Category: Capitalism

“Old Pittsburgh Industrial Fortune” Sustained “Anti-Materialist Conceit of Auroville”

(p. C7) Utopias are not, by definition, found on this side of paradise. Yet that truth hasn’t stopped visionaries and seekers—not to mention knaves and fools—from trying to build communities on lofty principles and quixotic aspirations. One such wonderland is Auroville, a commune in India’s Tamil south whose heady origins can be traced to the incense-and-raga days of the 1960s. Akash Kapur’s “Better to Have Gone” is a haunting and elegant account of this attempt at utopia and of his family’s deep connections to it.

. . .

Mr. Kapur and his wife, Auralice—a name given to her by the Mother, who asserted the right to name all children born to her flock—both grew up in Auroville. Auralice was born in 1972, Mr. Kapur two years later. Auralice’s mother, Diane Maes, was a woman from rural Flanders who’d arrived at Auroville as an 18-year-old. Headstrong and flirtatious, she soon separated from the biological father of her daughter and took up with another Auroville man named John Walker, in many ways the book’s most compelling (and infuriating) character.

. . .

Unlike the bucolic Maes, Walker was born into privilege, his father the heir to an old Pittsburgh industrial fortune.

. . .

It’s easy to be irritated, even incensed at times, by Walker’s blithe aura of entitlement. The hardship of the early days at Auroville—when there was no running water or electricity—is mitigated in Walker’s case by his renting an air-conditioned room at a comfortable hotel in nearby Pondicherry. Whenever funds ran low, he wrote to his father for more.

Much of this money helped sustain the anti-materialist conceit of Auroville. The community depended on the bounty of rich residents like Walker, who placed their trust funds at the disposal of the Mother. Walker’s money paid for the drilling of wells, the building of roads and houses, the salaries of laborers, even Auroville’s bakery. He did not, of course, begrudge this parasitic relationship with utopia. Why would he? All he had to do was holler for dad.

For the full review, see:

Tunku Varadarajan. “Dawn of a New Humanity.” The Wall Street Journal (Saturday, July 24, 2021): C7.

(Note: ellipses added.)

(Note: the online version of the review has the date July 23, 2021, and has the title “‘Better to Have Gone’ Review: Dawn of a New Humanity.”)

The book under review is:

Kapur, Akash. Better to Have Gone: Love, Death, and the Quest for Utopia in Auroville. New York: Scribner, 2021.

Milton Friedman Will Be Vindicated on China

I was lucky to be able to take Milton Friedman’s Price Theory graduate course the last time he taught a full version of it. (I think he taught an abbreviated version a year or two later.) He was, and remains, one of my heroes. He predicted that China’s move to the market would also lead it to more political freedom. I suspect that he will still turn out to be correct, but with a longer delay than he or I thought likely. A dynamic economy depends on innovative entrepreneurship and innovative entrepreneurship depends on freedom of thought and speech. Xi is systematically destroying freedom of thought and speech in China; the house of cards will fall and Milton will be vindicated in the end.

(p. A15) “I predict that China will move increasingly toward political freedom if it continues its successful move to economic freedom.”

So spoke Milton Friedman in 2003. It seemed a good idea at the time, especially after the transformations of the dictatorships in Taiwan and South Korea into messy but functioning democracies.

. . .

Under Mr. Xi, Beijing has carried out genocide against China’s Uyghur minority, threatened Taiwan with invasion, shut down a pro-democracy newspaper in Hong Kong, covered up the origins of Covid-19, and so on. Even so, China’s economy continues to boom—it grew more than 18% in the first quarter from a year earlier—and Friedman now looks to have gotten it colossally wrong about capitalism and freedom.

For the full commentary, see:

William McGurn. “Milton Friedman Wrong About China?” The Wall Street Journal (Tuesday, June 29, 2021): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date June 28, 2021, and has the title “Was Milton Friedman Wrong About China?”)

