The Media's Top 10 Economic Myths of 2008 (No.10)


10. Capitalism is dead or dying

Media myth: From Michael Moore to CNBC, people wondered about the end of free-market capitalism.

Originally published by the Business & Media Institute

Is free-market capitalism really at death's door? That's what the media have claimed, beginning with Pulitzer-prize winning columnist Steven Pearlstein's obituary for capitalism Aug. 1. Since then, the claim has been repeated in The Washington Post, on CNBC and CNN. Even controversial filmmaker Michael Moore, reacting to the Wall Street bailouts, claimed capitalism was dead on "Larry King Live."

A front-page analysis in the Oct. 10 Washington Post declared that "The worst financial crisis since the Great Depression is claiming another casualty: American-style capitalism."

That story by staff writer Anthony Faiola accurately portrayed the potential government takeover of elements of the financial system as un-capitalistic, but incorrectly blamed capitalism for economic devastation.

"[T]he hands-off brand of capitalism in the United States is now being blamed for the easy credit that sickened the housing market and allowed a freewheeling Wall Street to create a pool of toxic investments that has infected the global financial system," Faiola wrote. His story had no rebuttal from free market economists who say this was not market failure after all. It also claimed that countries have lost respect for the American brand of capitalism in the wake of U.S. financial turmoil.

CNBC also worried Sept. 19 that capitalism "seems to be dead." That was what former Bloomberg South Europe bureau chief Rob Cox told CNBC's "The Call" viewers while talking about taxpayer funded bailouts "I don't know what it means. I don't know how we're going to regulate. I don't know how we're going to legislate going forward but its dead."

But not everyone took such a pessimistic tone. Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, and current senior fellow at the Hudson Institute said "reports of capitalism's death are greatly exaggerated," in an Oct. 16 column.

"Although Washington is using non-market solutions in an attempt to unfreeze the credit markets, they have not succeeded, and are unlikely to be permanent. The next administration, Republican or Democratic, might take over more of the economy," Furchtgott-Roth said. "But if one country in our global economy proceeds down an unsuccessful socialist road, others will demonstrate the effectiveness of capitalist measures—just as America led the way with tax cuts in the 1980s."