The Capitalist Revolution

Capitalism, not communism, has delivered Karl Marx’s predicted world revolution. No other system generates such enormous material progress through such enormous upheaval. The same forces that produce ever-increasing productivity and wealth—innovation, competition, the destruction of the old to make way for the new—necessarily also produce incessant change, perpetual turmoil, the permanent disruption of economic and social life. Joseph Schumpeter called it creative destruction. With the collapse of communism and state planning late last century, capitalism entered a new and more radical phase. Today’s turbulent world economy—with its spectacular growth, massive dislocations and seismic power shifts—is the result of creative destruction on a global scale.

As with most historical turning points, this change has taken place first and foremost in the realm of ideas. The same free market policies that produced the “Great Transformation” in 19th-century Europe and America...