Maybe capitalism works better when the skeptics are in charge

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John Hopkins economist Christopher Carroll examines the historical evidence on how the economy and the stock market perform better under Democratic administrations than Republican ones, and speculates:

The answer can’t be found by drilling down (so to speak) into the specific policy proposals of the two parties, which have evolved so much over the years as to defy any kind of meaningful generalization.

Nor are there any clearly identifiable differences in doctrine that should translate into a reasonable expectation of better economic performance under one party or the other.

Perhaps the best explanation has to do with attitudes, not doctrines: Maybe capitalism works better when its excesses are restrained by skeptics than when true-believers are writing, interpreting, judging, and executing the rules of the game. (The Democrats are surely the more skeptical of our two parties).

Carroll also writes:

As the twentieth century recedes in the rear view mirror, it increasingly seems that for better or worse, the defining manifesto of the recent era has been Milton Friedman’s Capitalism And Freedom. But that book’s power derived partly from its fierce independence from the orthodoxies of its time. Friedman’s voice was a skeptical breath of fresh air when the reigning viewpoint was a kind of smug pseudo-socialism that did not recognize the astounding power of markets to accomplish desirable aims. But now, the reigning Republican orthodoxy is a kind of smug pseudo-Friedmanism which believes that markets left to themselves can do no wrong; perhaps it is time for another breath of fresh air.

The book for the new epoch has not been written yet, but I have a proposed title: Capitalism and Skepticism. Skepticism might not be as bracing as freedom, but it’s something we could have used a bit more of in the past few years.

No no no. It’s called The Myth of the Rational Market, and it will be published by Collins next spring/summer. The book’s page–which had been making unfulfilled promises for years–seems to have disappeared, but the thing really is on track. I just got the manuscript back from my editor last week, and he doesn’t want any huge changes.

Update: Okay, here’s the Amazon page. It says the book came out three weeks ago. If only.