Wealth and Worth

...During the previous decade, he reminds us, the moral, cultural and political ramifications of capitalism were being enumerated by critics on both the Left and Right...

...By contrast, there is a whole chapter devoted to Hayek, in both senses of that word...

...Müller rightly chides Hayek for "his propensity to exaggerate the scope of his very real insights," and adds that he had "the crystal-clear vision of the one-eyed man...

...We cannot answer these questions abstractly, nor can we answer them once and for all...

...Hegel, Karl Marx, Matthew Arnold, Max Weber-as well as some who may be less familiar to many American readers, such as Justus Moser, Georg Simmel, Werner Sombart, Georg Lukâcs, and Hans Freyer...

...He begins with Voltaire, goes on to Adam Smith, and winds up with Joseph Schumpeter, John Maynard Keynes, and Friedrich Hayek...

...We tend indeed to learn more from our own mistakes than from the mistakes and debates of the past...

...Partly this is because he shows quite clearly that most of them preferred a timeless, static world-whether it was the benevolent feudal order favored by Moser, or the state of perfect freedom favored by Hegel, Marx and Marcuse...

...From Schumpeter he obtains the role of the market as the hand maiden of innovation...

...Less successful is Muller's attempt to extract from the critics of capitalism solutions to some of the issues he raises...

...But he fails to sort out those like Smith, Marx, Schumpeter, and Hayek, whose views on the effects of capitalism were their main contribution, from those like Voltaire, Arnold, and Hegel, whose views were more nearly derivative ofor even incidental to-their main intellectual contributions...

...Müller himself acknowledges that Lukâcs drew on Lenin (in What Is to Be Done...

...It arose from the age of discovery-scientific as well as geographic-and from the urbanization of Europe that followed the agricultural revolution and opened the way for the industrial revolution...

...Along the way, we encounter other great names-Edmund Burke, G.W.F...

...It can perhaps be argued that they were not great thinkers, but it would be equally hard to argue that Freyer and Lukâcs were great thinkers...

...Lenin is mentioned only in passing, although his reworking of Marx'predictions about the collapse of capitalism (in Imperialism: The Highest State of Capitalism) was original and influential...

...The core of Keynes' contribution to economic analysis is collapsed into a single paragraph, so two of his innovations-concerning savings and interest-are muddled into one...

...Unfortunately, great thinkers rarely ask mundane questions involving matters of more or less, yet they are the ones we must answer: How much inequality is truly required to reward innovation...

...Two other omissions stand out...

...Müller is remarkably successful in extracting from three of his authors the fundamental attributes of the market economy...

...Furthermore, the efforts of latterday Socialists, such as Oscar Lange, to point out what Marx and Lenin did not tell us-how a planned economy could use prices, ratherthan Marx' obsolete labor theory of value, to allocate scarce resources efficiently-are totally neglected...

...And how does he help us respond to what remains unanswered today...

...The archenemy of capitalism, Marx, commands the longest chapter, but all of the other long chapters go to the friends of the market economy-Voltaire, Smith, Burke, Schumpeter, and Hayek...

...But capitalism is the child of change...

...Müller therefore sets out to explain how European thinkers have assessed the broader implications of the market economy...

...From all three plus Burke, he also extracts an essential caveat: The market must be competitive if it is to function properly...

...He is also careful to caution that each one can only be fully understood by paying artention to time and place-the world each author lived in, his own life and, in some instances, his own involvement with the market economy...

...Previous tariff-cutting rounds, however, were launched by the Administrations of Presidents Harry S. Truman and John F. Kennedy Let us ascend, though, from quibbles to central questions: How well has Müller achieved his main aim of demonstrating that the market economy and its ramifications have been at the focus of modern European thought...

...It accommodates and promotes competition, innovation and accumulation...

...Similarly, the positions of Ludwig von Mises and Hayek, who took part in the debate on the feasibility of central planning, are cited, but not the Socialists' important thoughts on the subject...

