Friday, February 3, 2012

Reports Of Capitalism's Death Are Greatly Exaggerated

By Howard Rich

As originally published at Investor’s Business Daily.
Klaus Schwab, a German academic and founder of the World Economic Forum, recently proclaimed the death of capitalism as we know it — a curious critique coming from the head of an organization whose motto finds "entrepreneurship is in the global public interest."

"Capitalism, in its current form, no longer fits the world around us," Schwab declared at the most recent installment of his globalist gathering in Davois, Switzerland, adding that the world's business and political leaders "have failed to learn the lessons from the financial crisis."

The latter half of this observation is indisputable. The doctrine of chasing good money after bad has reached dangerous dimensions on both sides of the Atlantic — yet leaders continue to plow ahead with new deficit spending and fresh bailouts regardless.

But is refusing to acknowledge the increasingly-costly failure of this ever-escalating interventionism really an indictment of capitalism? It would be easy to condemn Schwab for conducting a botched autopsy on the capitalist economic model, but what he's really done is more intellectually dishonest — he has misidentified the "victim."

Capitalism is far from dead. As proof we need only examine the ongoing rise of the global black market — which employed 1.8 billion people (half of the world's work force) and did $10 trillion worth of business in 2009. Within a decade, this "shadow economy" will employ two-thirds of the global work force and represent the largest economy on the planet.

More conventionally we ought to consider China — which has embraced free market reforms and seen its economy expand 16-fold over the last 30 years. In the last two decades this rising tide has lifted an estimated 440 million Chinese out of poverty.
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