5 Must Read Books About Capitalism
By Thomas Sowell | 2015
When asked during an interview why he didn’t include any graphs, tables or diagrams in his classic, Basic Economics, veteran economist Thomas Sowell replied, “because I want people to read it.”
Becoming acquainted with the virtues of free markets first requires a comprehensive knowledge of the broad principles of political economy: the price system, the role of profits and losses, the nature of free and controlled labour, and the dynamics of the macro-economy.
Sowell provides these essentials and many more in a manner that is incisive and highly readable.
Far from swamping the reader with jargon and economic models, Sowell keeps his exposition incredibly grounded and tangible, drawing on real-world examples to explain how free markets allocate resources and foster innovation to serve consumers.
Examples include J.C. Penney and his retail revolution, New York City real estate, or Rockefeller, Carnegie and the other so-called “robber barons”.
Crucially, Sowell is always comparative, contrasting human behaviour, incentives and outcomes in market and non-market settings. Endlessly illuminating and with a supreme ability to articulate complex economic principles simply, all while overturning widespread fallacies about free markets, Sowell includes a new section on global inequality in the fifth edition of Basic Economics.
By Milton Friedman and Rose Friedman | 1980
While Milton Friedman became a giant in the field of economics for his work on the theory of the consumption function and US monetary history (winning the Nobel Prize in 1976), Milton, along with his wife, Rose – a formidable economist in her own right – wrote this ‘personal statement’ in a slightly different vein.
It includes a philosophical streak, evoking thinkers such as Adam Smith, John Stuart Mill and the Founding Fathers of the United States, to provide a moral and intellectual base to a conception of society as best organised for the primacy of individual liberty and free choice, with a carefully limited role for government. But fear not: Free to Choose is crammed full of economics.
In the opening chapter, ‘The Power of the Market’, the Friedmans expound upon that beauty of the emergent order and spontaneous harmony that result from voluntary cooperation and the price system, and in Chapter 2, ‘The Tyranny of Controls’, make an unassailable case for free trade.
They also discuss the tendency for government efforts in the areas of poverty alleviation and education provision to backfire, and make a compelling case for free market alternatives.
Add to this the simple explanation of obvious yet oft-neglected principles of economics, such as the mutually beneficial nature of voluntary exchange, compared with the zero-sum nature of government expropriation, and Free to Choose becomes required reading for anyone interested in free markets and capitalism.
By Henry Hazlitt | 1979
The lesson within Henry Hazlitt’s book is that “economics… is the science of tracing the effects of some proposed or existing policy not only on some special interest in the short run, but on the general interest in the long run.”
So many of the myths with which economics is affected, and upon which so many anticapitalist policies are based, result from an inability to see the consequences of government intervention beyond stage one.
In Economics in One Lesson, Hazlitt forces the reader to do just that. By exposing the secondary consequences of intervention on neglected interest groups, be it the taxpayer, the consumer, or the businesses, Hazlitt takes a scalpel to protectionism, the minimum wage, price controls, governmentbacked loans, and stimulus spending, among other ill-judged economic policies. Hazlitt’s style is humorous, but informative.
His analysis of mistaken government intervention is so thorough and fl awlessly logical that it simply compels assent.
His utter demolition of the ‘broken window fallacy’ leaves the reader in no doubt that destruction never creates prosperity, and his seamless analysis leaves no escape-hatch for the argument that tariffs, subsidies, and the suppression of technology increase total employment.
The ability to see beyond the immediate and obvious consequences of intervention is crucial to a good economist, and to advocates of capitalism in particular.
By Robert P Murphy | 2007
The more you study free markets, the more you realise that capitalism is blamed for everything.
Capitalism is accused of destroying jobs, ruining the environment, inviting discrimination, exacerbating poverty and rewarding speculators who never lift a finger, instead of those who do all the hard work.
In his extremely informative and highly readable Politically Incorrect Guide to Capitalism, Bob Murphy tackles the worst accusations against capitalism head-on.
Many people will concede that laissez-faire capitalism does encourage efficient production, but argue that it does so at a devastating human and ecological cost.
But Murphy confidently argues that, capitalism protects the environment, crushes racism and improves public safety while also being essential for vast material wealth and individual freedom.
By defending corporations such as Microsoft, tycoons such as John Rockefeller, and their use of outsourcing and speculation, Murphy proves that even the worst accusations against capitalism as an economic system are baseless.
Why do famous athletes earn more than schoolteachers? Why do even bad CEOs get paid millions? How can liquidators make money just by sacking people?
Murphy boldly explains and defends these ‘worst excesses of capitalism’ in a book that is entertaining, educational, and of course, politically incorrect.
By Ayn Rand | 1967
This collection of essays “is not”, as Ayn Rand makes clear in her introduction, “a treatise on economics.”
Rather, it is a moral and philosophical defence of capitalism as the only system that defends our individual rights, and an assault on all forms of collectivist politico-economic organisation as inherently in violation of these rights.
Rand and the other contributors, including former US Federal Reserve chairman Alan Greenspan, are scathing and unapologetic in defence of the only social system that is capable of both achieving unimaginably high living standards, and of accomplishing this without the use of force upon peaceful individuals.
Rand’s fi re-and-brimstone approach embodied in her support of capitalism and denigration of collectivism is so relentless and forceful that the reader is liable to break into sweats at various points.
But beneath this hostility, Rand both exposes fallacies about capitalism and, particularly in her invaluable essays, What is Capitalism?, Man’s Rights and The Nature of Government, insightfully observe two things: that man’s liberation from collectivism is inextricably linked to human progress, and that all totalitarian and anti-human ideologies share a contempt for individual rights and its political manifestation: capitalism.