In 1848, a pair of authors published one of the most influential political pamphlets in history. They highlighted the transformative and dynamic nature of capitalism, which they noted had, in just a century, “created more massive and more colossal productive forces than ha[d] all preceding generations together.” They also emphasized the egalitarian power of free markets, observing that wherever capitalism took hold, it eliminated feudal arrangements and swept away entrenched prejudices.

But their acknowledgment of the forces unleashed by capitalism was far from an endorsement. While conceding the enormous benefits bestowed by free markets, they argued that capitalist systems un-avoidably led to inequality and exploitation of the proletariat by the bourgeoisie. To these authors, the contradictions inherent in capitalism would precipitate its downfall in a revolutionary transformation to Communism.

The authors, of course, are Marx and Engels, their pamphlet The Communist Manifesto. The pair proved prescient in their observations of the transformative nature of capitalism and its ability to supercharge economic development and promote liberty. Around the time they wrote, 90 percent of those on the planet lived in extreme poverty. Today, fewer than 10 percent do. Global life expectancy has more than doubled, from around 30 years to just over 70. The duo was less successful in their prediction that the forces of capitalism would lead to self-destruction.

Since publication of the Manifesto, free markets have been under constant assault from the left. During that same time, with some notable intellectual exceptions, conservatives have generally argued that capitalism is the most effective system to foster individual freedom, economic growth, and prosperity. With the recent escalation of right-wing populism, however, an increasing number of self-described conservatives have turned anti-capitalist. Politicians, including former President Trump and Senators Josh Hawley (R-Mo.), Marco Rubio (R-Fla.), and J.D. Vance (R-Ohio), and intellectuals, including Patrick Deneen, Sohrab Ahmari, and American Compass founder Oren Cass, challenge the premise that free markets promote the common good. Those in this camp advocate embracing the mechanisms of central planning to, in the words of Marco Rubio, “ensure that the results our economy produces are in the best interest of our people, our families, our communities, and our nation.”

The attacks on capitalism from both left and right are based on many factual and conceptual errors. As these views take hold, the need for a full-throated defense of free markets has increased. Johan Norberg meets this need with his most recent book, The Capitalist Manifesto: Why the Global Free Market Will Save the World.1 It makes the definitive case for capitalism and repudiates common arguments offered against the system.


Norberg begins by cataloguing the immense economic and social benefits capitalism has conferred on mankind. For most of history, until just under 300 years ago, life was miserable for the bulk of humanity. Nearly all of Earth’s inhabitants lived in abject want with no hope of im-proving their lot. Global average income remained stagnant. Economic systems based on coercion were the norm. Then, beginning in the late-18th century, the liberalization of the British economy, transitioning from feudalism to capitalism, catalyzed the Industrial Revolution. The establishment of competitive markets and private-property rights facilitated the efficient allocation of resources, creating an environment conducive to innovation. The resulting rapid economic growth produced an unprecedented reduction in the percentage of the British population suffering from extreme poverty. As economies across the globe liberalized, the phenomenon spread.

Since then, capitalism has continued to benefit the world in an astonishing way. Norberg cites a review of more than 1,300 academic articles showcasing a resounding truth: “The correlation between economic freedom and societal outcomes [is] overwhelmingly positive: countries with freer markets have faster growth, better wages, greater poverty reduction [and] more investment.” Countries in the top quartile on a common index of economic freedom boast a per capita GDP seven times higher than countries in the bottom quartile. Those in the bottom quartile experience an extreme poverty rate that is a staggering 16 times higher than those in the top.

Of course, correlation isn’t causation. That’s why the cases of China, Korea, and Germany prove instructive. All three split into two nations, in which the citizens on each side were essentially the same; neither had an advantage in terms of history, culture, aptitude, skills, or ambitions. Without exception, the path of free markets led to far greater wealth and well-being. Taiwan, marginally richer than China in the mid-1950s, grew four times richer by 1980 (around the time China began to liberalize its economic policies). South Korea, poorer than resource-rich North Korea in 1955, is 20 times richer today. Pre–World War II, West Germany lagged East Germany in per capita GDP. By the time of reunification in 1990, West Germany’s per capita GDP was more than double that of East Germany. No counterexample exists. As Norberg observes, wealth inequality across the globe “is due to the uneven distribution of capitalism: people who have it become rich; those who do not have it stay poor.”

