Nine MythsaboutCapitalism (Herbert J. Walberg and Joseph L. Bast)

In this ebook, authors Walberg and Bast argue that many persistent
myths about capitalism distort public understanding of how markets
work and obscure their contributions to human progress. In this piece,
they address nine such misconceptions—claims that capitalism caus
es inequality, instability, environmental harm, or moral decline—and
explain how these misunderstandings hinder economic insight and
public trust in market systems. Their goal is to clarify the moral and
practical strengths of capitalism, showing that voluntary exchange,
competition, and private enterprise promote prosperity, equality of
opportunity, and individual freedom when properly understood.
This analysis originally appeared in a chapter from the Hoover In
stitution Press volume Education and Capitalism, where the authors
apply these broader arguments to the American K–12 system. They
suggest that embracing the principles of free markets through privat
ization could restore the quality and efficiency once characteristic of
U.S. education.

HOW CAPITALISM WORKS
reveals the promise of market-based school reforms, but embrac
ing that promise requires overcoming many common myths
about the history and record of capitalism. Those myths, Frie
drich Hayek wrote, “have long been proved not to have been
facts at all; yet they still continue, outside the circle of profes
sional economic historians, to be almost universally accepted as
the basis for the estimate of the existing economic order.”1
Many of the myths discussed here have little or nothing to
do with schooling per se, and consequently are rarely, if ever,
addressed in books on school reform. Yet, these assertions lie at
the heart of the (modern) liberal case against school vouchers,
and they become more important over time as other objections
are answered by sound scholarship and experience. Few read
ers will be persuaded to leave behind years of assumptions
and considered opinion on the basis of the few paragraphs
presented here, but perhaps some can be persuaded to begin
3
the journey. More complete defenses of capitalism can be found
in the books listed at the end of this chapter.
The nine myths discussed in this chapter are

1. Capitalism makes the rich get richer and the poor get
   poorer.
2. Capitalism is inherently unstable: It caused the Great
   Depression.
3. Corporations earn obscene profits at the expense of
   consumers and workers.
4. Corporations engage in predatory pricing, mislead
   ing advertising, and other deviations from the market
   ideal.
5. Unrestrained capitalism leads to environmental
   destruction.
6. Mergers and acquisitions have concentrated economic
   and political power in fewer hands.
7. Capitalism leads to globalism, which destroys culture
   and exacerbates inequality.
8. Without government protection of labor unions, work
   ers would not obtain a fair wage.
9. Capitalism allows and rewards racism and segregation

Read more here.