Historian Niall Ferguson on capitalism in crisis

I am sorry to witness that as Niall Ferguson gets older his views become stranger and grumpier! He, in his earlier career, produced great video/TV documentaries like “Civilization: Is the West History? (2011)” or “The Ascent of Money” (2008). 

Latest case in point: Ferguson’s commentary published in the November 2019 McKinsey Quarterly: ‘Don’t be the villain’: Niall Ferguson looks forward and back at capitalism in crisis. In my opinion, a disappointing commentary!

In his opening paragraph of his commentary, Ferguson states (emphasis added):

“Capitalism is in crisis, as usual. There will always be people questioning the legitimacy of the system. As Joseph Schumpeter wrote in Capitalism, Socialism and Democracy, published in 1942, capitalism has at its heart creative destruction, and that creates pain; it creates losers. This is the normal state of affairs, and we shouldn’t be surprised that it’s going on.” 

This is a highly one sided and very pessimistic view of capitalism! Yes, Creative Destruction creates losers, but it creates many more winners and those losers become winners again easily if they “incessantly revolutionizes the economic structure from within, ... incessantly creating a new one” (Source). Thus, Ferguson has only quoted the negative part of Schumpeter's Creative Destruction!

“The obvious lesson from the Gilded Age is don’t be the villain of the piece. John D. Rockefeller became the villain of the original antitrust movement in a way that Andrew Carnegie avoided. Why? I think it’s partly about bad luck, in the sense that Standard Oil was unlucky enough to be the target of some extremely effective muckraking reporting, and that didn’t happen to Carnegie. But it’s also because Carnegie understood the power of philanthropy to offset the unpopularity that you inevitably accumulate as a successful businessman. And Carnegie was extraordinarily revolutionary in his philanthropy. He said that you should give it all away—not half, as in the giving pledge that we have today—all of it. In a wonderful essay on wealth, Carnegie argued that you should spend the first third of your life educating yourself, the second third making money, and the third third giving it all away.”

Nice try by Ferguson to juxtapose Rockefeller and Carnegie in this way! Except it is terribly flawed in several respects: 

1. Carnegie was not the first super rich to give away most of his wealth, there were others before like Stephen Girard (1750 - 1831) of Philadelphia, perhaps one of the first multimillionaires of the U.S. 
2. The Gospel of Wealth essay by Carnegie is everything but wonderful, it is actually terrible. I have blogged about it here!

Historian Niall Ferguson on capitalism in crisis | McKinsey: Capitalism is in crisis, as usual, argues historian Niall Ferguson. By looking back, business leaders can get a clearer view of what’s coming.