NewsLink, Spring 2003, BOOK REVIEW, 20:21 Vision: Twentieth-Century Lessons for the Twenty-first Century

A market liberal's 'paranoid optimism'
20:21 Vision: Twentieth-Century Lessons for the Twenty-first Century
by Bill Emmott, Farrar,Straus & Giroux, 2003, 373 pages,
Reviewed by Frank Conte

FROM NEWSLINK, SPRING 2003, V7, N3.

In their magisterial work, the Communist Manifesto, Marx and Engels wrote that the industrial working classes would not only grow in numbers as they moved from country to city but they would become poorer, more alienated and antagonistic toward the bourgeois. This would lead inevitably to class war, the overthrow of capitalism and the classless society.

The 20^th century is proof that this utopian idea did not prevail even though socialism and communism as ideas retained much intellectual currency, not least of all in the West. Where the workers of the world united under the hammer and the sickle, they eventually found despair, poverty, environmental catastrophe and death. Today, even the nominally Communist China acknowledges the restless nature of man to barter his way to prosperity. To grow rich and prosper, as the market reformers declared, was not an organizing principle found in Das Kapital.

Economic historians, at least those disengaged from the dubious Marxist view of history, note how the industrial working class grew in Europe and the Americas since the rumblings of 1848. But rather than facing the nasty, short and brutish lives promised by Hobbes, the working classes lived like kings. By the end of the 20^th century, the working classes were better off in both relative and absolute terms in the liberal democracies. In a final ironic twist, history appears to show that "the only collective that works is the private company, an entity “that has found a way to blend financial incentives with instincts of the human tribe."

In the battle between Karl Marx and Vladimir Illyich Lenin on one side and Adam Smith and Friedrich von Hayek on the other, Smith and Hayek won. Today the running joke is that “socialism is the historically inevitable path between capitalism and capitalism.“

Despite the bumpy ride, capitalism is the vehicle of choice of both those developing nations that want to emerge from poverty and, ironically, those that want to build out a minimal welfare state. Markets, not governments, rule.

In the words of Bill Emmott, the irrepressible Editor in Chief of The Economis, "Capitalism is what brought, directly or indirectly, the improvements in human welfare that were seen during the 20th century. Its resources and incentives produced the technological developments that altered our lives, fromfrom antibiotics to MRI scans, from telephones to computers, from motor cars to jet airliners and from oil refining to air conditioning.

"In countries that enjoy such developments, capitalism has paid for education, health care, welfare support, vacations and pensions. For most of the second half of the 20th century, especially the 1980s and the 1990s, the lure of those benefits proved strong enough to make most people accept capitalism even if they could not bring themselves to love it.

In 20:21 Vision: Twentieth-Century Lessons for the Twenty-first Century, Emmott calls himself a "paranoid optimist" and with good reason. "Although it will never be loved,” he writes, "Capitalism is already a lot better regulated in all the rich countries than it was a hundred years ago and in an increasing number of poor ones, making it less likely that periods of instability, inequality or even environmental damage will be devastating." In light of Enron, the accounting scandals and the stock market bubble of the late 1990s, no one is challenging the first principles of market capitalism. Decades ago economists and journalists wrote books with titles such as Can Capitalism Survive? Today one asks how could capitalism have been challenged at all. Where Joseph Schumpeter believed that capitalism would be a victim of its own success, Emmott sets off in a remarkably different direction. It is not whether capitalism can survive, it is rather whether the rest of the world can overcome its ambivalence toward capitalism enough to participate in prosperity.

The unsettling aspects of capitalism, particularly income inequality, continue to be fodder for intellectuals. But fewer people tend to listen these days because governments that hold out the hope of ameliorating poverty often fail. “Governments run their economies as though they can be certain about the outcomes, and have been mostly proved wrong.”

The anti-globalization movement, which opposes worldwide capitalism, has no uniform program of organizing an alternative to markets and liberal democracy. The anti-globalization critique is tremendously misguided, while its first cousin, economic nationalism, armed with tariffs, import quotas and taxes, is especially cruel to those nations that seek a better life. (Rich-country tariffs on African textiles and other wares is one example.)

And yet the other option, a return to a pre-capitalist Islamic medievalism, cannot be seriously considered, despite its supposed appeal to the poor. Across the board, Emmott, shows that governments are overwhelmingly the problem, not the solution. "The point of a market is, that, for all its imperfections, it is the only way yet found to conduct experiments ... and to discover people's changing preferences." Command economies work the other way, by ignoring customer preferences.

What has allowed capitalism, in whatever form, to thrive is its ability to innovate and adapt. This is why it is natural for capitalism to link symbiotically with liberal democracy. Rather than the arrogance attributed to it, capitalism operates from a sense of humility or, as Emmott underscores, "the belief in tolerance, freedom and experimentation rather than in the imposition of solutions from above."

He adds notably that "the liberal presumption in favor of the market, of capitalism and indeed of freedom itself, is driven by intellectual humility. The acceptance that a process of constant experimentation, involving the freely expressed views and action of millions of people is likely to produce a better more adaptable outcome than a committee of experts with a blueprint."

Emmott's long view into the future would be incomplete without consideration of the new geopolitical reality. In light of the Iraq war, many nations worry that the U.S., the world's only superpower, will capriciously throw its weight around. But Emmott sees America as an elder brother reluctant to foster an empire but willing to defend freedom. "The United States is the first preeminent power in history whose ideas, if they triumph, would bring about the loss of its own dominance." What better hand to steer the world to prosperity in the 21st century?