Hating Capitalism

Paul H. Rubin —  13 May 2012

One topic that has long interested me is the source of dislike or hatred of capitalism; my Southern Economics Journal article “Folk Economics” (ungated version)  dealt in part with this topic. Today’s New York Times has an op-ed, “Capitalists and Other Psychopaths” by William Deresiewicz, who has taught English at Yale and Columbia, that both illustrates and explains this hatred.  What is interesting about this column is that it is entirely about the character and behavior of “the rich” including entrepreneurs.  The job creating function of business is briefly mentioned but most of the article focuses on “fraud, tax evasion, toxic dumping, product safety violations, bid rigging, overbilling, perjury.”

What is nowhere mentioned is anything to do with the goods and services produced by business.  This is a common attitude of critics of capitalism.  In many cases, capitalists may suffer the same personality defects as the rest of us.  And, as Mr. Deresiewicz points out, scientists, artists and scholars may also be hard working and smart.  But capitalism does not reward moral worth or hard work.  Capitalism rewards providing stuff  that other people are willing to pay for.  While is is easy to point out the stupidity of the critique (Mr. Deresiewicz has written and seems proud of his book, published by a capitalist publisher and available from various capitalist booksellers) that is not my point.  Rather, this column is interesting in that it is a pristine example of a totally irrelevant critique of capitalism, written by what is a smart person.  He does cite Adam Smith, but seems to misunderstand the basic functioning of markets.  Markets reward what one does, not what one is.

Paul H. Rubin


PAUL H. RUBIN is Samuel Candler Dobbs Professor of Economics at Emory University in Atlanta and formerly editor in chief of Managerial and Decision Economics. He blogs at Truth on the Market. He was President of the Southern Economic Association in 2013. He is a Fellow of the Public Choice Society and is associated with the Technology Policy Institute, the American Enterprise Institute, and the Independent Institute. Dr. Rubin has been a Senior Economist at President Reagan's Council of Economic Advisers, Chief Economist at the U.S. Consumer Product Safety Commission, Director of Advertising Economics at the Federal Trade Commission, and vice-president of Glassman-Oliver Economic Consultants, Inc., a litigation consulting firm in Washington. He has taught economics at the University of Georgia, City University of New York, VPI, and George Washington University Law School. Dr. Rubin has written or edited eleven books, and published over two hundred and fifty articles and chapters on economics, law, regulation, and evolution in journals including the American Economic Review, Journal of Political Economy, Quarterly Journal of Economics, Journal of Legal Studies, and the Journal of Law and Economics, and he frequently contributes to the Wall Street Journal and other leading newspapers. His work has been cited in the professional literature over 8000 times. Books include Managing Business Transactions, Free Press, 1990, Tort Reform by Contract, AEI, 1993, Privacy and the Commercial Use of Personal Information, Kluwer, 2001, (with Thomas Lenard), Darwinian Politics: The Evolutionary Origin of Freedom, Rutgers University Press, 2002, and Economics, Law and Individual Rights, Routledge, 2008 (edited, with Hugo Mialon). He has consulted widely on litigation related matters and has been an adviser to the Congressional Budget Office on tort reform. He has addressed numerous business, professional, policy, government and academic audiences. Dr. Rubin received his B.A. from the University of Cincinnati in 1963 and his Ph.D. from Purdue University in 1970.

15 responses to Hating Capitalism


    This effort to counter an article assumes markets are the exclusive preserve of capitalism, and seems to presume goods and services are only produced by industry within capitalism. None of which is true.

    But that’s failing to even begin considering the nature of publication in any given society, or the implications of discussion of capitalism in a society that’s not, by any stretch of the term, pure capitalism, but instead represents individuals unequally and preposes power to the powerful is ideal because they’ll “create jobs”. (perhaps a better understanding of “the invisible hand” is in order)

    Market fairy tales aside, focus on the ultimate, if you’re going to debate capitalism. Because it’s ultimately a target and imperative based ideal. A deeply flawed one, and one that’s never existed in pure form.