“Creatively Destructive Innovation” Is Continuous in Book Publishing Industry

(p. A13) In 2000 the RAND Corporation invited a group of historians—including me—to address a newly pressing question: Would digital media revolutionize society as profoundly as Gutenberg and movable type? Two decades later, John Thompson’s answer is yes, but not entirely as predicted. And our forecasts were often wrong because we overlooked key variables: We cannot understand the impact of technologies “without taking account of the complex social processes in which these technologies were embedded and of which they were part.”

Mr. Thompson provides that context in “Book Wars” (Polity, 511 pages, $35), an expert diagnosis of publishers and publishing, robustly illustrated with charts, graphs, tables, statistics and case studies.

. . .

My warning to the RAND corporation was to avoid succumbing to the “Two Big Bangs Theory”—the assumption that there were only two world-changing events in the history of print, in or around 1450 and 2000. With books, change is a constant. In the last two centuries the publishing trade has dealt with one creatively destructive innovation after another—mechanized printing and papermaking, railway bookstalls and distribution networks, linotype and offset printing, photomechanical reproduction, paperbacking and books-of-the-month. The movies opened up vast new possibilities (and revenues) for novelists, who increasingly wrote with the screen in mind, as Ernest Hemingway did when he insisted on casting Gary Cooper in “For Whom the Bell Tolls.” And television supercharged book publicity, climaxing (so far) with Oprah. While Mr. Thompson is entirely right to conclude that the transformation of publishing in the past 20 years has been bewildering, that’s nothing new. In a dynamic capitalist economy, the dust never settles.

For the full review, see:

Jonathan Rose. “BOOKSHELF; Publishing In a Protean Age.” The Wall Street Journal (Monday, August 9, 2021): A13.

(Note: ellipsis added.)

(Note: the online version of the review has the date August 8, 2021, and has the title “BOOKSHELF; ‘Book Wars’ Review: Publishing in a Protean Age.”)

The book under review is:

Thompson, John B. Book Wars: The Digital Revolution in Publishing. Cambridge, UK: Polity Press, 2021.

Capitalist Innovations Made Rapid Covid-19 Vaccines Possible

(p. A15) The Wuhan lab appears to have operated, in part, with U.S. government grant funding, although American scientists had no oversight role. Chinese scientists allegedly pursued gain-of-function research, increasing the virulence and transmissibility of certain viruses. It isn’t unheard of for a virus to escape from a government-funded lab, and the evidence increasingly suggests that’s what happened in Wuhan, even as China dubiously points a finger at the U.S. military.

Regardless of which government, if any, contributed to the emergence of Covid-19, the pandemic was quickly controlled by innovation from the private economy. New vaccines and private protocols, not government mandates, mainly slowed the spread in workplaces and schools. The pandemic originated from government failures that had to be corrected by private actors.

Even if the lab-leak theory proves false, and it turns out that SARS-CoV2 passed directly from animals to humans, one could still argue the Chinese government’s actions created the pandemic. Beijing covered up evidence of the virus’s early spread and allowed international flights from Wuhan during January and February 2020 while locking down domestic travel.

. . .

American capitalism supported decades of innovation that created conditions conducive to the rapid development of the Covid vaccines. About 70% of the returns to medical research and development across the world come from the U.S., where price controls are less prevalent than elsewhere and companies compete to bring new treatments and cures to market. Without the U.S. market, investors would have shied away from funding the cumulative advances that eventually led to successful Covid vaccines. In this sense, the U.S. market-based healthcare economy saved the world from Covid-19. None of it would have happened in a government-run health system.

For the full commentary see:

Casey B. Mulligan and Tomas J. Philipson. “Government Failure Gave the World Covid.” The Wall Street Journal (Tuesday, Aug. 10, 2021): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date August 9, 2021, and has the same title as the print version.)

Jon Stewart’s Solyndra Riff Skewered Industrial Policy

Remember Solyndra? Apparently too few do. Today’s WSJ reports how the U.S. is imitating China’s “industrial policy” of subsidizing favored firms in favored industries such as green energy and semiconductors. To remind us that Larry Summers was right when he wrote that “government is a crappy venture capitalist,” I link above to Jon Stewart’s wise and funny send-up of the Solyndra debacle, first broadcast almost 10 years ago, on September 15, 2011.

