The Facts Are Right, but the Facts Are Slight

The Capitalist Revolution: Fifty Propositions about Prosperity, Equality, and Liberty, by Peter L. Berger, New York: Basic Books, 262 pages, $17.95

Peter Berger identifies The Capitalist Revolution as a preliminary effort to construct an "empirically oriented theory of capitalism and society," to fill in a "great lacuna…on the contemporary intellectual landscape." To this end he presents 50 propositions as hypotheses subject to falsification.

The factual evidence strongly suggests that capitalism outperforms alternative organizational structures in terms of the familiar success criteria. While Berger implicitly places his faith in this factual record, he at the same time recognizes that capitalism is notoriously unsuccessful in generating its own "supporting myths." In some ultimate sense, the evidence must matter, but the feedback loop remains shrouded in mysteries.

The facts of capitalism's relative success have been available for decades. Berger-like rearrangements of the evidence can, without question, be of marginal value, and the incorporation of a discussion of the Asian capitalist successes is one of the best features of this book. But we need to know much more about why the bridge from facts to organizational structure seems so difficult to cross.

The book should be better than it is. The theme is important; the method is appropriate; the argument is well developed. Aside from Berger's fellow academic sociologists, however, readers will be put off by the proffered stance as "social science" and by the lapses into specialized terminology. What does the word facticity add? He surely aims for a generalized readership among the intelligentsia, but he sometimes fails to escape the rhetorical constraints of his own academy.

Berger seems to overlook what political scientists Robert Dahl and Charles Lindblom taught us three decades ago. We are rarely, if ever, presented with "capitalism" and "socialism" as effective policy options. We do not choose between whole organizational structures. We are faced with pragmatically derived choices between policy options in the small that will incrementally increase or decrease the politicization of our lives. And many who would express a preference for increasing politicization in the small would categorically reject the notion that they are choosing "socialism" over "capitalism" as an organizing principle for the whole social order.

Thus the failure to recognize the externalities of policy change may swamp in influence any understanding of the factual record. The federal government's bailout of a bank or an automobile firm is not likely to be opposed on an empirically grounded argument in favor of capitalism as a system of order. Such a bailout is much more likely to be opposed on the philosophically grounded argument that such an increase in politicization of the economy violates the principle by which the capitalist system operates.

Why do not the successes of capitalism, and especially as measured by the liberties and economic well-being of the masses, lead directly to political movement toward capitalist regimes? Peter Berger recognizes that the answer here, with respect to both the advanced socialist and the developing countries, lies in the incentives facing the persons and groups who hold the reins of political power. Success criteria for these effective decision makers are wholly different from those that might emerge from the ethical norms of the social philosophers. But exposure of the differences between the realities and the myths deserves greater emphasis than this book provides.

My criticisms do not add up to the suggestion that Berger should have written a different book. He has indeed marshaled the facts of capitalist success. These facts, however, must be supplemented by other evidence and analytical arguments. Ideas and analyses must join facts in the development of any effective political understanding.

James M. Buchanan, University Distinguished Professor at the Center for Study of Public Choice at George Mason University, received the 1986 Nobel Prize in economics.