    Capitalism is just an idea, a fictional one.


    Instapundit links to a post on Powerline pointing out that one of the “facts” in the Deresiewicz,article that I cite to is a total fabrication. Deresiewicz,claims that “10 percent of a sample of corporate managers met a clinical threshold for being labeled psychopaths”. Yesterday the Times published a correction. I did not refer to this point, but it is a further illustration of my point regarding the irrational hatred of businessmen.

      Henry G. Manne 22 May 2012 at 8:19 am

      It sure would be interesting to test whether there are more clinical psychopaths among corporate executives than there are among English professors. My bet is that they are spread out rather evenly in these particular two populations, but if we began adding professors of social work, sociologists, anthropologists, environmentalists, modern language teachers, and educationists, we would begin to see a much higher incidence of some form of deviant behavior in the latter groups.


      To debate this point is to fall into the Leftists’ own silly trap: there is no accepted clinical definition of ‘psychopath’: it’s an obsolete designation for whatever behavior it is that the observer finds socially objectionable, long abandoned by most psychiatrists and psychologists. As for ‘deviant behavior,’ that is hardly the point: obviously anyone who, e.g., refuses to conform to a dress code demanded of a business, or who insults customers, is behaving in a deviant manner—by the businessman’s definition. By the lefty sociologist’s definition, anyone who refuses to maximize distributive social justice by engaging in profitable economic transactions, or who entertains the possibility that global warming (if it even exists) is not primarily caused by human agency, is not only a ‘deviant,’ but a ‘psychopath,’ or worse. It’s not the size of the labeled populations which is the problem, it is reliance upon such inherently subjective categories in the first place.

      Let’s get back to basics: the consensus among academics—enforced by rigid conformism and threats of both social and professional ostracism—is that Capitalism, and especially the so-called conservatism which underpins it, is bad. It is risky on most campuses for any member of these institutions to assert otherwise. Most businesspeople, particularly those who call themselves ‘Conservative,’ in turn distrust and even hate anything which comes out of academia. This un-constructive, eristic debate only serves to make both sides feel more justified in their mutual contempt. Since education remains necessary, and much research remains useful, throwing fuel on the fire is not in our long-term interest as believers in a capitalist system, but neither is taking such arguments supinely, or ignoring them and hoping they’ll go away. The arguments have to be met, and it is better to meet them in terms recognized and understood by the opponents of the system than by those they are unlikely to comprehend, or which do not meet their objections. The fanatics won’t be won over, of course, but those who are more moderate, and more importantly, their students, may be positively affected. Labeling anyone ‘psychopathic’ or any such loaded category is a harmful distraction.



    First of all, I don’t mean to offend anyone with my comments, and so for any academic reading this, I would just say that I am just expressing my own personal views — I am not trying to denigrate YOU. There is a difference.

    Okay, let’s take up these views. Yes, I have debated these points with academics before. They always say that they work much, much more than I am suggesting. But their arguments are unpersuasive. The only real obligations teachers have is teaching — and if they only teach 6-7 credits a semester, then that means they are only teaching 6-7 hours a week. So, I then ask: what do you do with the rest of their week? This is what they say:
    (1) research
    (2) administrative duties
    (3) preparing for their classes
    (4) grading

    All of that sounds great, but I wouldn’t really consider it teaching. As for (1), I can say that I have respect for those academics that publish 8-9 substantive journal articles a year. But most academics publish 1 article every 2-3 years. As for (2), most academics will say that they are on the committee for faculty research, or student affairs, or something like that. I don’t even know what this means other than that they get to spend an entire afternoon in some cozy room having “meetings.” And as for (3), let me just say that this means nothing if you teach by powerpont — and most professors do.

    Finally, you are absolutely right that many law professors could be earning much, much more in the private sector. Maybe even millions! My point was just that EVEN IF you cut professors’ salaries to, say, $40,000, I predict that they would still elect to teach rather than earn millions in the private sector. Why? Because work in the private sector involves ACTUAL work. Teaching is nothing of the sort. In fact, a friend of mine, who is an economics professor, says that the hardest thing about his job is getting dressed for it. He also says that he would teach for free if he didn’t have to grade exams. He says lots of other things, but I will stop here.