Moreover, the economic benefits of capitalism trigger a cascade of social advantages, including improved health care, increased average life expectancy, greater democracy, reduced levels of corruption, enhanced respect for human rights, and heightened subjective well-being. Norberg presents data showing that “Western market economies are the world’s least racist societies” and “that economic freedom is positively correlated with tolerance of other ethnic groups and gay people.”

Norberg reveals the simple mechanism by which capitalism increases well-being: increasing societal wealth. In general, “the richer a country is, the longer and healthier people live, with improved outcomes on almost all indicators of well-being.” And the key to increasing a society’s wealth is to free its economy from government intervention. An unambiguous negative correlation exists between the size of government and economic growth. As a result, policies to reduce perceived inequality or otherwise tame capitalism impede growth, paradoxically making the intended beneficiaries of those policies worse off than they would otherwise be.

Why does free-market capitalism result in greater growth? As Norberg explains, capitalism isn’t about capital, it’s about how an economy allocates resources. In a free-market system, allocation decisions are driven by the forces of supply and demand. Billions of market participants make choices that express their preferences and needs. These choices, and the prices that ensue, aggregate and convey valuable information about the relative scarcity and desirability of goods and services. As a result, resources flow to their most valued use, fostering efficiency and innovation. Because no single entity can possess or process all the consequential information essential for the functioning of society, any interference in market decisions leads to shortages, surpluses, wasted resources, and decreased innovation, obstructing the growth that would otherwise benefit society.

Critics counter that the benefits of capitalism flow to the rich and powerful at the expense of the poor, so the system should be constrained. But their claim is false. Norberg notes that, regardless of how free a country’s economy is, citizens in the poorest decile receive around 3 percent of the country’s income. In fact, a slightly higher percentage flows to the poorest in the economically freest countries (2.9 percent), versus those in the least free (2.7 percent). As a mathematical result, the more economic growth a country experiences, the more absolute wealth flows to its poorest citizens. This effect is so powerful that today’s indigent are wealthier than the average citizens of just a few decades ago. As Kevin Williamson notes:

It is much better to be a poor American in 2022 than it was in 1982, 1922, or 1822, in that poor Americans today are better-fed, better-housed, and better-doctored than were poor people only a few decades ago, and, by most physical metrics, they are better provided-for than were middle-class people a generation ago.

Norberg illustrates Williamson’s point, observing that those in poverty in the U.S. today “own more amenities such as dishwashers, washing machines, dryers, air conditioners and televisions (and of course computers and mobile phones) than the average American did in 1970.”

After extolling the benefits of capitalism, Norberg addresses common attacks against the system, starting with assaults on free trade. Norberg, a fellow at the Cato Institute, has been defending free trade for over two decades after a youthful flirtation with anarchic leftism in his native Sweden. In the beginning, he defended globalization against leftists who asserted that free trade is evil because it allows richer countries to exploit poorer ones. The evidence since the turn of the century has destroyed this argument, as globalization cut the world-wide level of extreme poverty by over 70 percent.

Today, Norberg is more frequently confronted by those on the new right, who contend, as Donald Trump does, that “globalization . . . wipes out our middle class and our jobs.” Marco Rubio insists our trade policies have “exported [these] jobs to places like Mexico and China, leaving many American workers without the means to provide for their families.” Norberg provides abundant evidence that Trump and Rubio are simply wrong. For example, he cites one study showing that recent trade with China has resulted in a net increase in American jobs. To demonstrate that trade barriers destroy rather than save jobs, he points to an analysis establishing that, for each job saved by U.S. protectionist measures, the purchasing power lost could have been used to hire six additional workers.

Critics highlight the shift in the mix of available jobs, arguing that international trade has caused a significant decrease in well-paying manufacturing jobs that workers without a college degree could perform. Norberg concedes that as advanced economies become wealthier, they lose manufacturing jobs. But the decrease is overwhelmingly due to increases in productivity, primarily from automation, rather than outsourcing, by a factor of almost seven to one. That is why, despite the loss of around one-third of manufacturing jobs over the past 45 years, U.S. industrial output has more than doubled. In fact, the U.S. has the second-largest manufacturing economy on the planet, and our manufacturing output is near an all-time high. Furthermore, the resources freed by increased productivity have resulted in the replacement of the lost jobs with generally higher-paying jobs. On average, the U.S. adds around 2–3 million jobs annually.

