Is capitalism the best economic system? Does capitalism conflict with democracy? Rainer Zitelmann, a German former journalist, former businessman, investor and prolific author, addresses the first of these questions: his answer is a resounding “yes”. Torben Iversen, a Danish political scientist and professor at Harvard, and David Soskice, a British economist and professor at the London School of Economics, address the second: their answer is a resounding “no”. Zitelmann provides a lively polemic against the denigrators of free-market capitalism. Iversen and Soskice argue for the symbiosis of capitalism and democracy in the “advanced capitalist democracies”.
Not only does capitalism work, it is also the only economic system that works. This is Zitelmann’s core point in The Power of Capitalism. He justifies this controversial proposition by an appeal to historical experience, not abstract theory. Readers are taken through extraordinary stories of market-driven success: China’s journey from the catastrophe of the Great Leap Forward in the late 1950s, to the four decades that followed Deng Xiaoping’s “reform and opening up” — the biggest anti-poverty triumph in human history; the contrast between the prosperity of capitalist West Germany and South Korea and the poverty of their socialist twins, East Germany and North Korea; and the economic success of Chile, against the dismal failure of socialist Venezuela.
Zitelmann, a committed ideologue, pushes his view too far. He argues, for example, that the economic reforms of Margaret Thatcher and Ronald Reagan were an astonishing success. Yet that is debatable. In both cases, one consequence was a big rise in inequality. Zitelmann insists this is insignificant. Yet high inequality results in a decline in social mobility, as well as the rise of destructive populism.