This Edmund S. Phelps guy,

who won the Nobel Prize for Economics yesterday, seems to have a lot of great things to say. His article today in the WSJ, "Dynamic Capitalism: Entrepreneurship is lucrative--and just" is well worth a read.

I notice the Mises guys are agin 'im, in "Did Phelps Really Explain Stagflation?" by Frank Shostak.

I don't know. He may actually be an improvement on Friedman, though I didn't care for this line, "We all feel good to see people freed to pursue their dreams. Yet Hayek and Ayn Rand went too far in taking such freedom to be an absolute, the consequences be damned."

Tsk, tsk, tsk. Ya might wanna show some of those consequences if yer gonna make that kind of accusation, buddy. Well, maybe I should read some more of your work before I fly off the handle. The fact is that huge chunks of his readership assume that such consequences exist and are major.

Here's a good bit from his piece today:

The same capitalist dynamism that adds to the desirability of jobs also adds to their precariousness. The strong possibility of a general slump can cause anxiety. But we need some perspective. Even a market socialist economy might be unpredictable: In truth, the Continental economies are also susceptible to wide swings. In fact, it is the corporatist economies that have suffered the widest swings in recent decades. In the U.S. and the U.K., unemployment rates have been remarkably steady for 20 years. It may be that when the Continental economies are down, the paucity of their dynamism makes it harder for them to find something new on which to base a comeback.

The U.S. economy might be said to suffer from incomplete inclusion of the disadvantaged. But that is less a fault of capitalism than of electoral politics. The U.S. economy is not unambiguously worse than the Continental ones in this regard: Low-wage workers at least have access to jobs, which is of huge value to them in their efforts to be role models in their family and community. In any case, we can fix the problem.

Why, then, if the "downside" is so exaggerated, is capitalism so reviled in Western Continental Europe? It may be that elements of capitalism are seen by some in Europe as morally wrong in the same way that birth control or nuclear power or sweatshops are seen by some as simply wrong in spite of the consequences of barring them. And it appears that the recent street protesters associate business with established wealth; in their minds, giving greater latitude to businesses would increase the privileges of old wealth. By an "entrepreneur" they appear to mean a rich owner of a bank or factory, while for Schumpeter and Knight it meant a newcomer, a parvenu who is an outsider. A tremendous confusion is created by associating "capitalism" with entrenched wealth and power. The textbook capitalism of Schumpeter and Hayek means opening up the economy to new industries, opening industries to start-up companies, and opening existing companies to new owners and new managers. It is inseparable from an adequate degree of competition. Monopolies like Microsoft are a deviation from the model.

Yes, Microsoft will be reigned in eventually by superior competitors and/or new developments. It's bigness does not constitute a crisis.