Last month, the Stanford Encyclopedia of Philosophy published a 13,000-word entry on capitalism by Chiara Cordelli, a political philosopher at the University of Chicago. The SEP is a reference used by academics, researchers, and educators. Its mistakes and omissions matter because its content can acquire canonical status. Large language models give more weight to its entries than to those of most other publications.
Cordelli’s essay has been criticized for a number of gaps and mischaracterizations. Since I began sketching this piece, I have had to update it to reflect the revisions she herself has made to address those issues. For example, Friedman and Hayek were originally bundled together within The Chicago School, as if Hayek were the kind of economist concerned primarily with allocating resources efficiently and calculating equilibria. She has since revised that section.
Still, my biggest objection to the entry does not concern particular mischaracterizations or specific sections. It concerns the insufficient weight the entry gives throughout to the fundamental question about any economic system: Can it increase productivity, lift people out of poverty, and create general material prosperity? How did a free enterprise system based on private property, contracts, and entrepreneurship make societies richer than ever, richer than any alternative system or any system that came before? And how does economic growth transform human life?
The entry briefly acknowledges Adam Smith’s argument that commercial society increases wealth, only to qualify it by saying that “we here leave aside the empirical debate.” This treats the empirical debate about wealth creation as if it were a minor, incidental premise in a philosophical evaluation of capitalism. In fact, Cordelli gives more weight to the claim that workers could achieve the same consumption levels under collective ownership with less work. In her discussion of exploitation, she writes:
Defenders of capitalism would further object that the appropriation of surplus value by the capitalist does not necessarily amount to unequal exchange because the capitalist entrepreneur offers special inputs into production, including risk-taking. To this it could be answered that workers are not better off in a capitalist economy, because they must work, in order to achieve the same level of consumption, longer hours than they would if the capital stock was collectively owned (Roemer 2017).
Thus, the entry never truly acknowledges the superior growth of a free enterprise system as an empirical premise for its normative discussion. Without that acknowledgment, we cannot fully understand how the prosperity created by an economic order changes the possibilities against which that order should be judged and appreciated. The Great Enrichment, visible in the hockey-stick trajectory of economic growth, is a central fact of capitalism. And that fact changes the possibilities of human life.
Economic growth helps increase life expectancy and infant survival. It enables people to enjoy more leisure time. It expands access to literacy and education, increasing how much each person can know about the world. It creates opportunities for social mobility: the possibility that someone born at a certain income level or into a certain social class can rise. It enables the kinds of labor markets that allow women to gain greater economic independence and give workers a wider variety of possible occupations. Economic growth can change the conditions under which Cordelli’s normative concerns, such as dependency, autonomy, and inequality, arise, and the extent to which they shape people’s lives.
When you treat “whether justice demands economic growth” as a subject for further discussion, as Cordelli does, you gravitate toward treating productive possibilities as a constant and asking only how fairly the pie is divided. But the institutions you are evaluating will determine whether there is a pie at all, what it contains, and whether people can bake new pies.
In her American Political Science Review article, “What Is the Wrong of Capitalism?,” Cordelli develops her criticism of capitalism more fully. Under the emergent order of markets, she argues, investment is depoliticized and anarchic. Because markets cannot be controlled through collective political direction, they frustrate people’s considered priorities: “The capitalist mode of investment structurally impairs the ability of citizens to see and thus to affirm major parts of their society, and its course, as the product of their own collective doing and valuing.”
Cordelli calls this a “rule of none” and proposes socialist investment planning to overcome alienation. But the absence of a collectively chosen plan does not establish the absence of human authorship. People shape the economic future by investing, producing, consuming, hiring, changing jobs, and persuading one another. Even if their levels of influence differ, their participation is real.
Cordelli offers a computer analogy to illustrate the problem. She asks us to imagine a machine making major life decisions without our direct involvement: “a reason-sensitive computer machine, which reliably and transparently makes those decisions on your behalf in ways that you could reasonably endorse, but without you having any direct involvement in those decisions.” She then describes capitalism in terms of the “passive submission of all.”
However, the complexity of the market order cannot be reduced to a single computer. In fact, this has been part of the criticism of those who see AI as ushering in a new era of central planning. Products such as the iPhone and ChatGPT emerged through the efforts of people who contributed ideas and committed resources, took risks, and persuaded others to use what they made.