...Like earlier episodes, too, it has produced reasoned demands for reform and angry demands for retribution...

...What goods and services should the state provide...

...From Hayek he obtains the role of the market as the conveyor of information...

...How many votes should money be allowed to buy...

...We are likely to alter our answers whenever we have strayed too far in one direction or another...

...Consider the page distribution...

...From Smith he obtains the role of the market in harnessing self-interest to the efficient use of scarce resources...

...They have indeed acquired new prominence and urgency...

...These policies were continued and intensified by their Laborite and Democratic successors...

...Those issues have not gone away...

...Still, Müller credits him with having enormous influence on Prime Minister Margaret Thatcher and President Ronald Reagan-and then gives them too much credit: "In launching the Uruguay Round of the international General Agreement on Tariffs and Trade in 1986...

...At one point, he quotes a sentence inKeynes' 1930 lecture on "Economic Prospects for Our Grandchildren" that alludes to the Jews' "love" of compound interest...

...That's true...

...Like earlier booms and bubbles mentioned in Muller's book, the long boom of the 1990s was fostered by cupidity and fueled by credulity...

...Muller gives a great deal of attention to the role of anti-Semitism in the European critique of capitalism...

...The rest of the critics of capitalism-Möser, Sombart, Lukâcs, Freyer, Marcuse-receive much less space...

...And there are subtle biases lurking in this book...

...How much regulation is required to protect competitive capitalism against collusive capitalists...

...This is, says Muller, "a rhetorical flourish worthy of Marx or Sombart," and though he notes that Keynes was "more restrained" in the General Theory, published six years afterward, he wonders whether the lecture represented the true Keynes...

...that is how it contributes to economic growth...

...Muller decided to write this book in the mid-1980s...

...We also encounter Herbert Marcuse, who is strangely paired with Keynes...

...Economists are narrowly concerned with the way that the market economy functions -how it allocates resources to meet our material needs, now and in the future...

...In several other ways, too, Muller is kinderto Hayek than to Keynes...

...Utopia does not...

...If the past has something important to teach us, it is the lesson Müller teaches by showing so decisively that yesterday's debates were shaped by the passions, prejudices and personal histories of those who sought to pluck truth from the traumas of their times...

...Thatcher and Reagan pursued Smithian policies of reducing tariffs to encourage international trade...

...What is worse, Muller does not deign to devote a single page to the more moderate critics of capitalism-the German Revisionists, such as Eduard Bernstein, or the British Fabians, such as Sidney and Beatrice Webb...

...In fact, he goes out of his way to do so...

...They were creatures of their times, as were Bernstein and the Webbs...

...Reviewed by Peter B. Kenen Walker Professor of Economics and International Finance, Princeton University Capitalism, says Jerry Müller, is too important and complex a subject to be left to economists...

...They warned that the forces of commerce were subverting civic virtue, work was losing its meaning, new needs were being created as fast as new goods were being produced, the international market was destroying cultural diversity, the rich were getting richer while the poor were getting poorer, and market values were eroding the very traditions and institutions capitalism itself depends on...

...Muller tells us at the start that all of the thinkers he will survey have something important to say...

...to explain the intellectuals' role as the revolutionary vanguard of the proletariat...

...Furthermore, the debate about globalization has revived and recast an older one about the portability of Western capitalism-whether it can meet the needs of the world's poor in settings much different from those in which the market economy has flourished...

...They are insufficiently concerned with the ways that the market economy impinges on our private and public liveshow it defines our aspirations and frames our relations with others, individually and collectively...

...Later Muller dwells on Hayek's close identification with Vienna's Jewish liberals, although he concedes that Hayek's stance derived from his belief that "the fate of the Jews was closely aligned with the fate of liberalism, and the fate of liberalism was inextricably intertwined with the fate of capitalism...

...The collapse of Enron and WorldCom, the lies told by securities analysts, and the complicity of the accountants have led us to question the prudence and probity of those who manage the market economy...

...that is how it acts as the invisible hand...