“As American capitalism blossomed, some individuals, of course, earned extraordinary riches. In 1892, there were 4,050 millionaires, with less that 20 percent of these individuals having inherited their wealth. The rest created it, and, in the process, reduced poverty, expanded general prosperity, and made it possible for millions of immigrants looking for opportunity and freedom to find both in America.” (page 22, The Triumph of Economic Freedom)
Celebrating Truthful Patriotism in Economics
Our American news media has noted all summer that the World Cup has attracted many Europeans to America who had never visited us before, had a terrific time, and loved what they found. Contrary to popular European belief (perhaps largely a function of their own media), they encountered freedom, spaciousness, prosperity, happiness, fun, and little poverty. And, of course, air conditioning. Conclusion? America is quite ok and its system is working well.
What is America’s system? Of course, we have many systems. The Constitution establishes a republic fundamentally based on democracy, rather than inherited status. Our economy is based on free market principles establishing a strong private sector that most call capitalism.
Of course, Marxists see capitalism not as a self-contained economic system, but as an historical epoch where society’s entire political economy via ownership of the means of production are controlled by a minority of greedy capitalists, called the bourgeoisie. While cultural Marxists modified their narrative describing the struggle between capitalists and workers after World War I, they see the inherent nature of capitaism’s zero sum game of theft remaining. To Marxists, capitalism is an evil that must go and inevitably will fall.
Disregarding the observations of European soccer (football) fans this summer, our mainstream media continues a longstanding practice begun during “The Great Recession” of harping on Marxist lies about capitalism, which has become the foundation or central keel of the Democratic Party today. With this in mind and in honor of this month’s 250th anniversary of America, our Praxis Circle Book of the Month is The Triumph of Economic Freedom: Debunking the Seven Myths of American Capitalism by Phil Gramm and Donald Boudreaux (2025, 197 pages).
Human Flourishing and Prosperity are Earned
The Triumph of Economic Freedom sets the record straight about greedy, elitist, capitalist millionaires and the entire system. By the way, a million dollars is still a lot of money (as it was in the 1800s), and the number of these self-interested parasites continues to grow. Let’s offer a few statistics.
While the number of persons making over a million in Virginia increased from 6,764 in 2010 to 18,720 in 2022 (estimated Virginia population 8,631,393), Virginia ranked only 32 on the basis of percentage increase (176%) during that 12 year period among all 50 states.
In 2022, the top 1% of earners made $663,00 or above. The top marginal federal tax rate (37%) applies to income at or above $639,950, though the average million dollar earner pays approximately 26% due to deductions. Finally, the top 1% of federal taxpayers pay 40% of total taxes, the top 5% pay 66%, the top 10% – 72%, and the top 25% – 89%. Almost half of Americans receive more from the federal government than they pay in taxes.
What Europeans discovered this summer is that the wealthiest country in the world is flourishing and prosperous, and that poverty has been virtually eliminated. Our millionaires (including many in Northern Virginia in the Democratic Party) must be doing something right.
We have written about Phil Gramm’s splendid work in the field of economics before, and his 2022 book, The Myth of American Inequality, was our Book of the Month in January 2024. There, Senator Gramm and his team divided America’s population into quintiles by income to show how false the media’s and Democratic Party’s narrative about inequality, affordability, living standards, the American Dream, and “capitalism” truly are. Facts mean things.
Senator Gramm (age 84) was a terrific leader in Congress and the Senate from Texas between 1979 and 2002, where he taught economics at Texas A&M prior to entering politics. Originally from Georgia (being educated through his Phd at the University of Georgia), Senator Gramm was a leader in banking matters, balancing the federal budget, welfare state reform, and deregulation. Notably, Gramm switched from the Democratic to Republican Party in 1983 during the “Reagan Revolution,” when so many “Southern Democrats” and working class people nationally realized they were in the wrong party. (It is time for similar switching again from the DP to the RP as the DP has continued its relentless surge since Obama to the Far Left.) Gramm is an AEI fellow and an excellent speaker and writer, noted for commonsensical, understandable communication.
