The Rhetoric of the Economy and the Polity

The Great Recession is not the end of capitalism. An innovative economy makes mistakes, but that is not a good reason to regulate it out of its innovations. The innovations—not unions or regulation—have increased real income per head by a factor of 100 in the places that have adopted bourgeois liberty and dignity. An innovative economy is “rhetorical” because, if our economic lives are not frozen by tradition, we must persuade each other what is to be done. “Rhetoric,” of course, is the ancient word for unforced persuasion. Samuelsonian economics, which is the usual kind, ignores words, persuasion, rhetoric. Yet one quarter of national income in a modern economy is earned from “sweet talk.” Discovery, which Austrian economists like Schumpeter and Kirzner emphasize, depends on rhetoric, and the rhetoric depends on ethics. Realist political philosophy, and agency theory in business schools, miss the ethical foundations of our lives.