Refuted By Events
By Bryan Caplan
Did the financial crisis of 2008 refute capitalism once and for all? I was just on Al Jazeera to debate this question. My opponents – and, I suspect, my host – thought so. Obviously I disagreed about capitalism. But even if I were a staunch socialist, I would never claim that the events of 2008 “refuted” much of anything. Vivid, dramatic news often sways public opinion about policies and philosophies. But such news should have little influence over the judgments of serious thinkers. Unless…
1. The events are extremely bad, with no significant countervailing events in the other direction over a long period of time.
2. The events occurred under an extremely pure form of a particular policy or philosophy.
3. The events can’t plausibly be linked to luck.
From this perspective, it’s absurd to claim that capitalism was refuted by the events of 2008. (1) World output fell by a few percent. Bad, but hardly an historic disaster. And there were many obvious countervailing events – like the massive increase in world output during the preceding decade. (2) As I pointed out on Al Jazeera, every affected country had a strong admixture of markets and government. Why would mere events pin the blame on markets? (3) Almost everyone was shocked by 2008 – a classic sign of bad luck at work.
What real-world events would measure up to my standards? I’d be willing to argue that extreme nationalism was refuted by the history of Nazism, and radical socialism was refuted by the history of Communism. Both sets of events were awful; neither produced significant countervailing events; and both showed philosophies in very pure forms. You could argue that Nazism and Communism suffered from the bad luck of extremely wicked leaders. But given the two philosophies’ disdain for division of powers and embrace of unrestrained hatred of their enemies, the atrocities of Lenin, Stalin, Hitler, and Mao reveal a systemic flaw in the philosophies themselves.
Any other examples you’d care to defend? Again, my question isn’t whether some policies or philosophies are wrong. My question is whether you can honestly point to decisive events that close your case.