Capitalists ought not to be cowed by their critics

Sir, Lynn Forester de Rothschild’s recent column (“Capitalism thrives by looking past the bottom line,” May 21) provides new evidence of the prescience of legendary economist Joseph Schumpeter. Schumpeter’s essay “Can Capitalism Survive?” argued that even successful business leaders would eventually lose faith in the morality of the free market, signalling its failure.

Ms de Rothschild begins by recognising that capitalism is grounded in “human relationships” and “human aspiration,” even emphasising that capitalism “has guided the world economy to unprecedented prosperity”.

One might then expect Ms Rothschild to marvel at why, as she notes, “faith in market institutions has rarely been lower”. After all, why should it be so hard to defend an institution that has brought hundreds of millions out of poverty?

Instead, like all too many successful business people before her, she seems to accept the criticisms of the anti-capitalists. Schumpeter long ago noted that business “absorbs the slogans of current radicalism and seems quite willing to undergo a process of conversion to a creed hostile to its very existence”. He argued that radical criticisms of capitalism (from Charles Dickens and the Muckrakers to Michael Moore and Naomi Klein) would lead business people to an apologist outlook and that capitalism would fail as the community “lost faith in its own creed”.

This loss of faith seems evident in Ms de Rothschild’s proposed style of “inclusive” capitalism, which itself differs only somewhat from John Mackey’s “conscious” capitalism and Bill Gates’ “creative” capitalism. She will no doubt get plenty of agreement from anti-capitalist critics by arguing that businesses need to expand their portfolio from profit-making to social work. The next step, however, will not be capitalism that “thrives”, but a market that is controlled more and more by activist demands and political regulation.

Instead of trying to transform the global economy to please its least sympathetic observers, we should encourage entrepreneurs, executives, and investors to tell the real story about how markets expand prosperity and opportunity wherever they are allowed to be free. Regular, unhyphenated capitalism works better than its critics give it credit for. The last thing we need is C-suite intellectuals agreeing with them.