In The Anti-Capitalistic Mentality, Mises asks: Why do so many people “loathe” capitalism? He gives a threefold answer.

First is simple ignorance. Few people credit capitalism for the fact that they “enjoy amenities that were denied to even the most prosperous people of earlier generations.” Telephones, cars, steel-making, and thousands of other advancements are all “an achievement of classical liberalism, free trade, laissez faire, and capital” — with the driving force being the profit motive and the deployment of capital used in the development of better tools and machines and the creation of new products. Take away capitalism and you wipe out most or all of the extraordinary progress that has been made in raising living standards and reducing poverty since the dawn of the Industrial Revolution.

Second is envy, the green-eyed monster — which causes many people to think they have gotten the short end of the stick. As Mises observes:

Capitalism grants to each the opportunity to attain the most desirable positions which, of course, can only be attained by the few.… Whatever a man may have gained for himself, there are always before his eyes people who have outstripped him.… Such is the attitude of the tramp against the man with the regular job, the factory hand against the foreman, the executive against the vice-president, the vice-president against the president, the man who is worth three hundred thousand dollars against the millionaire, and so on.

Third is the unceasing vilification of capitalism by those who seek to constrain or destroy it. As Mises notes, the critics and anti-capitalists go on telling and re-telling same story: saying that “capitalism is a system to make the masses suffer terribly and that the more capitalism progresses and approaches its full maturity, the more the immense majority becomes impoverished.”

Indeed, that is the story Piketty tells in his book, which soared to the top of the New York Times and Amazon best-seller lists. Does inequality rank as the great defining issue of the 21st century? If you agree with Piketty, it does. He contends that disparities in income and wealth are spiraling out of control — setting the haves against the have-nots. Without “confiscatory” taxes to create a new social/economic equilibrium, he warns, today’s democracies may ultimately collapse — taking capitalism and the capitalists down with them.

Read more: The American Spectator

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