Economic Theory

Myths and straw men

In my new IEA monograph Selfishness, Greed and Capitalism, I discuss some of the most common straw men and myths about free-market capitalism. Some ideological disputes cannot be settled by evidence alone, but factual statements can be checked and, if wrong, soundly rebutted. This is not a book about economic theory and it rarely touches on genuine academic controversies. It merely seeks to set the record straight where factual errors have become conventional wisdom.

The book is divided into two sections. The first deals with ‘straw man’ assertions that are sometimes made about free-market economics. For critics of the market economy, it is easier to respond to absurd distortions of their opponents’ position than to tackle the arguments directly. Four of the most common exaggerations and misrepresentations about economists’ beliefs and assumptions are dealt with here, namely that economists believe that people are (a) totally greedy, and (b) completely rational, and that economists themselves believe that (a) GDP is all that matters, and (b) they live in a free market.

The second part of the monograph addresses specific claims that are frequently made about economic life in the era of supposed ‘neoliberalism’. Some of these, such as the timeworn lament that ‘the rich get richer and the poor get poorer’ have been parroted for years throughout the world. Others, such as the TUC’s claim that Britain is a country in which ‘inequality soars’ and ‘social mobility has hit reverse’ – or the Guardian‘s claim that Britain is ‘Europe’s sweatshop’ – are more specific to the UK in the twenty-first century. All can be tested by looking at data from organisations such as the Office for National Statistics.

Along the way, the book discusses various myths-within-myths and outright falsehoods that can most charitably be attributed to misunderstanding. Many of these are ‘zombie arguments’ which have been destroyed many times before and yet continue to walk amongst us. In light of the sound rebuttals these claims have received from the hands of eminent scholars over the years, it is too much to hope that my little monograph will lead to more factual accuracy coming from politicians, the press or the pub bore. Nevertheless, we offer it as an early Christmas present to those who believe that whilst comment is free, facts really should be sacred.

The straw men

Capitalism relies on greed and selfishness

Economists believe people are perfectly rational

Economists think GDP is all that matters

Economists think we live in a free market

The myths

The rich get richer and the poor get poorer

We are working ever longer hours

Rich countries will not benefit from more economic growth

There is a paradox of prosperity

Inequality is rising in Britain

Inequality is the cause of health and social problems

If you’re born poor, you die poor

Selfishness, Greed and Capitalism can be downloaded here.

Head of Lifestyle Economics, IEA

Christopher Snowdon is the Head of Lifestyle Economics at the IEA. He is the author of The Art of Suppression, The Spirit Level Delusion and Velvet Glove; Iron Fist. His work focuses on pleasure, prohibition and dodgy statistics. He has authored a number of papers, including "Sock Puppets", "Euro Puppets", "The Proof of the Pudding", "The Crack Cocaine of Gambling" and "Free Market Solutions in Health".