His co-author, Donald Boudreaux (age 67) is equally notable and influential from the academic world as former Chair of the distinguished Economics Department at George Mason University just outside Washington, D.C. Our legendary Praxis Circle Contributor Walter Williams (1936 – 2020) spent most of his career in the George Mason Econ Department, and Dr. Boudreaux often looks to another Praxis Circle Contributor, Deirdre McCloskey, for inspiration. (She is cited several times in The Triumph.) Dr. Boudreaux and I share a degree from the University of Virginia Law School (mine from 1982 and his from 1994). In any case, as my many friends from Louisiana will all agree, one has got to love anyone from New Orleans with the first or last name, Boudreaux.
My one sentence summary of The Triumph is that if you want to consider yourself educated in American economics, then you must buy and consume this easy-to-read classic. The list below offers my summary of the seven myths Gramm and Boudreaux credibly debunk. I will not explain how they do so here, but note that their explanations are consistent with my own memory and experience in American business over the last 50 years. A consistent theme across each myth is that it’s actually the federal government that time and again is the primary cause of serious economic problems, not the source of solutions.
The lie involved? Government continues to create the problems it then runs in to claim credit for solving. We see this in America on both sides of the political aisle. Government does this because it can. The party in power bribes voters to obtain and keep votes. As power aggregates centrally, the lie grows in Dorian Gray fashion. This process craters budgets and eventually destroys nations. Historical examples are legion across the globe and history. Most likely, America is more than halfway there.
My impression is that most of The Triumph’s content is contrary to what is taught in school today and definitely contrary to the mainstream media’s propaganda. If you see any myths below that you think are true, then I would definitely buy the book to begin the necessary process of reeducation. (Such “reeducation” would make General Secretary Stalin or Chairman Mao proud, and it will be a lot less painful. Red Guards aren’t needed in America.)
The Seven Great Myths of American Capitalism
- The Genesis Myth: The Industrial Revolution Impoverished Workers
- Progressive Era Regulation Rescued American from Capitalism
- The Great Depression (1929 to 1939) Was a Failure of Capitalism
- Foreign Trade and Trade Deficits Destroyed American Manufacturing
- Deregulation and Capitalistic Greed Caused the Great Recession (2007 to 2009)
- Income Inequality Has Radically Increased in America Since the 1950s
- Poverty Is a Failure of American Capitalism
What is “business,” the word most Americans associate with the word capitalism? It’s service to the needs of others. It’s as far as we can get from “zero sum,” where all boats rise with the tide. It’s how humanity in a flawed world best meets its human needs (material and spiritual) and spreads increased wealth on an equitable, just basis. It’s based on morality, honesty, talent, creativity, perseverance, hard work, quality, productivity, and efficiency. All of this is common knowledge in most Western business sectors. Whether free persons choose to adhere to these standards varies widely, but freedom to prosper is worth far more to humanity than authoritarian conformity.
It’s common knowledge today among economists worldwide (who are honest) that income and living standards of the average person remained almost totally flat until approximately the late 1700s, then shot up like a hockey stick first in the United Kingdom and then America and spread across Western Europe. Praxis Circle has offered much of the research here in our content over the years. Since I entered college in the mid-1970s, as global population has more than doubled, the entire world has transformed itself from roughly being 80% poor to being 80% above subsistence, with quality of life increasing almost everywhere. This is without question due to economic freedom.
Praxis Circle Contributor Anne Bradley wrote a book review on The Triumph for the Acton Institute that cannot be improved upon. Therefore, no need for elaboration here other than to offer a few, final observations about how Christian worldview relates to economic freedom; it is the opposite of what the “experts” thought would happen in the 1970s; and it is an economic miracle unprecedented in the history of the world.
Christian Worldview and Economic Freedom
Among others, our All Star Contributor Rodney Stark (1934 – 2022) is know widely for popularizing the truth that today’s science and prosperity happened first in the West, which he attributes primarily to what we refer to as CJC (Classical Judeo-Christianity). He cites the importance of the West’s focus on the God of the Bible, an All-Powerful Creator God. We recently published a two-part series to highlight what this means (The Creator God Narrative vs. The Man God Narrative, Part I and Part II). Dr. Stark’s key insight is that once mankind started seeing creativity, reason, and logic in God, we humans started looking creatively as imago Dei for reason and logic in nature, too.
