Where Have All the Capitalists Gone? Essays in Moral Political Economy by Richard M. Salsman
By Robert Begley
Great Barrington, MA: American Institute for Economic Research, 2021
524 pp. $22 (paperback)
Imagine living in a rights-protecting society where individuals are free to create an abundance of life-serving products and services—where scientific and medical innovations are so common that your life expectancy could easily surpass ages we currently only dream of.
Richard M. Salsman advocates the basis of such a society—capitalism—in his latest book, Where Have All the Capitalists Gone? Essays in Moral Political Economy. In this collection of sixty-six essays, Salsman describes and examines the requirements of a truly capitalist, fully free society.1
Why is capitalism the only system capable of bringing about such flourishing? Referencing Ayn Rand, Salsman points out that capitalism is the system of the mind. He writes:
Ayn Rand argued that reason is our main means of survival, that brains, not brawn, are the primary source of wealth creation and flourishing. She demonstrated why human intelligence and productive prowess must be free if they are to function properly, and—of most relevance here—that capitalism is the only social system that protects individual rights, frees man’s mind, and enables him to produce, trade, and prosper. Rand defined “capitalism” as “a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.” Critically, “it is the basic, metaphysical fact of man’s nature—the connection between his survival and his use of reason—that capitalism recognizes and protects.” (29)
Salsman, a professor in Duke University’s Philosophy, Politics & Economics (PPE) program, integrates these three disciplines, also bringing to bear the knowledge he’s gained while running his own market forecasting firm, where his clients expect quantifiable results that increase their profits. The author of three other books and hundreds of articles on various aspects of capitalism, Salsman is one of the world’s foremost scholars on the topic.
Where Have All the Capitalists Gone? includes ten integrated sections that together make his case for capitalism. Three are on philosophy, three on politics, and four on economics. He names his greatest influence in each of those categories as Ayn Rand, Alexander Hamilton, and Jean-Baptiste Say, respectively.
Philosophy
Salsman understands that socioeconomic systems rest on more fundamental philosophic ideas, including views on ethics and the nature of knowledge. Consequently, this book is unlike typical books on economics in that it describes the importance of an objective theory of knowledge and the ethics of rational self-interest.
Salsman contrasts social systems that protect individual rights with those that don’t, showing that this difference is a matter of life and death. Liberty leads to wealth, happiness, and life, whereas tyranny breeds poverty, misery, and death.
The relationships between key ideas are conveyed in helpful tables and charts, enabling readers to quickly unpack complex ideas. For example, a table titled “Ethical-Legal-Political Elements of Capitalism versus Statism” contrasts the foundations of capitalism—objectivity, which support rational self-interest—with those of statism, namely, the view that all “knowledge” is unfounded and subjective, and that morality requires self-sacrifice. These visual snapshots condense a massive number of issues and illustrate the connections between basic philosophy and downstream ethical and political ideas.
Politics
Salsman credits the American founders as honorable statesmen and politicians who aimed to create a legitimate and lasting government to do what any government should do: protect individual rights. He coins a helpful phrase to encapsulate the system they sought to build: constitutional capitalism. This, he says, is “a system of rational, civilized, cooperative people, a system of objective law. . . . It’s what the Founders created and hoped we’d preserve and protect” (106).
Salsman argues that constitutional capitalism is the ideal politico-economic system. In showing the difference between markets and states, he explains,
What do markets do best? It should be obvious. They produce and exchange wealth, including infrastructure, coordinated by a free price system—guided by profit. What do states do best? . . . The good government preserves, protects and defends individual rights, including private property rights, as well as the rule of law, voluntary exchange, law and order, and national defense, while facilitating, where necessary, the erection and maintenance of infrastructure—all guided by justice. Taken together, the ideal system sure isn’t unlimited democracy (nor is it “democratic socialism”) but constitutional capitalism. (369–370)
How does this differ from laissez-faire capitalism? Salsman argues that “constitutional capitalism” more precisely captures the essence of rights-respecting government for several reasons. First, his conception identifies the need for a strong, rights-respecting constitution, such as that created by America’s founding fathers. Second, it properly limits government, reducing its functions to maintaining police and military forces, along with courts operating on objectively defined laws.
Such a government requires property to fulfill this role, including administrative buildings, military and law enforcement equipment, and so on. Thus, Salsman argues, fulfilling its core function requires funding and a “light but firm” touch. He says that this “touch” is not one of control, but one of necessary interaction. But he does not explain whether this requires forced taxation. Salsman also says that the tendency among those who advocate completely “hands off” government is toward no government at all: anarchism.
Economics
Although many books about capitalism describe its economic value, pointing to the growth of relatively capitalistic countries, Salsman argues that this is not enough to defend it against its critics. Those who consider capitalism immoral do not care whether it is practical, whereas those who can defend capitalism on moral grounds, but not practical ones, are branded as pie-in-the-sky idealists. This is why those who wish to defend capitalism must integrate both the moral and economic case for it.
On this account, Salsman praises 19th-century political economist Jean-Baptiste Say’s work and the economic principle that bears his name: Say’s Law. Salsman states, “Say’s Law holds that supply constitutes demand.” Salsman refers to this as the “primacy of production,” explaining that supply is a necessary precondition for prosperity, wealth creation, and demand. He argues: “Given the importance and primacy of production in an advancing, progressing civilization, we must be concerned above all with the freedom, rights, incentives, and rewards of creative inventors, engineers, and entrepreneurs” (120).
Salsman calls Say’s Law the first principle in political economy. He says that it connects the moral and political dots of “rationality, the pursuit of self-interest, entrepreneurialism, profit-making, private property rights, the rule of law, and constitutionalism” (118).
Today, Salsman notes, America, and Western countries in general, have a mixture of capitalist and statist elements. For instance, people working in some sectors of the economy, such as technology, enjoy greater liberty and better protection of their rights, including property rights. This relative freedom unleashes innovators, whose products and services improve millions of people’s lives. Consider innovations in digital communications such as Zoom and FaceTime, which enable us to easily see and engage with friends, business partners, or loved ones in different parts of the world.
Salsman points out that people are motivated by the prospect of profit, leading them to innovate and produce life-serving values. Further, these value producers justly deserve credit for creating values, seeking profits, and promoting human prosperity.
Advocates of Capitalism
Salsman holds that advocates of capitalism can be effective only if they understand and explain how it is ultimately based on fundamental facts about human nature. He states:
Capitalism is the only legitimate habitat for humanity. It is sustainable because practical, practical because moral, moral because egoistic, egoistic because rational and rational because natural—i.e., consonant with human nature. No argument for capitalism lacking these crucial elements or denying their logical dependency can withstand scrutiny or win the day. (xiv)
Where Have All the Capitalists Gone? does have a few flaws. Because it is a compilation of essays from different publications, the style and quality of writing varies, and links between one chapter and the next are not always clear. Also, there are a few claims, such as those made about Thomas Jefferson being a “progressive,” that Salsman doesn’t substantiate.
That said, I highly recommend this book. It contains a healthy mixture of principles and particulars, abstractions and concretes, theory and history. The only book on the subject that I know of with a similar scope and depth is Ayn Rand’s _ Capitalism: The Unknown Ideal._ Whereas Rand’s book includes contributions from economists, historians, and psychologists, Where Have All the Capitalists Gone? is the work of one man. This is a remarkable achievement.
Anyone interested in philosophy, politics, or economics—and especially those looking for an integrated understanding of all three—will benefit from reading Where Have All the Capitalists Gone? It is an important and accessible explanation of capitalism, which clearly shows why it is the only social system for a free and prosperous future.