The WSJ article mentioned above, is:

Ip, Greg. “West Dusts Off an Old Idea to Compete with China.” The Wall Street Journal (Fri., July 30, 2021): A1 & A7.

India’s Tata “Paid a Harsh Price” for Keeping Distance from Government

(p. A15) Mr. Raianu, a historian at the University of Maryland, is guilty of no hype when he titles his book “Tata: The Global Corporation That Built Indian Capitalism.”

. . .

No other company has dominated the history of its national commerce and industry quite as much as the house of Tata in India, where it is one of the few major businesses still regarded as unstained by overt corruption. Although family-run for most of its existence—the stubborn Indian norm for merchants—the Tata company was from an early date “unusual” among India’s corporate groups (Mr. Raianu says) in employing professional executives and “talented nonrelatives.” The company also “kept its distance from the state” in both colonial and postcolonial times. It gave only lukewarm support to the Indian National Congress, which meant that the Tatas had few political chips to cash when the Congress party came to govern a free India. It paid a harsh price for this aloofness when Air India—the Tatas’ thriving aviation arm—was nationalized by Prime Minister Nehru in 1953.

. . .

The Parsi character of the company has, in many ways, helped it to transcend the mud pit of Indian business. The Parsis are a minuscule community, numbering around 57,000 Indians today. Practitioners of Zoroastrianism, they fled to India in the eighth century when Persia came under the sway of Islam. They embraced Western ways more readily than other Indians and, as a result, thrived under the British. Parsis, writes Mr. Raianu, “typified the religious minority exempt from ritual restrictions of caste and guild systems, much like European Jews.” And so they were more ready to look outward—to foreign opportunities—than the hidebound Indian business castes.

For the full review, see:

Tunku Varadarajan. “BOOKSHELF; From Homestead to Hegemony.” The Wall Street Journal (Wednesday, July 14, 2021): A15.

(Note: ellipses added.)

(Note: the online version of the review has the date July 13, 2021, and has the title “BOOKSHELF; ‘Tata’ Review: From Homestead to Hegemony.”)

The book under review is:

Raianu, Mircea. Tata: The Global Corporation That Built Indian Capitalism. Cambridge, MA: Harvard University Press, 2021.

Xi Jinping Only Pays “Mere Lip Service” to “Private Enterprise and Innovation”

(p. A23) Ant Group, China’s biggest fintech conglomerate, was preparing last November for its initial public offering. Analysts projected it would raise $34 billion, the largest sale of shares in history. The company, founded by Jack Ma, had become synonymous with financial innovations, which are often risky.

In the run-up to the I.P.O., Chinese regulators trying to assess financial risks on Ant’s books had been brushed off by Mr. Ma. In an audacious speech, he criticized regulators as too cautious and pilloried state-owned banks for their “pawnshop” mentality of providing loans only to borrowers who could post collateral.

Even oblique attacks on China’s government rarely go unpunished. This was a direct provocation. Yet such was Mr. Ma’s aura, and his apparent imperviousness to government strictures, that domestic and foreign investors were unconcerned.

. . .

Then it all fell apart. Two days before Ant’s shares were to begin trading on the Hong Kong and Shanghai exchanges, the government blocked the I.P.O.

. . .

It seemed that, in bringing the hammer down on the company, the government aimed to limit its growing economic and political power.

But in so doing, the government spooked investors. Suddenly, President Xi Jinping’s pledges to encourage private enterprise and innovation looked like mere lip service.

For the full commentary, see:

Eswar Prasad. “Jack Ma Paid for Taunting China.” The New York Times (Friday, April 30, 2021): A23.

(Note: ellipses added.)

(Note: the online version of the commentary has the date April 28, 2021, and has the title “Jack Ma Taunted China. Then Came His Fall.”)

