Fake Capitalism: It’s Not Free Markets that Have Failed Us but Government Distortion of Them

Free-market capitalism is out of favor, and the sentiment is becoming global. At the September G20 meeting, Australia’s Prime Minister Malcolm Turnbull, exhorted fellow leaders to “civilize capitalism.”

However, the truth is, behind the veneer of free-market governance is a deep expanse of government involvement in massive areas of the economy, such as the housing market and health care. People don’t make decisions on housing and health-care concerns every day, but when they do, they would benefit from the information that markets provide about whether they can afford a large house or whether a particular drug is worth the price. Government distortion of these key markets has scrambled these signals.

Before America and the rest of the West declare free-market capitalism the culprit for our recent economic woes, we should ask ourselves: How much capitalism does the West really have, and is it really behind the West’s problems? Let’s not worsen those problems by confusing our failure to understand free-market capitalism with the thing itself.

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