    Anyway, this is a subject dear to my hear Illic, and I am happy to continue debating this with you, but I don’t want to upset anyone reading this who is a professor. So let’s just conclude the discussion here.

    All best.


    Thanks for the comments. A few points: I agree (always) with Henry; I discuss envy in my book, Darwinian Politics. . But insider trading is not unique; for example, I have always been amazed at the intense dislike of the pharmaceutical industry from the political system, and I am sure others have their pet puzzles as well.

    I did not mean my post as a defense of capitalism so much as illustrating a pure example of the irrational hatred of capitalism. I think understanding this belief system will be helpful in promoting capitalism, but that was not my intent here.

    I think Dom a little too pessimistic. In the last century, there were several victories of free market capitalism. The tremendous expansion of free trade and reduction of tariffs was a great victory for the ideas of economists. Also the auction systems for spectrum and reduction in the power of the FCC to allocate licenses, and the demise of AT&T as a protected monopoly. Competition n the stock exchanges. Something I write about, the allowing of direct-to-consumer advertising by the FDA (which of course is still doing tremendous harm in its approval process). The victory of the “Chicago School” in antitrust (I know, Dom, but it is still an improvement.) There is a long way to go, but let us not forget what has been accomplished.

    The existence of loss in a “profit and loss” system is actually one of capitalism’s strengths, not a weakness. Every system makes mistakes. Capitalism is self correcting: mistakes go bankrupt. Government, on the other hand, has a tendency to continue and even double down on its mistakes, a source of great waste.


      Dr. Rubin,

      Ugh! there is nothing more naive then the belief that markets are “inexorably” self-correcting. Just stop and think about it. Sure, losses in capitalist economies generate “information” that entrepreneurs can use in attempting to “correct” past mistakes; but there is nothing to suggest that this information itself will be correct, or that entrepreneurs will utilize it in the right way. The self-correcting argument is a weak one.

      I would encourage you to read Israel Kirzner, who is an Austrian economist. He has done more than any other economist to study seriously what it is that entrepreneurs do — i.;e., the information available to them, their interpretation of that information, and their subsequent utilization of that information. It really is great.

      And Illic,

      Just a quick note — I think you are mistaken by suggesting that “academics” are being left out of the “fruits” of capitalism. You obviously have no idea. I recently googled the salaries of law professors at my University and found that the average professor makes about $150,000. Some even make as much as $275,000. I think that is just plain silly. Consider that law professors teach only two classes a semester, which means that they are only really “working” about 6-7 hours a week. Who knows what they do the rest of the time. They will say research and administrative duties, but I would even question that.

      If I had control of a university, the first thing I would do to save on costs is cut these salaries. I mean, professors have it great. It is nothing like the real world. I bet that if you cut law professors’ salaries to $40,000, they would still teach — even if they had the prospect of earning more in the private sector.

      Everyone knows this is true, but it is something that is never really talked about. I wonder why???


        “Consider that law professors teach only two classes a semester, which means that they are only really “working” about 6-7 hours a week. Who knows what they do the rest of the time. They will say research and administrative duties, but I would even question that.”

        “Everyone knows this is true, but it is something that is never really talked about. I wonder why???”
        —Perhaps because it’s not true???

        You are pretty ignorant of academe, if you think that most academicians (a) make as much as full law professors, (b) only work 4 hours a week. You also have low standards if you think that $150,000 is anywhere near what a full professor of law could earn in private practice. As for your hostile views on what to do with academics, (including many of our allies, even on this web site) I rest my case.

        BTW, I am NOT an academic.


    To reply: for those otherwise enamored of capitalism, I would urge you to consider that even capitalism’s most ardent defenders concede that capitalism is (always will be) a system of profit AND loss. That is to say, firms in capitalist economies will always experience loss. That means unemployment, instability, and economic waste. So, please do bear that in mind. Not every capitalist enterprise is a raging success. A ton of businesses fail and experience loss, and that has a big impact on people’s lives.

