ECO-Mon-0013-Stock

A Business Week article in 1979 proclaimed "The Death of Equities." A few years later, a vast, long-running bull market in stocks began. In 1997, the Financial Times similarly announced "The Death of Gold."

Our current decade, needless to say, has brought a giant bull market in the shining metal, "barbarous relic" though it was claimed to be.

With the financial crisis of 2007-09, we were treated to announcements of "The Death of Capitalism." This is just as hopeless a prediction as the other two were. The bull market in capitalism also will return, because it will continue to be unmatched at creating economic well-being for ordinary people on the trend--but it will not do so without its inevitable cycles of booms and busts.

The future of capitalism, which is better thought of as economies based on enterprise, market competition and uncertainty, is robust on the trend line, but volatile, as always. People who think capitalism is about equilibrium, who value above all stability and theorise that markets will create it, are shocked by this volatility. This is to miss the essence of the matter.

Click here to read the full article as an Adobe Acrobat PDF.

Alex J. Pollock is a resident fellow at AEI.

Photo credit: iStockphoto/Lyle Koehnlein