Opinion | I Was Wrong About Capitalism

I have a specific way I tend to be wrong. I fall behind. Every day the world turns and every day I try to adjust my belief system to the realities of the moment. You would think I’d be able to recognize the emerging challenges and shifting tectonics fairly quickly. As a newspaper columnist, I’m paid for one skill above others: careful observation. But sometimes I’m just slow. I suffer an intellectual lag.

Reality has changed, but my mental frameworks just sit there. Worse, they prevent me from even seeing the change that is already underway — what the experts call “conceptual blindness.” I’m trying to address one period’s problems through the last period’s frameworks.

It’s not until I dismantle and reconstruct those preconceptions that everything becomes obvious — until the next historic change.

Let’s start at the beginning.

When I was in high school and college, I was a democratic socialist. I was entranced by the left-wing radicals of the 1930s — the way they wrote, painted, marched and organized on behalf of working men and women. I saw the world through the lens of class struggle.

That was surely a useful frame for the 1930s, when the economy was heavily industrial and when millions were hungry and out of work. But when I was in college in the early 1980s, the economy was not like that. America was suffering from stagflation — high unemployment and high inflation at the same time. The chief problem was sclerosis. Over the years special-interest groups had clogged up the economy with overly burdensome regulations, work rules, perverse tax structures and all the other sinecures the economists call “rent seeking.”

The United States needed a shot of dynamism to get the entrepreneurial and innovative juices flowing. It took me until about 1985 to realize that the people I disdained — Ronald Reagan and Margaret Thatcher — were actually doing something useful and needed.

So off to The Wall Street Journal’s editorial page I went, to drink deep from the wells of free-market thinking. For a while this bet on free-market economic dynamism seemed to be paying off. It was the late 1980s and 1990s — the golden days of globalization, liberalization, the early creativity of Silicon Valley.

In the early 1990s, The Journal sent me on many reporting trips to the U.S.S.R. and, later, Russia, and everything that was uncool in New York was cool in Moscow, so to be a right-wing editorial writer was to be cutting-edge and hip. I paid close attention to all the privatization plans that were floating around. If state property could be distributed to the masses, then a new capitalist Russia could be born.

I saw but did not see the enormous amount of corruption that was going on. I saw but did not see that property rights alone do not spontaneously make a decent society. The primary problem in all societies is order — moral, legal and social order. It took me a while to see that what Russia really needed was not privatization first, but law and order first.

By the time I came to this job, in 2003, I was having qualms about the free-market education I’d received — but not fast enough. It took me a while to see that the postindustrial capitalism machine — while innovative, dynamic and wonderful in many respects — had some fundamental flaws. The most educated Americans were amassing more and more wealth, dominating the best living areas, pouring advantages into their kids. A highly unequal caste system was forming. Bit by bit it dawned on me that the government would have to get much more active if every child was going to have an open field and a fair chance.

I started writing columns about inequality. I called around to my right-leaning economist friends and they sensed inequality was a problem, but few had done much work on the subject or done much thinking on how to address it.

I saw but didn’t see. By the time the financial crisis hit, the flaws in modern capitalism were blindingly obvious, but my mental frames still didn’t shift fast enough. Barack Obama was trying to figure out how to stimulate the economy and I still had that 1990s “the deficit is the problem” mind-set. I wrote a bunch of columns urging Obama to keep the stimulus reasonably small, columns that look wrong in hindsight. Deficits matter, but they were not the core challenge in 2009. I opposed Obama’s auto bailout on free-market grounds, and that was wrong, too.

Sometimes in life you should stick to your worldview and defend it against criticism. But sometimes the world is genuinely different than it was before. At those moments the crucial skills are the ones nobody teaches you: how to reorganize your mind, how to see with new eyes.

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