What is the state of American capitalism today? It's easy to be pessimistic. Hillary Clinton, the Democratic presidential frontrunner, thinks it's a political winner to criticize the "gig economy" that allows people to earn money on their own terms, be it selling homemade crafts on Etsy or ferrying passengers around town for Lyft. And just behind Clinton in the Democratic race is Bernie Sanders, a self-avowed socialist who likes to say the U.S. should be more like Scandinavia.
The idea that free enterprise is on the outs is nothing new. In a speech adapted for the April 1984 reason, William H. Meckling and James E. Gleason argued that capitalism was in dire straits. They were rebutting a 1981 essay by Nobel Prize winner George Stigler, who posited that capitalism was at "high noon" because American business owners had achieved the power to influence regulations for their own benefit.
In "American Capitalism at Sunset," Meckling and Gleason noted that there's "no good reason that the health of capitalism should be identified with the success of businessmen in tapping the political process," because free market capitalism and crony capitalism are not the same thing. The authors pointed to the proliferation of regulations as evidence that capitalism was, in fact, faltering.
"A more reliable measure of capitalism's role in society is…the fraction of output accounted for by government expenditures. By that measure, the descent of capitalism from its zenith began long ago," they wrote. "Other indicators that lead to the same conclusion are the fraction of wealth owned by governments, and the extent to which private industry is being nationalized."
Thirty years on, business executives continue to collude with lawmakers for their mutual benefit. The Affordable Care Act imposed an unprecedented level of control over health insurance decision making, while billions in "green energy" subsidies have been funneled to connected industries under the auspices of fighting climate change. The Heritage Foundation estimates that the Obama administration imposed 26 new major rules in 2013 alone.
But the last three decades have also seen a worldwide reduction in poverty of unparalleled magnitude. The fall of communism and a proliferation of new technologies made possible by freer markets has fueled wealth creation like nothing seen before. Cronyism and overregulation remain problems, but as long as people are free to exchange goods and services, the sun hasn't set on capitalism yet.