Bring Back Capitalism

A new generation of unscrupulous political leaders and Wall Street hucksters has come up with a brilliant plan to outwit the populist revolt: pretending to be critics of capitalism

BlackRock CEO Larry Fink tells Fox Business host Liz Claman how climate change killed the Iguanodon

Raise your hand if you saw this headline from the New York Times last week coming:

The name of Bret Stephens may be the one most associated with “markets” in media. Even his struggle-sessionish “I was wrong about climate change” piece in 2022 came with a caveat that witnessing melting glaciers in Greenland just reinforced “my belief that markets, not government, provide the cure.” Seeing an article about capitalism failing the middle class above his byline is like reading “Grammer is Overrayted” by William Safire, or “Globalism: It Doesn’t Float My Plane” by Thomas Friedman. In the end Stephens tried to say something in defense of markets, but in a bizarre reversal from 15 years ago, such protestations now need to be couched as indictments of the profit motive, especially in papers like the Times, whose upscale readers are continuing their preposterous pose of socialist chic.

The mainstream press was once home to reflexive, often hysterical defenses of the free-market system. Op-ed pages saw even the CEOs of firms caught trading against their own clients defended as “wealth creators” who did “God’s work” for a “social purpose.” No more. Now, even the very wealthy give performative speeches about the pitfalls of capitalism, corporate-funded think-tanks routinely decry its failures, and polls on sites like Fast Company even show that 35% of “C-suite executives” react negatively to the word, “capitalism.” What gives? The only headline I recall in recent years that unironically cheered the capitalist idea was a Washington Post op-ed from last summer: “Elon Musk’s Twitter Failure Shows Capitalism is Working.”

I spent a decade covering the corruption, inequities, and excess of the American financial system, with a focus on the 2008 crash. Many of the issues I wrote about (and was ridiculed for covering) are in the Stephens piece. However, the new orthodoxy about capitalism coming into vogue freaks even me out, particularly since the most lurid protestations seem to be coming from Wall Street’s own leaders. If I sound emotional, it’s because I’ve had to listen to a progression of self-congratulation campaigns from this crew, and this one is by far the boldest and most obnoxious.  

Seeing Chase CEO Jamie Dimon issue a smiling clarion call in Fortune for higher taxes and massive government intervention via a “Marshall Plan for America” was a major tell that something even worse than what he called “free-for-all capitalism” was being contemplated. Dimon’s pledge was in line with outgoing World Economic Forum chief Klaus Schwab’s “stakeholder capitalism,” which purports to end the idea of corporations existing to “maximize their profits,” and make business leaders “trustees of society,” leading efforts to address “social and environmental challenges.”

For those who aren’t fluent in rich-person bullshit, what Schwab and Dimon (and a long list of others, like Apple CEO Tim Cook and BlackRock’s Larry Fink) were proposing was that we take the same people who spent the last twenty years devouring Fed rescues and converting the savings of the middle class into Jackson Hole villas, and instead of hurling them off cliffs, put them in charge of society. They would additionally like taxpayers to fund a big enough safety net to guarantee the next generation of customers for, say, a depository bank. As in: “We screwed things up so badly, you need to give us even more leeway to make things right.” It’s enough to make the most mild-mannered person reach for something sharp.

Most of the nightmares I covered after 2008 had little to do with true free enterprise. The real story of the bubble era was and is the fusing of state and corporate power. Waves of bailouts created a class of predatory “Too Big To Fail” super-firms that could siphon off massive profits without exposure to market risk, while repaying political partners in both parties with financial backing. The resultant incestuous jumble has been an economy led by a handful of market-immune actors suckling a never-emptying teat of public subsidies, while squeezing an expanding population of everyone else, i.e. the ordinary people and small businesses forced to stare down both barrels of capitalism’s business end.

It’s phony competition, but real profits are extracted. Winners preserve gains under mazes of incomprehensible tax shelters, then retire to wealth archipelagoes in the Hamptons or the Vineyard or Davos or any of a dozen other places where failing schools, immigration, crime, poverty, and other issues make no appearance. It’s infuriating and people absolutely should be outraged, but make no mistake: it isn’t “capitalism,” at least not exactly.

I’ve often been asked what should have been done after the 2008 crash, a question that usually contains the implication that Fed chief Ben Bernanke’s Nobel-winning strategy of cash infusions to the insolvent banks that caused the mess turned out well. It didn’t turn out well. The Bernanke strategy of using the Fed to remove hundreds of billions in terrible investments from the books of key firms excused companies like Citigroup and Bank of America and, yes, JP Morgan Chase (which bought Bear Stearns at a discount after the Fed swallowed billions of its “illiquid” assets) from capitalism’s one functional regulatory mechanism: failure. Selectively removing the fangs of the market made unfairness an indelible feature of American life, and made these companies and their idiot leaders permanent parasites on the neck of society. In hindsight, they needed big, healthy doses of good old-fashioned capitalist failure.

Clogging the toilet of the market to keep those bad actors afloat has had disastrous consequences. Why they need flushing: