Capitalism’s core defence, Mr Meltzer argues, is that it is the only system that leads to freedom and economic growth. It is less good at ensuring virtue or stability; failure is an inherent part. Indeed the author’s observation that “capitalism without failure is like religion without sin. It doesn’t work well,” has already been widely circulated. However, the sins attributed to capitalism—corruption, fraud and greed, to name but three—are not only pervasive in systems where the state controls production, but far more damaging and far less likely to be rectified.
The main problem, he argues, is that even nominally capitalist systems have, for better and worse, elements of state control. These often begin with defence and the police, and go on to national transport systems, which leads, in America’s case, to an ever-expanding network of bureaus and agencies. Much of bureaucracy is adopted under the rationale of enhancing “fairness”. But, as Mr Meltzer notes, fairness often means providing present benefits using debt that must be repaid by taxpayers in the future (which is hardly fair) or through regulations and subsidies created by people in government who then go on to exploit them in private-sector jobs (which is also unfair).