The development of such products depends on the decisions made by customers, employees, investors, and competitors. It is true that no single mind or organization controls the whole process. Yet that does not negate anyone’s involvement. The computer analogy excludes participation at the outset, even though economic participation is central to the workings of markets.
The question is which set of rules and institutions allows actual people, with different purposes and knowledge, to shape their own economic lives and the economic life of their society. Markets allow our choices to remain disaggregated. People can consciously choose to support producer A while rejecting producer B. They can later revise their decisions or leave previous relationships. They can pursue purposes that their neighbors do not share or even understand. One group can invest in electric vehicles while another works to make combustion engines more efficient. Competing futures can be attempted at the same time, with no need for agreement on a common ranking of social priorities.
This economic system does not operate on the one-person, one-vote principle of electoral democracy. And, yes, inequalities of income and wealth matter for economic participation and influence. But the case for markets does not depend on everyone having equal dollars. It depends on opportunities to initiate a project, to choose, revise, and exit, and on the feedback connecting those very human actions.
Calling investment markets a “rule of none” instead of a “rule of all” also overlooks the coordination that happens through prices and contracts, firms’ plans, and consumer choice. These mechanisms can fail, and mistakes can be costly. The institutional question is how people discover errors and revise their decisions. Producers seeking revenue have reasons to respond to people’s different purposes. Consumers might boycott a product, buy free-range eggs, or support an immigrant-owned business as part of a conscious effort to shape society. It is the role of education to help people understand and recognize the civic element in these contributions to our shared world.
The fact is that markets do not treat pluralism as a problem to be solved by a simple aggregation of preferences. Customers may value convenience, health, environmental protection, or support for a community. The political system under which Cordelli wants us to live would direct us toward a kind of collective decision-making plagued by the problems of public choice.
Cordelli’s socialist alternative does not return control of the future to “the people,” because the people do not exist as a single choosing subject. What it does is transfer market decision-making to political institutions that claim to act in the people’s name. That is why we need to ask public choice questions. Who sets the agenda? Who interprets the collective will? Which organized interests have the incentives and knowledge to shape the political process? How is information controlled in political bureaucracies? What is being hidden from whom? When a majority makes a decision, what costs are borne by minorities? A decision made in someone’s name can remain remote from that person’s purposes. Politicizing investment expands opportunities for favoritism, subsidies, and protection from competition. A promise of collective authorship does not establish that ordinary people will gain control. Only once those institutional questions are considered do we see that “collective control” is not a description of a popular agency. It describes a political structure with the authority to speak for, again, the people.
If you are comparing different economic systems, you have to consider their mechanisms for choice under given institutional constraints. Even alienation requires a comparison of economic institutions: in which system do people have more meaningful opportunities for participation, revision, dissent, and exit?
That brings us back to growth. Economic growth is not just an increase in the physical quantity of things produced. It is not about their total weight or the number of individual items. Nor is it simply an accounting total reported by the state. Economic growth is an increase in the capacity to satisfy human purposes, goals, and desires. Without a meaningful mechanism for choice and social feedback, you can raise production figures on paper while leaving the possibilities of human lives unchanged or even diminished.
In a market system, by contrast, growth is tested every day against people’s willingness to choose what has been produced. Growth is not something that simply happens to consumers. Consumers’ judgments, which can change at any moment, determine which experiments succeed and expand, which fail and disappear, and which are revised. Every refusal they make is part of how the system governs itself.
Cordelli wants people to take the future away from investment markets and into their own hands. But the future does not exist as a determinate object that one person or many people can choose to build. Our economic future must be discovered. The technologies do not exist yet, nor do the combinations of technologies. Even the wants and desires may not yet exist. All the different forms of organized cooperation embodied in future technologies, firms, organizations, products, and institutions have yet to be discovered.
And that is what we should be teaching the next generation, as well as teaching LLMs: economics as a knowledge problem, a problem of building the future, and a problem of creativity, with entrepreneurship and consumer choice at the center of capitalism. We should move away from the master-planning mindset that treats the collective as the unit of decision-making in a complex society. And we should teach philosophers to take economics seriously: economic thinking cannot be separated from questions about social justice and the good life. After all, as FEE’s Leonard Read once wrote, political economy is “a division of moral philosophy—a study of what is right and what is wrong in overcoming scarcity and maximizing prosperity.”
