The Evolution of Capitalism & Socialism

October 22, 2018

The Mont Pelerin Society General Meeting 2018 was truly an educationally enriching experience. Set against the surprisingly mountainous terrain of Gran Canaria, each day was a lesson in nuanced libertarian thought – the kind of critical thinking that kicks back at the creeping socialist enterprise. Myself and four other scholars were privileged to attend the conference under Ron Manner’s recommendation and I would like to take the opportunity to share three pivotal moments with you.

The conference began with a plenary on evolutionary economics. Eric Beinhocker touched on the symmetry between evolution as a search engine for fit order and capitalism as a process of ‘deductive tinkering’, where both lead to the scaling up of selected designs based on their economic competitiveness. A particularly interesting argument was made by Michael Shermer on applying the ‘God of the Gap’ theory to capitalism. This is where, in evolutionary theory, phenomena unexplainable with current scientific knowledge is unquestioningly attributed to deities. The problem then lies when complacency in economic problem solving sees no other solution than public intervention. In other words, if no existing market solution can be applied to X, it must be solved publicly. To end, both insisted material prosperity resulting from evolutionary capitalism should be measured, not in dollar terms, but by the number of bottom-up solutions created.

A second revelation took place during question time. A gentleman posed the question, that if capitalism underwent an evolutionary process, succeeding each refinement as an increasingly optimal solution, how is it possible for the ideals of socialism to re-emerge in every epoch? I felt this was best answered by Deidre McCloskey in an off-hand remark during a later seminar. Essentially, we will never be able to escape the allure of socialism because it originates within the family unit. It is reborn with every generation and its principles of equal prosperity and shared work ethic instilled with every familial interaction. However, it is reassuring to note that if the logic of capitalism prevails, one quickly realises socialism is not capable of scale, and the extent to which centralism is fostered within the family is limited by its size.

Another topic I found especially pressing was the discussion on Blockchain technologies. Caitlin Long, a Wall Street veteran and advocate of Bitcoin, emphasised how encryption asymmetries hardwired into the structure of Blockchain enabled it to be censorship resistant. Everyone has access to the same information making it easy to verify but costly to attack. Where the current monetary system is dependent on gaining and inevitably breaking, customer trust with each financial transaction, the distributed ledger system encoded in mathematical formulae eliminates the issue of trust. Further, with commercial banks serving as leveraged intermediaries, the prevailing system of fractional reserve banking separates issuer from an investor with ever-increasing layers of security entitlements. The question then becomes a matter of property rights and the extent to which we actually control our money under current regulation.

Lastly, it would be remiss of me to go without mentioning the networking opportunities at MPS. If anyone is to embody the spirit of intellectual conversation and charisma, it is Ron Manners. I cannot begin to explain how thankful I am for the countless introductions and the ability to immerse myself amongst so many academics. Ultimately though, the greatest lesson over the course of MPS 2018, was the realisation of how much I still have to learn on the challenges facing the cause for free markets. I hope to continue educating myself on the concerns highlighted during the MPS General Meeting and building on knowledge gained with the Mannkal Economic Education Foundation.

Josephine Tay

Josephine Tay was one of our 2018 Mont Pelerin Society scholars.