Capitalism Still the Only Game in Town

A Business Week article in 1979 proclaimed "The Death of Equities." A few years later, a vast, long-running bull market in stocks began. In 1997, the Financial Times similarly announced "The Death of Gold."

Our current decade, needless to say, has brought a giant bull market in the shining metal, "barbarous relic" though it was claimed to be.

With the financial crisis of 2007-09, we were treated to announcements of "The Death of Capitalism." This is just as hopeless a prediction as the other two were. The bull market in capitalism also will return, because it will continue to be unmatched at creating economic well-being for ordinary people on the trend--but it will not do so without its inevitable cycles of booms and busts.

The future of capitalism, which is better thought of as economies based on enterprise, market competition and uncertainty, is robust on the trend line, but volatile, as always. People who think capitalism is about equilibrium, who value above all stability and theorise that markets will create it, are shocked by this volatility. This is to miss the essence of the matter.

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Alex J. Pollock is a resident fellow at AEI.

Photo credit: iStockphoto/Lyle Koehnlein

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About the Author

 

Alex J.
Pollock
  • Alex J. Pollock is a resident fellow at the American Enterprise Institute (AEI), where he studies and writes about housing finance; government-sponsored enterprises, including Fannie Mae, Freddie Mac, and the Federal Home Loan Banks; retirement finance; and banking and central banks. He also works on corporate governance and accounting standards issues.


    Pollock has had a 35-year career in banking and was president and CEO of the Federal Home Loan Bank of Chicago for more than 12 years immediately before joining AEI. A prolific writer, he has written numerous articles on financial systems and is the author of the book “Boom and Bust: Financial Cycles and Human Prosperity” (AEI Press, 2011). He has also created a one-page mortgage form to help borrowers understand their mortgage obligations.


    The lead director of CME Group, Pollock is also a director of the Great Lakes Higher Education Corporation and the chairman of the board of the Great Books Foundation. He is a past president of the International Union for Housing Finance.


    He has an M.P.A. in international relations from Princeton University, an M.A. in philosophy from the University of Chicago, and a B.A. from Williams College.


  • Phone: 202.862.7190
    Email: apollock@aei.org
  • Assistant Info

    Name: Emily Rapp
    Phone: (202) 419-5212
    Email: emily.rapp@aei.org

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