Economists Visit College to Debate Future of Capitalism

Two influential economists debated whether capitalism is worth saving in today’s world in a debate last Thursday, Feb. 28, in Dana Auditorium. 

Free-market economist Michael Munger spoke in support of capitalism, while Marxist economist Richard Wolff argued for socialism. Their exchange was part of the college’s Alexander Hamilton Forum, a series aiming to foster civil discussion around differences in American political thought. 

“This prompt might have sounded strange to most ears just 15 years ago,” said Keegan Callanan, assistant professor of Political Science and event moderator. “But today, polling indicates that socialism is more popular than capitalism among both Democrats and, what is perhaps the same thing, the young.”

Munger, a professor of Political Science, Economics and Public Policy at Duke, was the first to lay out his position. While he did not offer a clear definition of capitalism, Munger explained that markets are an integral part of a capitalist system, though he noted they are also found in other economic systems. Socialism, on the other hand, he defined in detail. 

“The only useful definition of socialism is state ownership and control of the means of production, state management of the direction of resources, and state control and provision of all services,” Munger said. “By that definition, there are no functional socialist nations. The exceptions are at the margins.”

Munger asked the audience to consider their priorities, namely whether they were concerned with ending poverty or ending inequality. Using China as an example, he conceded that capitalism is good at getting rid of poverty but also noted that it often creates inequality. Since 1978, when China began adopting free-market reform, China has seen the largest decline of poverty in history. However, it is currently the country with the greatest degree of income inequality in the world.

“If you were to ask the poor, who now have a much more prosperous living setting, ‘are you concerned with inequality,’ well, they might be. But if you ask them if they want to go back, they will probably say no, which means capitalism is worth saving,” Munger said. “If you want a system that reduces inequality and poverty, my claim is that there is no such system.”

In closing, Munger concentrated on pervasive evidence of the failures of democratic government. He believes the kind of regulation present in America that protects large corporations is the failure of democracy, not capitalism.  

“If we had a different political system, we would be able to save capitalism,” he concluded. “We need to save capitalism in order to address the questions of inequality that will harm democracy.” 

Munger concentrated on the U.S. government’s failures to spend on basic infrastructure, to maintain basic public education and to adopt an efficient health care system. 

“As an old person I want to thank you for keeping my taxes low. But there is no reason for my taxes to be low. I am rich as heck. Why does our political system have this pathology? Because every flaw in consumers is worse in voters.”

Next to speak was Wolff, Professor Emeritus at University of Massachusetts-Amherst and Visiting Professor at the New School in New York. He began his argument with a response to Munger’s claims.

“Partly I agree with him, partly I feel like we must live in different universes,” Wolff said. “I would like to see capitalism wiped off the face of the earth.”

Much of Wolff’s response centered on the difference between his and Munger’s definitions of capitalism. Wolff defined capitalism as “an organization of production, so that a small group of people make the decisions that everyone else has to live with.”

Wolff connects this to his definition of democracy, which he believes to mean each person has a say in the decisions that affect them.

“Capitalism is not a democratic economic system. You could have a democratic economic system if everybody had an equal voice.” Wolff  said.

Wolff latched on to Munger’s concession of inequality, and cited historical examples of economic downturns to demonstrate the instability of a capitalist system.

“Capitalists have been trying to figure out how to stop these crashes from happening,” said Wolff, referencing the 11 downturns of the American capitalist economy between 1941 and 2008. “They have been working at it for 200 years because capitalism, wherever it has landed, goes through these cycles.”

Wolff described the pervasive anxiety that racks economists as they wait for the next economic crash. He predicted it will occur at the end of this year or early next year. 

Although Wolff noted that he is not inherently against markets, as they have existed through history and in every socialist society he is aware of, he made it clear he is not a major proponent of them. 

“Markets are themselves a questionable institution, and a healthy society should be questioning them all the time,” Wolff said.

Later in his argument, Wolff emphasized the evolving nature of socialism. He explained how socialists are reacting to their history and socialist experiments that have come before them, much like capitalists did coming out of feudalism.

Wolff concluded by returning to the idea of democratization.

“Let’s make socialism be not just about government doing things, but a government rooted in a mass of people who have real power because they own and operate the enterprises collectively,” Wolff said. “That would build on what was achieved by capitalism, build on what was achieved in socialism and do better than either of those were able to do.”

Although each of the debaters held differing viewpoints and even seemed to contradict themselves at times, neither speaker dominated the conversation. For those in attendance, the amicable dialogue between the speakers exemplified how to communicate across difference.

 “I was gratified to see so many students interested in the dialogue, asking fine questions and continuing the conversation among themselves afterwards,” Callanan said. “Sparking those kinds of conversations is certainly one of the goals of the Hamilton Forum.”

“I believe that watching scholars debate forces me to consider opinions that differ from my own, and thus expands my worldview,” Quinn Boyle ’21 said. Other students agreed with Boyle, and added that difficult conversations are critical to a liberal arts education.

“Respectful disagreement creates learning and growth because it forces people to defend their stances with evidence and logic,” said Joseph Lyons ’21. “The debate this past Thursday certainly made me consider ideas that differ from my own. I think Middlebury should do all it can to promote such challenging conversations.”