Capitalism Classic

Everyone's chattering about reformulating capitalism, at the World Economic Forum, Davos, and elsewhere. But New Capitalism just might be like New Coke—much ballyhooed and a little different, but not necessarily better. Steve Forbes defends Capitalism Classic, suggesting that it's time to rediscover "the essence of entrepreneurial capitalism":

There are bull and bear markets. There are calamities that shake our faith. But the principles that support economic growth endure. Democratic capitalism requires:

The rule of law, especially property rights.

Money that is stable in value.

Low tax rates.

Minimal impediments to doing business and starting new businesses.

Reducing or removing trade barriers.

The blunt truth is that government spending is a poor substitute for private business and consumer investing and spending. Were it otherwise, the Soviet Union would have won the cold war and Japan, which had numerous government-funded stimulus packages in the '90s, would have escaped its 12-year recession.

As Joseph Schumpeter, the 20th century's foremost economist, observed, dynamic growth in the standard of living requires constant innovation and volatility. That's capitalism, and it works. It is our way forward.