More Evidence Xi Jinping Believes in Marx’s Communism

(p. A11) Mr. Biden this month published his Interim National Security Strategic Guidance. The document puts China in a category by itself as “the only competitor potentially capable of combining its economic, diplomatic, military, and technological power to mount a sustained challenge to a stable and open international system.”

In his signed introduction to the document, Mr. Biden wrote: “I believe we are in the midst of a historic and fundamental debate about the future direction of our world. There are those who argue that, given all the challenges we face, autocracy is the best way forward. . . . We must prove that our model isn’t a relic of history; it’s the single best way to realize the promise of our future.”

This candor is helpful. Beijing’s dirty secret is that Mr. Xi, in his internal speeches, has for years been describing the competition in precisely these ideological terms. Consider a passage from his seminal speech—kept secret for six years—to the Communist Party Central Committee on Jan. 5, 2013.

“There are people who believe that communism is an unattainable hope, or even that it is beyond hoping for—that communism is an illusion. . . . Facts have repeatedly told us that Marx and Engels’s analysis of the basic contradictions in capitalist society is not outdated, nor is the historical-materialist view that capitalism is bound to die out and socialism is bound to win. This is an inevitable trend in social and historical development. But the road is tortuous. The eventual demise of capitalism and the ultimate victory of socialism will require a long historical process to reach completion.”

The Biden and Xi quotations are almost mirror images of each other. The president’s quotation serves as a belated American rejoinder to Mr. Xi’s furtive call for the defeat of capitalism and democracy, which he made during President Obama’s first term.

For the full commentary, see:

Matt Pottinger. “Beijing Targets American Business.” The Wall Street Journal Saturday, March 27, 2021): A11.

(Note: ellipses in original.)

(Note: the online version of the commentary has the date March 26, 2021, and has the same title as the print version.)

“Publicly Held Companies Will Play the Political Game”

(p. A11) Mr. Chitester was probably the only PBS or NPR station manager who didn’t believe public radio and television should receive subsidies from American taxpayers. But he had a skill in short supply among the pro-capitalist intellectual class: He knew how to popularize free-market ideas, which many thought couldn’t be done on television.

He confesses that he isn’t sure he’d even heard of Friedman when Wallis put the two in touch. But Mr. Chitester says he devoured Friedman’s 1962 book, “Capitalism and Freedom,” and went to meet Milton and his wife, fellow economist and collaborator, Rose, at their San Francisco apartment.

An hour into the conversation, Mr. Chitester brought up a section in the book where Friedman talks about the responsibility of business—also the theme of Friedman’s famous 1970 New York Times essay, “The Social Responsibility of Business Is to Increase Its Profits.” Mr. Chitester described his dilemma: “I said to Milton, based on your philosophy, I shouldn’t be asking companies for money, and if they take your advice, they’re not going to give me any.”

“Bob, don’t worry about it,” Friedman reassured him. “Businessmen don’t like me anyway.” The economist elaborated. “He said private owners—those who own their own companies—they will be sympathetic. But corporations and publicly held companies will play the political game.” In other word, they’d be shy about supporting such a project lest it hurt them when seeking government funding.

. . .

. . . [Chitester] offers two suggestions for those dreaming about doing what he did.

“First,” he says, “you have to be a storyteller. Think of the people that have had meteoric rises to celebrity. They’ve been excellent storytellers. Free-market preachers if you will.”

. . .

. . . [second] to hopefully get people to think at least initially that I’m a nice person,” he says. “Because if they don’t think I’m a nice person, there’s nothing on the face of the earth I can do that will likely persuade them to listen to what I have to say.”

For the full interview, see:

William McGurn, interviewer. “THE WEEKEND INTERVIEW; The Man Who Made Milton Friedman a Star.” The Wall Street Journal (Saturday, Oct 31, 2020): A11.

(Note: ellipses, and bracketed words, added.)

(Note: the online version of the interview has the date Oct. 30, 2020, and has the same title as the print version.)