And trade restrictions harm others besides workers. Norberg believes that protectionists too often overlook the significant costs their policies inflict on American consumers. By allowing individuals and nations to specialize in what they do best, free trade unleashes the forces of comparative advantage, maximizing efficiency and resource allocation. Trade barriers perpetuate inefficiencies and misallocate resources, limiting choices and increasing prices. The resulting harm disproportionately affects “low- and middle-income households who spend a larger share of their income on internationally traded goods, such as clothing, food and consumer electronics.” For example, a recent study found that the tariffs imposed by the Trump administration on imported washing machines increased the cost of washers by 11.5 percent. So protectionist measures are a double whammy, decreasing employment and raising prices, often substantially.

Recent events have increased the frequency of the argument that government intervention in international trade is necessary to ensure uninterrupted access to essential goods during emergencies, such as natural disasters and wars. For example, the Biden White House, claiming that the Covid pandemic exposed the dangers of relying on global supply chains, insists that “the U.S. must take stronger action to identify and get ahead of vulnerabilities in the supply chains of critical goods.” The world undeniably faced shortages of critical items during the pandemic. However, government actions intensified these shortages, which, it turns out, is typically the case. Norberg notes a review of the 389 economic crises in the world occurring after 1992, revealing a historical pattern of government intervention significantly exacerbating the effect of upheavals.

Why does government intervention inevitably muck things up? While hindsight may offer clarity on the appropriate responses to past crises, predicting the nature of the next calamity is impossible. And governments are not equipped to respond to unpredictable events as they occur, since centralized decision-making can’t keep up with the high volume of fast-changing information and conditions. The free-market system’s ability instantly to synthesize and rapidly act upon dynamic and decentralized information makes it the most effective way to navigate the significant challenges encountered during volatile circumstances. Arguably, adherence to unfettered capitalism is most important during precarious times.

After taking on protectionism, Norberg addresses other criticisms of capitalism, exposing myths and misconceptions regarding income inequality, the dangers of big companies, the ability of industrial policy to improve on market results, the threats posed to our economy by China, and the risk that unfettered capitalism poses to the environment. His discussion of these issues demonstrates that “capitalism makes us freer and richer, creates better jobs and greater opportunities and helps us solve environmental problems.”

Norberg then turns to address those who make a social case against capitalism, quoting Noreena Hertz, who believes that liberal free markets rob us of “solidarity, community, togetherness and kindness”; Patrick Deneen, who claims that the system makes us “insecure, powerless, afraid and alone”; and Joel Halldorf, who maintains that freedom “makes us lonely.” These critics believe that liberal capitalism turns otherwise decent human beings into greedy competitors, seeking ever more material benefit at the expense of others, destroying personal relationships and creating feelings of isolation.

To reverse these effects, critics, such as Oren Cass, would buttress and constrain capitalism by “adopting public policies necessary for shaping markets toward [the common good].” Of course, these paternalistic critics often disagree on what the common good is, so their policy prescriptions vary, often in contradictory manners. Broadly speaking, those on the left propose policies intended to combat income inequality, while those on the right call for a return to traditional, religious-based values, which they believe will rebuild communities, among other things, curbing the perceived loneliness epidemic.

Once again, the critics misconstrue the dynamics at play. Take the claim that capitalism results in increased loneliness. Polls typically show the opposite: Those in the most market-oriented societies report being less lonely. These polls also show no correlation between the level of income inequality or religiosity of a society and the prevalence of loneliness. As Norberg says, it turns out “we need personal freedom and free markets to remedy the existential isolation that equality and spirituality can’t solve; it’s not the other way around.”

Even though no evidence links the free market to increased loneliness, some argue that capitalism, by fueling the pursuit of wealth, turns us indifferent and ruthless. However, the premise is wrong. Capitalism doesn’t instill a desire for profit that does not already exist, nor would such a desire vanish under an alternative economic system. Self-interest is a fundamental aspect of human nature, independent of the economic framework under which someone lives. Banning market forces won’t eradicate this inherent trait. Those who believe we can eliminate self-interest by departing from capitalism completely misunderstand how human beings work. Constraining capitalism won’t alter a person’s essential make-up. Milton Friedman articulated this point in an appearance on The Phil Donahue Show more than 40 years ago that has gained new life as a viral YouTube video:

Is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed?…The world runs on individuals pursuing their separate interests…. Is political self-interest really nobler than economic self-interest? Where in the world do you find these angels who are going to organize society for us?