    Now, there is something to be said for whether or not capitalist’s are “deliberately” greedy and corrupt. Frankly, I don’t see that argument as terribly relevant. It is sufficient simply to point out that inefficiency and waste is present in capitalist economies simply because the system is one of profit AND loss.

    The task, then, is to show that regulation by its very nature can do nothing but make things worse. If regulators were infallible in their judgment, and expert in their predictions, then regulations would be a great thing. But that is not the case. So, I say no to regulation, WHILE also acknowledging that capitalism is a terrible, terrible thing. But the terrors of capitalism DOES NOT lead to a need for regulation. I cannot understand why nearly every academic thinks like this. I just can’t understand it.


      “. . . I just can’t understand it.”
      —Because academics, who are mostly not participants in the system, and suffer envy by being left out of so many of the fruits of it, identify with the losers, that’s why. And because, especially for those who are literary and artistic, personal histories mean more than abstract utility functions. So we’re talking past them, most of the time, and it becomes a dialogue of the deaf.

      To meet their arguments head-on, one has to discuss the losers under Socialism, personalize them, and deal with it in detail. And, as I said before, one has to try to make sure that they recognize their own stake in the capitalist system (pensions do not come from God) and perhaps try to increase it. If they understood that tuition hikes haven’t into professor’s salaries, but anti-poverty and financial aid programs have come out of them, perhaps they would begin to comprehend. It’s a slow process now, because the Left has become so entrenched in the Academy that it is an act of non-conformism with potentially strong social repercussions for any academic to fail to toe the party line. But one has to try, because otherwise (U. Chicago partly excepted, perhaps) we are just going to see the perpetuation of an influential anti-CapitaIist and even revolutionary class: a kind of lumpen proletariat with a disproportionate influence on future generations.


    It was George Gilder, I think, who observed that “the chief problem with Socialism is Socialism; the chief problem with Capitalism is capitalists.” Almost every cogent critique of socialism points out the inherent self-contradictions of the system, as well as the fallacious assumptions upon which its supposed positive qualities are based: its lack of utility as the basis either for an economy or for a political system. By contrast, almost every attack upon Capitalism devolves upon two things: histories of those who have abused the system, and the inequalities which result from the system itself. That is, upon individuals and individual outcomes, rather than general utility. Never do proponents of Socialism point out that the median level of economic benefit is almost invariably higher under Capitalism, because Socialism is really based upon a naive belief in distributive justice to the exclusion of everything else, and/or upon simple envy. Many academics, almost all among the brightest of their peers, resent the fact that a capitalist society has not treated them better. And given how badly most are treated today, with gross overproduction of Ph.D.s relative to the number of vacancies available, almost every aspect of university budgets having ballooned except for professors’ salaries, the democratization inherent in the Internet having depreciated the value of those works which have made it into print, etc., it is no wonder they are resentful. They take out this resentment by pointing out the excesses of certain capitalists, which one does not usually have to go far to find.

    What defenders of our present system ought to do in response is (a) to spend more time emphasizing actual (and not only theoretical) abuses, inequalities, unfairness, and corruption which are nearly ubiquitous in any heavily socialist system, due to the excessive power it must inherently give to the State and its operatives, but (b) to admit that the amorality which our present system has engendered not only fails to sanction and discourage some of those who would abuse the advantages the accumulation of wealth has given them; it fails to even disapprove of many of those wretched excesses. This not only encourages what are ultimately socially atomistic attitudes, it leaves the field wide open for the critique of Capitalism as inherently corrupting. Actually, it is not Capitalism which corrupts, it is the unchecked autonomy of individuals who are neither measured against any value system nor subject to any social sanction: the power of an entrenched member of a socialist nomenklatura is every bit as corrupting as the power of any member of a pure plutocracy, and it is much less likely to bring with it any offsetting economic or social benefits for the rest of society. In short, defenders of our way of life should both attack socialists as well as Socialism (because both are corrupting), but also stop defending those who abuse a mixed capitalist system such as ours by abusing its loopholes and weaknesses, and turning it into an exercise in Social Darwinism.

