Can Capitalism Survive?

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perceived differently. And the ability of the command economy to centralize power has an irresistible appeal for otherwise shaky leaders of developing nations. As Moynihan observes, many of the developing nations have an "interest in deprecating the economic achievements of capitalism, since none of their own managed economies are doing well."

On the historical record, capitalism clearly is more enriching—in every major way. Capitalism, says Eckstein, "is the only engine that has been developed so far that encourages people to be highly innovative, to develop new products and processes." Profit-seeking capitalists have developed all the vital machines of "postindustrial" society. In contrast, centrally managed economies have rarely done well at developing civilian high-technology industry—largely because inventors lack incentive. In socialist economies the same lack has led to appalling shoddiness in many of the services that provide life's amenities.

Capitalists also have produced a far greater quantity and variety of consumer goods and services than socialist central planners. The reason: for all its weaknesses, the market functions as a superbly adaptive super-computer that continuously monitors consumer tastes. Says Walter Heller: "The private market makes trillions of decisions without any central regulation. It is a fantastic cybernetic device that processes huge amounts of information in the form of the consumer voting with his dollars, the retailer telegraphing back to the wholesaler, the wholesaler to the producer."

Communist nations have paid the market the ultimate compliment by trying to introduce elements of market pricing into their own economies, so far with meager success. The trademarks of Communist economies remain indelible: low productivity, shortages of goods, lengthy queues in stores, years-long waits for apartments. In order to spur initiative, most Communist countries also have huge and growing differences in real income (and perquisites) between commissar and collective farmer. Nikita Khrushchev once replied to a charge that the Soviet Union was going capitalist: "Call it what you will, incentives are the only way to make people work harder."

More important, capitalism's superior productivity is not solely a matter of electric toothbrushes and throwaway soft-drink bottles: the system also does better at filling basic human needs like food. Farmers in the capitalist U.S., Canada and Australia grow enough not only to feed their own peoples but also to export huge surpluses. In contrast, the Soviet Union—although 30% of its workers labor on its vast farmlands—has to import food. So does India, which permits private farming but insists out of socialist principle that the produce be sold at unrealistically low prices.

The freedom of capitalist society at its best must be prized above all. True, some dictatorships are capitalist because most of the economy is privately owned. Still, the major capitalist nations all have popularly elected governments that guard the right of free speech and assembly. Capitalism demands, by definition, that the individual be free within broad limits to spend and invest his money any way he pleases, to own private property and to enter any business or profession that attracts him. The state that grants those significant