Capitalism After the Crisis

First Things contributing writer Yuval Levin has just launched the new public policy journal  National Affairs . The new quarterly, which picks up the banner from the sorely missed The Public Interest, focuses on domestic policy and political economy.

Only a few days old, the fledgling journal has already produced a number of must-read articles, including University of Chicago economist Luigi Zingales’ take on how the current financial crisis will affect the future of capitalism . As Zingales notes, the linking of government and big business helps to undermine capitalism:

When the government is small and relatively weak, the way to make money is to start a successful private-sector business. But the larger the size and scope of government spending, the easier it is to make money by diverting public resources. Starting a business is difficult and involves a lot of risk — but getting a government favor or contract is easier, and a much safer bet. And so in nations with large and powerful governments, the state tends to find itself at the heart of the economic system, even if that system is relatively capitalist. This tends to confound politics and economics, both in practice and in public perceptions: The larger the share of capitalists who acquire their wealth thanks to their political connections, the greater the perception that capitalism is unfair and corrupt.

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