    It also wouldn’t hurt to borrow a page from the likes of the Emperor Augustus, (and most wise rulers as well as benevolent despots down through the ages), by patronizing a few intellectuals and generally trying to heal the rift between the most economically productive and the academy. It has been a defect of popular democracy that it fails to patronize those who will both frame popular opinion and ultimately write the history of each age for those which follow. Yes, occasionally such individuals will bite the hand that feeds them, but most will, when they realize they have a stake in the system rather than being kept wholly outside it, have more kind things to say regarding the way we do things, and issue fewer indiscriminate criticisms of everything that is. It is true that the overwhelmingly leftist academic establishment has done almost as much as it can in recent years to attack Capitalism, but it is also true that most capitalists have done very little to try to endear the Academy to themselves. (Endowing gymnasiums and dormitories doesn’t count; endowing chairs, artists, and institutes might, especially if the donors make sure that they remain involved, and while intellectual and artistic freedom are preserved, there is a continued presence among the trustees of the original donation to make sure that the chair or institute does not get stolen by those with a hostile propagandistic agenda. One form of intellectual dishonesty is as incompatible with academic freedom as the other.)

    Dom Armentano 13 May 2012 at 11:16 am

    I disagree that we will “win the argument” there. Except, perhaps, for some limited transportation deregulation in the 1970s, where have we ever won the argument that “regulation is much worse” than free market capitalism? I also disagree that “capitalism produces fraud, tax evasion, corruption…” and that that “is no secret.” Greed and a poorly structured legal system, not capitalism (or socialism) per se “produces” most of the social ills that you identify. And clearly they all easily predate any capitalist institutions or systems.


    Just a quick note. I don’t think you guys will get very far at all with comments like these. Okay, this is how the discussion proceeds: the critics accuse capitalism of fraud, tax evasion, corruption, perjury, etc. etc. Then you guys come in and say that these critics misunderstand capitalism. Capitalism actually produces goods that make society better off. That may be true, but it does nothing to answer these critics’ complaints. And saying that these critics misunderstand capitalism will not get you very far.

    Here is how you should argue: Well, of course, capitalism produces fraud, tax evasion, corruption, and all kinds of god-awful things. That is no secret. But there is no scientific law that says regulators can do any better. In fact, they are apt to do a lot worse, because unlike capitalism, regulations have the force of law and force everyone to comply with the codified rules, standards, and requirements. If these things are wrong, which they probably will be, then everyone suffers. That is not so with capitalism. So yes, while capitalism is terrible, regulation is much worse.

    That is how you guys need to argue. For too long people have tried to debate the productive efficiencies of capitalism. This is a losing argument. You will get nowhere. Challenge these critics at the point where they offer alternatives, such as regulation. That is where you will win the argument.

    Henry G. Manne 13 May 2012 at 7:47 am

    Paul is most certainly correct about capitalism’s critics failure to understand markets. But I am reluctant to accept that as an argument to explain the tenacity, ferocity and passion of this dislike. I tried to think of other “hates” that seem to fit the same bill (i.e. logical arguments on the other side that are ignored or never learned), and I came up with two additional ones that have long puzzled me and which I believe have similar genesis. One is anti-Semitism, and the other is dislike of insider trading. Isn’t it possible that all three of these are fed by the same genetic pressure to experience envy? That is, envy might very well be a survival characteristic, since, without it, individuals might not be acquisitive enough to fight their fellow apes for the goods those beings acquired. Thus envy would make the survival of the fittest scheme function more efficiently. If our DNA developed in such a way that we were perfectly content to see our neighbors eating high on the hog while we starved, or waited for their altruism genes to kick in, the
    “lucky” hunter might survive when the better hunter perished. That’s OK in the market, as Paul explains, but it may not be such a good survival scheme.

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