- - Thursday, October 16, 2014


By Peter Foster
Pleasaunce Press, $24.95, 503 pages

If you go to a bookstore, you’ll find an abundance of books deploring the very nature of capitalism. Hence, it’s a pleasure to find one author who will buck the trend and present the flawed logic of the anti-capitalists.

Peter Foster, an author and columnist for The Financial Post section of Canada’s National Post, is the perfect individual to praise capitalism’s many virtues. Born in London, he earned an economics degree at the University of Cambridge. He worked at the United Kingdom’s Financial Times and, after immigrating to Canada in the 1970s, The Financial Post. He has won numerous awards for his business-oriented columns, and has been nominated — twice — for the Reason Foundation’s prestigious Bastiat Prize.

In Mr. Foster’s superb new book, “Why We Bite the Invisible Hand: The Psychology of Anti-Capitalism,” he analyzes the various arguments against the economic model that has helped build and shape Western democracy. The book is well-researched, the language is straightforward (a rarity for most economics books) and the examples are presented with great precision. If you’re looking for some welcome relief from the persistent braying of the anti-capitalist horde, look no further than Mr. Foster’s intelligent and rational perspective.

What is the “invisible hand”? This term was first introduced by 18th-century Scottish philosopher and economist Adam Smith. As Mr. Foster explains, “[i]t refers to the emergent evolutionary processes of commercial markets, which reward competitive innovation and efficiency, promote cooperation and have created unprecedented wealth.” To put it more simply, the invisible hand “is often considered a proxy for capitalism.”

Alas, it’s not uncommon for critics to bite the hand that feeds them.

Smith’s legacy isn’t on full display in his native land. In “The People’s Story,” an Edinburgh-based museum, the city’s social history basks in the glow of trade unions, with “[n]o thanks to free markets, capitalism or Adam Smith.” Meanwhile, a competing economic theory exists within Karl Marx and Friedrich Engels’ work. The authors of “The Communist Manifesto” took “Smith’s division of labor and his enthusiasm for free trade and turned them into inhumane monstrosities.”

There are other examples. Fidel Castro’s Cuba is a “repressive, essentially primitive regime — with its banning of private property and free speech and its grossly inefficient top-down system of economic control.” Yet, it remains the darling of left-wing intellectuals. Hollywood turns up, too. In Russell Crowe’s performance as John Nash in “A Beautiful Mind,” he says (in character), “Adam Smith needs revision. Adam Smith said the best result comes from everyone in the group doing what’s best for himself, right? Adam Smith was wrong.” It’s also worth mentioning the prominent economist John Maynard Keynes, whose “only use for capitalism appeared to be to provide the wherewithal to get rid of capitalism.”

To someone like Mr. Foster, who admires Smith and supports capitalism, the current situation is incredibly frustrating. Here was a wise economist who “had pointed out what was potentially beneficial about free markets and counterproductive about government intervention.” Yet, he has been “misrepresented, castigated and ultimately turned upside down” by anti-capitalists, antiglobalization activists and others. They demonize Smith’s philosophies (and other like-minded individuals, including Milton Friedman and Friedrich Hayek) and passionately reject the benefits of capitalism.

Mr. Foster feels “capitalism is underappreciated because it is fundamentally counterintuitive and in many ways morally objectionable to minds that were overwhelmingly formed in the very different environment of the Pleistocene.” Many opponents “are still inclined toward a zero-sum view of resources and wealth, and disposed to see market relationships and their results as being all about power.” Moreover, they believe “we are designed to feel and express gratitude to individuals, not systematic abstractions.”

Naturally, this anti-capitalist psychology is rather foolish. “[I]f anything threatens the world with retarded growth and high unemployment,” the author writes, “it is the confluence of the return of Keynesianism, the unsustainability of overgenerous welfare states, the delusions of regulatory financial ‘macroprudence’ and the conceit of managing the global economy so as to control the weather.” All of this is being done “while aspiring to solve the problems of global poverty through tried-and-failed top-down methods.”

“Why We Bite the Invisible Hand” correctly notes that in spite of it all, “capitalism continues to work its wonders, both spectacular and mundane.” What the anti-capitalists frequently ignore is “the invisible hand is perhaps the most powerful and beneficent systemic force in human history, and that when you bite it, it always bites back.” Thank goodness for that.

Michael Taube is a contributor to The Washington Times.

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