Progressivism can be viewed as socialism lite, paying homage to the great progress of capitalism while acknowledging some of the limitations of a free market. Social and economic theories develop, mature and evolve as they face the hard tests of history and events. In the competitive continuum between capitalism and socialism or progressivism we tend to compare our preferred idea and the other ideas from different points on the evolutionary scale.
Modern progressives certainly do not advocate the eugenics, prohibition and imperialism characteristic of the early days of the first era of Progressivism under Theodore Roosevelt and Woodrow Wilson, but they do still frame modern capitalism in in the social Darwinism of the Gilded Age.
The philosophy of capitalism has been advanced considerably beyond mere laissez faire and the invisible hand of Adam Smith. George Gilder wrote in the noted Wealth and Poverty from the 1980’s, updated 20 years later with an additional 40,000 words, that capitalism is the competition of ideas. He expanded on the concept in Knowledge and Power, that capitalism works best when knowledge and power converge. Government regulatory agencies have considerable power but lack sufficient knowledge to effectively regulate most of the time, and certainly lacks the knowledge to allocate capital as well as a ruthless but accountable market place.
Human foibles and failures which tarnish market choices do not disappear in the government sector and difficult decisions do not disappear when they are abdicated or delegated to the elected serving a limited term or to the bureaucracies which have escaped both control and accountability.
Gilder’s most recent book, The Scandal of Money, focuses on how our management of money is at the root of many of our social ills from inequality to economic stagnation. He explains how our centralization and instability has led to the financialization and the hypertrophy of finance, pushing far too high a percent of our economic transactions into the financial sphere which is both unproductive and exacerbates inequality.
Deidre McCloskey in Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World caps off a trilogy (Bourgeois Dignity: Why Economics Can’t Explain the Modern World, The Bourgeois Virtues: Ethics for an Age of Commerce) bringing a rich and thorough look from history and economics, examining the various developments that explain the rapid growth in human development in the last few hundred years. Reading McCloskey takes a commitment, this work consumed ten years of her professional life. It is a worthy, but not a light read.
Both of these gifted authors bring tremendous insight and development into modern economic thinking that goes far beyond the dated concepts of capitalism so commonly used by the left, but both of these authors challenge much of the thinking from the right as well. Gilder is quite critical of some Milton Friedman’s monetarist thoughts, particularly on monetary velocity, and finds it similar in a few critical ways to Keynesianism.
Matt Ridley adds to this collection with his excellent The Evolution of Everything, a lively view that spontaneous order applies to many facets of our lives other than evolution.
Perhaps these high minded views of our political economy are mere escapes from a political season mired in deceit and ignorance, but they still provide a much needed view of what actually works and what doesn’t before we continue to double down on failed policies. The challenge to our political class is to translate these ideas into policies that have meaning to modern voters. Toward that end I remain very skeptical but optimistic. History seems to be a march of human improvement, but not without some serious setbacks.