Well, our ancestors found it. Not only can humankind improve his/her lot, it’s our God-given duty and responsibility to do so for our families, friends, fellow countrymen, and fellow man.
Why is this the case? Because it’s true. The CGN is true and conforms better than any other global worldview to reality.
While America’s free social-political-economic system began developing thousands of years prior to 1800 during Classical times and the Middle Ages, it accelerated after the Protestant Reformation. Mentioned above, Deidre McCloskey has dedicated her long academic career to showing this as an economic historian. CJC influence continued well into the 1900s, heavily influencing the United Kingdom and the United States. It continues today. Indeed, free enterprise explains most of the prosperity that’s spread across the world since the Fall of the Berlin Wall and Soviet Union. It’s statistically provable. This is what real “progress” in action looks like.
“Well,” you might ask, “if capitalism is so good, why is it always under siege? Why after the Soviet Union’s Fall that supposedly disproved centralized, planned economies?” Similarly, why are key segments of the U.S. population turning pro-Islamic Palestine and Anti-Israel so soon after September 11, 2001 and October 7, 2023? Why, then, has the Democratic Party essentially turned into the DSA (Democratic Socialists of America)?
Answer: Yes, there is an internal power struggle in America now out in the open. Yes, there is greed and envy. Yes, there is malfeasance (on both sides).
But there’s also the ignorance and confusion The Triumph is trying to address. In my opinion, closely related is the bad “marketing” (a businessman’s term) of Christian worldview and the radical Leftish liberalism it produces, starting with the word “capitalism” itself.
Several Praxis Circle Contributors have recognized this and do not like the word.
Capitalism is not a pragmatic mousetrap that exists in the interests of capital or the owners of the means of production. It developed with Jewish and Christian focus, morality, and ethics, and it is dead without that. Christian worldview is wholly incompatible with Marxist and most materialistic or naturalistic worldviews. Today, our terminology absolutely must reflect this, and it does not.
With the encouragement of various inspirational thought leaders, many being Contributors, Praxis Circle is in the process of reimagining Christian worldview for today. What first became apparent soon after the 1960s has now snowballed into an American crisis. As everything from the personal to the public square becomes political in a binary way, devout and faithful Jews and Christians in America and the West are finding their religion moving much closer to, if not totally congruent with, their politics. It’s now easy to see how “Christian Democracy” arose in Europe in party form as Marxism widely spread there first. Again, the Christians and Marxist worldviews are utterly incompatible at every turn (yet, ironically, Christians still use the word capitalism invented by Marx and his predecessors).
Obviously, as the black dog of socialism/communism (state control of everything in a scientifically materialist world) gains influence here, the same circumstances experienced first in Europe are repeating themselves. As a result, we might have no choice but to reform our political party and affiliations.
In any case, perhaps the best place to start is with the facts about what CJC’s freedom can do, and that means reading The Triumph of Economic Freedom. I’ll end with the quote below from The Triumph’s last pages and note, again, that “economic freedom” mentioned there grew out of only one form of objective truth—revelation from God, Moses, and Christ—and only one worldview will sustain it. Let’s fix a good and potentially beautiful American system, rather than trash it and start over with any other system already proven to fail spectacularly, wherever and whenever tried.
America can do this.
“In the richest countries in history’s most prosperous age, it is poverty, not affluence, that looks unnatural. But prosperity is not natural; it does not just happen. Prosperity must be actively and continuously produced. In America, poverty is abetted by failed government policies that decouple poor people from the very system that creates prosperity. Welfare payments discourage work, failed public education deprives children of human capital, and inadequate law enforcement stunts the power of market forces to generate prosperity in poor neighborhoods. . . But freedom has been the key to the great progress we have made in the past, and it is likely the key to our progress in the future. If we can preserve freedom, especially economic freedom [italics added], there is no limit to the future of America.” (pages 196 and 197)
