ON-Lion Letter
A review of the headlines of the past decade seems to show that disasters are often part of capitalist systems:  the high-tech bubble, the Enron fraud, the Madoff Ponzi scheme, the great housing bubble, massive layoffs, and a widening income gap.  Disenchantment with the market economy has reached the point that many even question capitalism itself.

Bradley Prize
 recipient Allan H. Meltzer disagrees, passionately and persuasively.  Drawing on deep expertise as a financial historian and authority on economic theory, in his new book Why Capitalism?, he provides a resounding answer to the question.

Meltzer is the Allan H. Meltzer University Professor of Political Economy and Public Policy at Carnegie Mellon University's Tepper School of Business in Pittsburgh and the founder of Carnegie Mellon's Gailliot Center for Public Policy, which is supported by Milwaukee's Lynde and Harry Bradley Foundation.

Only capitalism maximizes both growth and individual freedom, Meltzer writes in the book, from Oxford University Press.  Unlike socialism, capitalism is adaptive, not rigid -- private ownership of the means of production flourishes wherever it takes root, regardless of culture.  Laws intended to tamper with its fundamental dynamics, such as those that redistribute wealth, fail.  European countries boasting extensive welfare programs have not surpassed the more market-oriented United States. 

Capitalism does require a strong legal framework, according to Meltzer, and it does not solve all problems efficiently.  But he finds that its problems stem from universal human weaknesses -- such as dishonesty, venality, and expediency -- which are not specific to capitalism.

Along the way, Meltzer systematically analyzes the role of government, positing that regulations are static, but markets are dynamic, usually seeking ways to skirt the rules.  Regulation is socially useful if it brings private costs into line with social costs; if it doesn't, regulation simply invites circumvention.

Vigorously argued, sweeping in scope, Why Capitalism? reminds us of the fundamental vitality of the one economic system that has survived every challenge and risen to dominate the globe.
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