A Capitalism for the People: Recapturing the Lost Genius of American Prosperity

Abstract

Born in Italy, University of Chicago economist Luigi Zingales witnessed firsthand consequences of high inflation and unemployment--paired with rampant nepotism and cronyism--on a country's economy. This experience profoundly shaped his professional interests, and in 1988 he arrived in United States, armed with a political passion and belief that economists should not merely interpret world, but should change it for better. In A Capitalism for People, Zingales makes a forceful, philosophical, and at times personal argument that roots of American capitalism are dying, and that result is a drift toward more corrupt systems found throughout Europe and much of rest of world. American capitalism, according to Zingales, grew in a unique incubator that provided it with a distinct flavor of competitiveness, a meritocratic nature that fostered trust in markets and a faith in mobility. Lately, however, that trust has been eroded by a betrayal of our pro-business elites, whose lobbying has come to dictate market rather than be subject to it, and this betrayal has taken place with complicity of our intellectual class. Because of this trend, much of country is questioning--often with great anger--whether system that has for so long buoyed their hopes has now betrayed them once and for all. What we are left with is either anti-market pitchfork populism or pro-business technocratic insularity. Neither of these options presents a way to preserve what author calls the lighthouse of American capitalism. Zingales argues that way forward is pro-market populism, a fostering of truly free and open competition for good of people--not for good of big business. Drawing on historical record of American populism at turn of twentieth century, Zingales illustrates how our current circumstances aren't all that different. People in middle and at bottom are getting squeezed, while people at top are only growing richer. The solutions now, as then, are reforms to economic policy that level playing field. Reforms that may be anti-business (specifically anti-big business), but are squarely pro-market. The question is whether we can once again muster courage to confront powers that be.

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