Is Capitalism Limp? - criticism of Edward Luttwak's 'Turbo Capitalism: Winners and Losers in the Global Economy - Brief Article

National Review, April 19, 1999

NEW YORK, FEBRUARY 29

People who stay on their toes waiting eagerly for capitalism to fail are greatly buoyed by the new book by Edward Luttwak, Turbo-Capitalism: Winners and Losers in the Global Economy. His name cheers reluctant readers of economic and political analysis because he is a bright gentleman with keen insights. Years ago he clarified matters by telling us that in Soviet Russia, everything was permitted, except such activity as was banned. In China, nothing was permitted, except such activity as earned an exemption. Dr. Luttwak is now telling us that the current form of capitalism is called Turbo-Capitalism, and that what has happened is that capitalism has forsaken the kind of orderly upward mobility which over recent centuries won for it the sullen approval of the ethical community.

If under capitalism 100 million people all rise, as with the tide, then everyone on board any one of capitalism's boats can cheer the secular movement toward universal economic progress. Aha! This is no longer happening, Dr. Luttwak says, because the grand propellants of modern capitalism don't leave the kind of wake left by the development of a car engine or the generation of electricity. Instead we have the computer. And (I am citing Dr. Luttwak) it does not do for the many what it does for the few. The result is the isolation of a larger and larger class which does not rise with the tide.

A current criticism of the GOP tax proposals that would give everyone a 10 percent reduction in tax bills is criticized in the same spirit. Why these people need to remind us, week after week, month after month, decade after decade, that a 10 percent reduction would mean $300,000 more for Bill Gates and zero more money for the mother of two is hard to understand. That the rich are rich seems to me not in need of reiteration, any more than one would feel it useful to say that a reader, after all, knows the alphabet. The point in a universal reduction of taxes is first to lower disproportionate burdens. If Mr. Gates is paying 50 percent of his earnings to the government the question isn't: Isn't that a nice, jolly figure for somebody that rich? The question is: Do we really believe that a just society should penalize a citizen by as much as 50 percent of what he earns?

Dr. Luttwak has a nice metaphor for it all. The rich are industrious (those of them who are) because they feel the Calvinist drive. The not-rich accept their relative penury because they understand the Calvinist drive of mortification and sacrifice. The not-rich who look at the whole scene and just seethe, are revolutionaries, faux revolutionaries, revolutionaries manques, or inchoate revolutionaries.

The best thing to do is slow down, because capitalism has unexpected and ingenious ways of spreading the wealth. Dr. Luttwak's "deprived, $25,000-per- year mother" is the beneficiary of computer technology from the moment she rises to the moment she returns to sleep, a sleep whose untroubled state may be owing to medical discoveries made possible by?-computer technology.

About this there is general agreement, namely that the value of an education, in economic terms, is greater than ever. Thirty years ago a college education meant a 40 percent increase in average earnings. Now that is 70 percent. Well, how does capitalism handle that problem? A higher percentage of people go to college today than in 1950. The strain comes only when you bump into ineducability. If the special skills required to move around in cyberworld aren't acquirable, then there is relative lack of progress. What do we do about that? We struggle to find other means of increasing productivity. There is an engine that is working on this all the time, because engines are fired by the need to reduce cost and to increase production.

"They"-the true believers-are asking more and more often, What in the name of heaven does the Republican party think distinguishes it from other political parties? What does distinguish the party, or should, is a metaphysical regard for property and a general belief that discriminatory taxation is a violation of a basic civil right, even if the Sixteenth Amendment kicked its way into being, athwart the most basic moral perception, that one does not treat John differently from James just because John earns more money.

Turbo-Capitalism can fire away on its sooty engines, but the basic picture is not changed. -Universal Press Syndicate