Capitalism: Good

Tyler Cowen – a professor of economics at George Mason University and bestselling author of, among other titles, Stubborn Attachments and The Complacent Class – presents a detailed, passionate case for the modern corporation. It’s a daunting task, but Cowen raises relevant points about the love-hate relationship many people have with corporate capitalism. There are two sides to every story, and you need to at least hear the arguments, Cowen maintains, even if you don’t agree with all of them. By the end of his book, savvy readers may have gained a greater appreciation for big business.

Unsurprisingly, The Wall Street Journal found much to love in Cowen’s perspective, saying, “Mr. Cowen’s book is timely, and his writing style is a refreshing contrast to the strident left-wing declamations that are so common today. He is calm and conversational, splashing cool water on the firebrands.” But The New York Review of Books wrote, “Cowen did not become one of the world’s most-read bloggers on economics without understanding the value of a well-timed contrarian blast.”

Effective, Cooperative, Inclusive

Cowen’s thesis is that American big business improves life for everyone.

The logic of capitalism is not so easy to replace, and different organizational forms, while they may sound better, usually do not improve the basic trade-offs that rule the workplace.Tyler Cowen

He argues that big business is effective, cooperative and inclusive, and that it provides stable, rewarding jobs. Cowen makes the case that successful corporations nurture their positive roles in society, which motivates employees and customer loyalty.

Human Nature

Some people lean toward greed and fraud; Cowen urges you to debate whether business worsens this tendency. Other systems, he points out, succumb to human weakness as readily as – if not more so than – capitalism does.

American competitive capitalism, Cowen says, incentivizes honesty and trust, because businesses value suppliers, employees and customers. The choice permeating a healthy competitive system, the author finds, means that punishment awaits any dishonest business; the internet increases the likelihood and cost of this punishment.

CEO Pay

In support of CEOs’ lavish salaries, Cowen recites the areas in which they must develop skills: financial markets, public relations, media, trade patterns, the global economy, the latest technology, employee motivation, corporate culture, internal accounting, budgets and business plans.

We respond by turning CEOs into victims of a kind of public ritual sacrifice, dissecting their every move, imputing malign motives, criticizing their pay and treating them as personifications of all that bothers us about capitalism. Tyler Cowen

Though he finds high income inequality distasteful, Cowen asserts that the system guarantees that the best executives will find the biggest businesses that most need them. He further argues, somewhat lamely, that top lawyers, sports and media stars also earn outsized compensation.

Market Dominance

Cowen notes that a monopoly’s hold over consumers rarely lasts, as new technologies and fresh business models eclipse leaders. He raises the oft-cited failures of former market dominators Kodak, Blackberry, MySpace, Nokia, IBM and Yahoo.

Cowen explains that hubris and crisis may afflict US financial markets, but their liquidity means investors can quickly allocate capital where needed, allowing these markets to support economic growth and development.

He regards the venture capital sector as the most productive arena for finance. Cowen calls it the envy of the world and cites its responsibility for many successful American firms. Again, somewhat weakly, Cowen alludes to many funded start-ups that center around health, green ideals or other altruistic aims.

Cowen references these companies’ size and the risks they face as justifying finance’s high pay. US financial markets, he avows, help America maintain its global geopolitical influence and strength.

Teenagers

Cowen finds the harshest critics of corporations to be those who humanize businesses the most.

When it comes to the implicit categories we use for processing information about corporations, typically we relate to them as people, we praise or damn them as people, and we can be loyal to them as we (sometimes) are to people.Tyler Cowen

The author paints these critics – who rely on corporations for goods, services and employment – as teenagers who resent their parents, focusing on perceived unfairness while taking for granted their continuing care.

Benefits

Cowen posits that the capitalist economy is an amalgam of abstract rules with far-reaching benefits that go beyond distinct examples. He suggests that individual failures and abuses might be a price worth paying for a system that works well in an imperfect world in which inherently fallible human beings run things. Cowen insists that businesses are neither evil nor their customers’ friends. Instead of moralizing when they don’t maintain the highest ethical standards, Cowen believes society should appreciate the benefits corporations bring and judge them accordingly.

Yay Capitalism!

Tyler Cowen writes a lot. He has published numerous titles, and his brand depends on his prolificacy. So his arguments don’t always run deep, even when he makes his points with great passion. Cowen offers little that is new, insightful or revelatory in his defense of big business, other than how much he likes it and wants its representatives to like him. His positions read like extended bold-type headlines announcing his loyalty to a system most regard as inevitable. And he rebuts criticism you may have never heard uttered or regarded as credible. This, then, is a niche product: material for columnists, a pat on the back for those in business who need reassurance, and insurance that readers will find Cowen’s blog and that business talk shows will welcome him as a guest. Young readers curious about big business will find familiar justifications that may help them develop their own views.

Tyler Cowen has also written Average Is Over, Discover Your Inner Economist and The Great Stagnation. Classic works on capitalism’s virtues include Capitalism by Ayn Rand and Capitalism and Freedom by Milton Friedman.