The Friedman book mentioned in the passage quoted above is:

Friedman, Milton. Capitalism and Freedom. Chicago: The University of Chicago Press, 1962.

Chinese Communists Have Failed to Reform Toward Free Markets

(p. B6) China is the only major world economy reporting any economic growth today. It went first into Covid-19 and was first out, grinding out 3.2% growth in the most recent quarter while the U.S. shrank 9.5% and other advanced economies endured double-digit declines. High-tech monitoring, comprehensive testing and aggressive top-down containment measures enabled China to get the virus under control while others struggled. The Middle Kingdom may even deliver a modest year-over-year economic expansion in 2020.

This rebound is real, but behind the short-term numbers the economic restart is dubious. China’s growth spurt isn’t the beginning of a robust recovery but an uneven bounce fueled by infrastructure construction.

. . .

An honest look at the forces behind China’s growth this year shows a doubling down on state-managed solutions, not real reform. State-owned entities, or SOEs, drove China’s investment-led recovery.

. . .

For years, the world has watched and waited for China to become more like a free-market economy, thereby reducing American security concerns. At a time of profound stress world-wide, the multiple gauges of reform we have been monitoring through the China Dashboard point in the opposite direction. China’s economic norms are diverging from, rather than converging with, the West’s. Long-promised changes detailed at the beginning of the Xi era haven’t materialized.

Though Beijing talks about “market allocation” efficiency, it isn’t guided by what mainstream economists would call market principles. The Chinese economy is instead a system of state capitalism in which the arbiter is an uncontestable political authority. That may or may not work for China, but it isn’t what liberal democracies thought they would get when they invited China to take a leading role in the world economy.

For the full commentary, see:

Daniel Rosen, and Kevin Rudd. “China Backslides on Economic Reform.” The Wall Street Journal (Wednesday, September 23, 2020): A17.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Sep. 22, 2020, and has the same title as the print version.)

Amazon’s Culture “Asks a Lot of Questions”

(p. B2) John Mackey helped popularize organic food when he co-founded Whole Foods Market four decades ago. Over the past several months, his chain of more than 500 stores has scrambled to adapt to another major shift in how Americans buy groceries.

. . .

The pandemic has accelerated an online-grocery movement that Whole Foods was already seeking to capitalize on as part of Amazon.com Inc. Mr. Mackey sold Whole Foods to the online-retail juggernaut for $13.4 billion in 2017, one of the decisions he recounts in his new book out this month, “Conscious Leadership: Elevating Humanity Through Business.”

. . .

WSJ: What merger challenges have you’ve learned from?

Mr. Mackey: Amazon has a culture that asks a lot of questions. We took a little longer to get used to that, but that’s no big deal. That’s how you learn things. They’re trying to understand our business. They want to know everything. And I think that’s healthy.

WSJ: What’s the biggest leadership lesson you’ve adopted from Jeff Bezos?

Mr. Mackey: Amazon wants you to write up a document explaining your ideas, defending them, and then you can have discussions. That’s a practice Whole Foods has adopted. Amazon’s also very data-driven. As opposed to acting from the gut, Amazon says, “Show us the data.” That’s been a good discipline for us. We do it ourselves, even when we’re not talking to Amazon.

For the full interview, see:

Jaewon Kang, interviewer. “BOSS TALK; Rugged Individualism in the Grocery Aisle.” The Wall Street Journal (Saturday, September 12, 2020): B2.

(Note: ellipses added. In both the print and online versions, “WSJ” and “Mr. Mackey” are bolded, as are the questions asked by Jaewon Kang. The bolding is not visible in the theme used for this blog.)

(Note: the online version of the interview has the date Sep. 11, 2020, and has the title “BOSS TALK; Whole Foods CEO John Mackey Says Many People Are Done With Grocery Stores.”)

The book co-authored by Mackey and mentioned above is:

Mackey, John, Steve Mcintosh, and Carter Phipps. Conscious Capitalism: Elevating Humanity Through Business. New York: Portfolio, 2020.