This conclusion doesn’t suggest that life under capitalism is without challenge, merely that comparable issues are greater in societies with more severe market constraints. The central feature of systems like feudalism, Communism, and socialism is that they compel some citizens to provide a portion of the rewards of their efforts to others, regardless of the wishes of the providers. This inherently breeds divisiveness. Under capitalism, in contrast, which depends on voluntary interaction, we naturally consider the needs and desires of others, fostering a spirit of cooperation. This stands as a vital differentiator between capitalism and other systems. Instead of ignoring the existence of inherent self-interest, capitalism channels it in beneficial ways.

The empirical evidence substantiates the assertion that individuals in free-market economies exhibit less callousness and greater generosity. A team of psychologists measured the prevalence of various forms of generosity and helpfulness across 152 countries. These actions included willingness to, among other things, donate blood, organs, and bone marrow; contribute to charity; volunteer, assist strangers; and show kindness to animals. One of the most robust correlations identified was the heightened likelihood of assistance by residents of individualistic countries. Experiments conducted across societies at diverse developmental stages reveal that citizens of cultures least accustomed to daily market transactions are most likely to view human interactions as an opportunity to exploit others.


The minor flaw in Norberg’s otherwise comprehensive defense of free markets is that he touches only incidentally on the moral case for capitalism—for example, noting in passing that it is “the insistence on voluntary relations that makes the free market morally superior to all other systems.” But the moral case is both essential and strong. As Milton Friedman laid out in, among other places, his seminal work, Capitalism and Freedom, free-market economic arrangements promote political and individual liberties in two essential ways.

First, as Norberg highlights, economic freedom is inherently valuable, constituting an end in itself. The essential feature of capitalism is that it enables people to interact voluntarily, without interference from others. Any government-imposed restriction on individuals’ rights to transact (or requirement to engage in certain transactions) deprives them of a portion of their personal freedom. According to Friedman,

it is partly this feature of the market that leads many people to be opposed to it. What most people really object to when they object to a free market is that it is so hard for them to shape it to their own will. The market gives people what the people want instead of what other people think they ought to want. At the bottom of many criticisms of the market economy is really lack of belief in freedom itself.

Second, economic freedom is necessary (though not alone sufficient) to safeguard individual liberty and democratic governance. Friedman contended that “the essence of political freedom is the absence of coercion of one man by his fellow men.” The danger to political freedom arises from a concentration of power that would permit such coercion. To preserve political freedom, concentrated power must be eliminated or checked. But if the government controls the means of production, real dissent becomes a practical impossibility. Economic power, gained through a market free of government interference, has so far proven to be the only effective way to curb concentrated political power. Empirical evidence supports this claim. As Friedman observed, there has yet to be a politically free society that lacked a form of free-market system for the bulk of its economic activity.

At the end of his book, Norberg provides a warning:

[If you are] convinced of the importance of open societies and free markets: do not take them for granted…. Capitalism has meant the greatest social and economic progress humanity has ever experienced, and millions respond by rejecting it in favor of the next singer they have never heard. For the first time, free markets provided broad populations with the resources and leisure to engage in theoretical ideas and political debate, and to a not insignificant extent, we have devoted them to rejecting the market economy as unfair and soul-destroying.

Because we exist in a largely free and prosperous society, we often fail to appreciate that we live during the smallest sliver of history in which humans have enjoyed anything approaching the enormous wealth, political freedom, and individual liberty we in the United States possess. The last two and a half centuries stand as a remarkable anomaly in the broader historical trend, and our continued fortune is far from guaranteed. Nearly 60 years ago, Ronald Reagan noted the fragility of our freedom, advising that it “is never more than one generation away from extinction.” Maintaining our prosperity and liberty requires constant vigilance. We ignore Norberg’s warning at our peril.

1 Atlantic Books, 304 pages

Photo: AP Photo/Mark Lennihan

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