Economic Theory

Book review: “The Capitalist Manifesto: Why the Global Free Market Will Save the World” by Johan Norberg (Part 1)

I first came across Johan Norberg almost exactly 20 years ago, when the German translation of his book In Defence of Global Capitalism came out. The book argued that globalisation was a success story. In large parts of the developing world, poverty, infant mortality and illiteracy were falling, life expectancy was rising, nutrition was improving, and democracy was spreading. These positive trends were, according to the younger Norberg, likely to continue, and they were not a product of chance. They were a result of the spread of capitalism.

At the time, this was considered an outrageous thing to say. It went completely against the zeitgeist. The early-to-mid-2000s were the heyday of the anti-globalisation movement. The almost universally accepted conventional wisdom of the day was that “globalisation” meant the exploitation of poor countries by multinational corporations, and that the world was going from bad to worse.  

One reviewer wrote in 2003:  

“I have seldom read so much drivel packed into one book […]  

The author has apparently still not evolved beyond the political understanding of his late-adolescent “Anarchist Party”, with which he won the school elections in 1988 […] 

Norberg’s genius was put to better use when he was head boy of the “Anarchist Party” […] 

The market economy does not deserve such lousy defenders”

No, that was not some communist. That was Norbert Blüm, the former West German Minister of Labour, and a Christian Democrat. So you can imagine how the book was received by the Left!

With his most recent book The Capitalist Manifesto: Why the Global Free Market Will Save the World, Norberg goes back to the beginning. It is not technically a sequel to In Defence of Global Capitalism, and you can definitely read the former without having read the latter, but it picks up its main themes again, and frequently refers back to it. 

Norberg starts with some stocktaking of what has happened in the meantime. The era of “globalisation” is generally said to have started around 1990, so when In Defence of Global Capitalism came out, it was still in its relatively early stages. We now have three decades to go by. What happened in those three decades?

Quite a lot. Extreme poverty fell from 38% of the world’s population to less than 10%, child and infant mortality fell from 9.3% to 3.7%, global life expectancy increased from 64 years to over 70 years, illiteracy dropped from 25.7% to 13.5%, child labour decreased from 16% to 10%, and so on, and so forth. The countries and regions which performed best are the ones which did precisely the opposite of what the anti-globalisation movement wanted them to do, while the most spectacular counterexample is the movement’s erstwhile poster child of Venezuela.  

I am very much aware of the temptations of confirmation bias and motivated reasoning, and I do try to seek out evidence that goes against what I want to believe. But with the greatest intellectual self-discipline in the world – how can anyone browse the pages of Our World In Data, Human Progress or Gapminder today without concluding that Norberg was 100% right, and his opponents 100% wrong?   

But Norberg is far more generous to his opponents than I would have been in his stead. There is not much self-congratulation going on. 

Perhaps this is partly due to the fact that it does not feel like much of a victory. Sure, the anti-globalisation movement has long faded into obscurity. Some of our younger readers are probably not even aware that it was ever a thing. But have classical liberals benefited from this, in any way? Has being right made us more successful in winning over hearts and minds? Are there more people now who embrace free-market capitalism, or who at least accept that, even if they don’t like it, it is the most powerful motor of economic and social progress known to man?  

Very far from it. Anti-capitalists are intellectual nomads with short-term memories. They hop from one fashionable cause to the next, never staying in any one place for too long, and quickly forgetting about the specifics of their previous pet cause. By the time the verdict is in on the assertions of movement X, everyone has already moved on to movement Y, and nobody cares anymore. They are a moving target, and the only common thread that connects this succession of fashionable movements is anti-capitalism.

Which is bad enough already. What makes matters worse is that, in addition to the anti-capitalist Left, we have also seen the rise of an anti-liberal Right. (Here, Norberg mainly concentrates on the situation in the US, but there is a UK equivalent, namely the “communitarians” or “post-liberals”.) Where In Defence of Global Capitalism was able to concentrate on one enemy, The Capitalist Manifesto has to fight a two-front war. Some chapters are primarily aimed at the anti-capitalist Left, others are primarily aimed at the anti-liberal Right, and some could apply to both in roughly equal measure.

Chapter 3 concentrates on the claim that free trade has led to a “deindustrialisation” of the West, and the misplaced nostalgia for the economic structure of the postwar decades that usually goes with it. Norberg shows that automation and productivity improvements have contributed far more to job losses in the manufacturing industries than free trade, and that, in any case, job losses are not a bad thing. The same processes that make some jobs redundant also lower consumer prices and thereby make us richer, which then creates demand for new jobs in other sectors. These are, of course, not always dream jobs, but overall, there is no evidence that levels of job satisfaction are any lower than they used to be in previous decades.

There are genuine problems, though. In some Western countries, NIMBYism is driving up the cost of housing. This makes it harder for people to move to where the best job opportunities are, and it gives younger generations a worse deal. In addition, the extension of occupational licensing is erecting market entry barriers. None of this has anything to do with “neoliberalism” or “hyperglobalisation”, though – quite the opposite.


Continue to Part 2


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Head of Political Economy

Dr Kristian Niemietz is the IEA's Head of Political Economy. Kristian studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). He also studied Political Economy at King's College London, graduating in 2013 with a PhD. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and taught Economics at King's College London. He is the author of the books "Socialism: The Failed Idea That Never Dies" (2019), "Universal Healthcare Without The NHS" (2016), "Redefining The Poverty Debate" (2012) and "A New Understanding of Poverty" (2011).

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