The Capitalist Manifesto

Johan Norberg’s defense of capitalism against its modern critics, from degrowth advocates to industrial-policy enthusiasts.

It’s data-dense, covers a wide range of objections, and mostly lets the evidence do the talking. I think it falters slightly when it slips into partisan labeling (“leftist”, “right-wing nationalist”), but the core arguments are strong and well-sourced.

The economy is a positive-sum game

Capitalism is not about dividing a fixed pie. It’s about growing the pie so everyone’s slice gets bigger.

Journalist A.J. Jacobs used to say grace at dinner by thanking everyone who made the family’s meal possible. One day his son interrupted: “You know these people can’t hear you, right?” So Jacobs decided to actually go and thank them. He picked coffee, figuring it was a relatively contained task.

It wasn’t. His cup of coffee started nine months before he drank it and traveled 4,000 kilometers on motorcycles, trucks, and ships. It was made possible by farmers, truck drivers, warehouse workers, pallet manufacturers, the engineer who designed the process for producing steel, the designer who developed the special plastic bag that keeps beans fresh, and the team behind the pheromones sprayed in warehouses so that moths lose interest in each other, stop breeding, and stop eating the beans.

Jacobs tried to thank them all but was quickly overwhelmed. He’d need to thank the people who make plastic for the helmets that miners wear to dig iron ore that’s turned into steel that’s turned into saws that forest workers use to cut trees that become the pallets the coffee ships on. Behind each person he thanked, he could find at least ten more who made that person’s work possible. He stopped at a thousand, listed in his book Thanks a Thousand, knowing the real number was many times that.

None of these people know who you are. Most don’t even know they’re involved in making coffee. They didn’t plan this. They weren’t organized for the purpose. And yet there’s a cup of coffee at the cafe or at home at the exact moment you want one, which you might not have known you wanted ten minutes ago.

That’s Adam Smith’s invisible hand at planetary scale. Nobody does it for you. They do it for themselves, and the system aligns incentives so that serving your own interest means serving others. And most of us treat a trip to the supermarket as a chore.

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages.
— Adam Smith

Growth compounds and everyone benefits

A country growing at 2% per capita doubles average income in thirty-five years. At 3%, it doubles in twenty-three. Over a hundred years, that single percentage point is the difference between becoming seven times richer or nineteen times richer.

A survey of 118 countries over forty years showed that more than three-quarters of income differences for the poorest 40% can be explained by average income growth.
Raise the ceiling and the floor rises with it. The question politicians should ask isn’t “how do we redistribute to the poor?” but “which institutions help us create more for everyone?”

Pick a party that promises a new $100/month benefit, or one that raises growth from 1% to 2%. The benefit party wins year one. By year three you’ve already lost money, and after ten years you’re down over $4,000 a year. Meanwhile the growth party helped the whole population, and the benefit party taxed them to pay for it.

This section left me thinking of my home country, Denmark. We spend enormous resources on redistribution and claim to be rich. But are we growing enough? Taxing higher earners at punishing rates — people who carry disproportionate economic weight — just incentivizes them to leave or park their money elsewhere. European founders are already building their companies somewhere else.

Property rights, voluntary exchange, and the moral case

Norberg uses Marx’s own definition. Capitalism is privately owned means of production, market-based coordination, and workers who voluntarily sell their labor.

Property rights are the foundation. When something is yours, you have every reason to manage it well. If you own a field, you buy equipment, maintain the soil, invest in the long term. If you don’t own it, why bother? Someone more powerful could push you aside tomorrow.

The free market then aligns incentives so that the best way to help yourself is finding the best way to help others. You earn profit by creating something others find more valuable than its parts. Unlike slavery, feudalism, or socialism (systems built on commands and obedience), the market is built on handshakes and voluntary exchange.

One reason why capitalism is morally superior to socialism is that you are free to live as a socialist in a free market economy, as long as you do not force anyone else to do so.

The core principle is that nobody should be forced to live under another’s ideology.
I’ve seen the opposite pattern play out in smaller settings: office-first mandates vs. hybrid choice, dietary evangelism, and so on. One group demands conformity from everyone. The other allows individual freedom.

The price system as GPS

Free pricing and profit opportunities act as the economy’s GPS, describing the landscape and showing you how to navigate to the place you want to be.

When prices are unregulated, they signal what’s needed, where, and how urgently. Every regulation, even necessary ones for safety or the environment, adds friction. It makes adaptation harder, more expensive, slower. Overregulation stagnates an economy because it fences off territory that explorers might have used to find better ways.

Central planners can’t predict all the variables. They might fence off the exact branch that would have led to a breakthrough, and they’d never know.
Capitalism works because millions of free individuals, each optimizing locally, collectively produce a global system. That beats a handful of planners trying to control everything from the top.

Price controls are the extreme version. Rent control, Venezuelan food price caps — the result is always the same: supply shrinks, queues grow, and an informal market appears where connections matter more than need.

Inflation is subtler but just as destructive. When central banks print money to deal with a crisis, you get more liquidity but no more wealth. Prices go up, purchasing power drops — an invisible tax. Worse, it jams the GPS. As Keynes put it, high inflation makes economic relationships “so utterly disordered as to be almost meaningless.”

Deindustrialization, trade, and the jobs myth

People talk about deindustrialization like it’s a disease. It’s actually a symptom of getting richer. Manufacturing employment declines not because factories are outcompeted, but because they become dramatically more productive. Fewer people produce more output.

Automation doesn’t kill jobs either. A 1% increase in factory automation actually increases the workforce there by 0.25% after two years and 0.4% after ten. The manual jobs disappear, but they’re replaced by different jobs that complement the machine.

Since we need less of our consumption devoted to material objects, we spend more on services: care, entertainment, design, research, education. We can only afford that because automation makes manufactured goods cheaper.

The same pattern plays out with trade. For every job lost to Chinese imports, 150 workers lost theirs for completely different reasons. But the China story fits the “predatory global capitalism” narrative, so it gets the attention.

The iPhone breakdown in the book is a good example of how misleading “Made in China” can be.
An iPhone 7 sold for $649. Manufacturing cost was $237, but most of that went to American, Japanese, Korean, and Taiwanese components shipped to China for assembly. China’s actual share was $8.50 — 1.3% of the retail price. The remaining 98.7% went to designers, programmers, salespeople, marketers, and tax authorities, mostly in richer countries. Bringing those assembly jobs home would make iPhones so expensive Apple couldn’t compete, and Americans would lose the high-value jobs that exist precisely because the low-value assembly is outsourced where it’s cheapest.

Protectionism always sounds like it’s saving jobs. In practice, each job saved by US trade barriers cost consumers six times the average manufacturing wage. For every job you “save”, you destroy the purchasing power that could have employed six others.
Frédéric Bastiat called it: what you see is the saved job. What you don’t see is everyone who loses theirs downstream because steel is now more expensive, consumers have less to spend, and retaliatory tariffs cut into exports.

Protectionism also makes you fragile. Regulations and tariff barriers had concentrated US baby formula production into a handful of domestic factories. When one factory had problems, the entire country ran out.

Work is better than it’s ever been

Working hours have halved since industrialism. Since 1960, annual hours in major Western economies dropped by about a fifth. We start working later and live longer after retirement.

The middle class “disappeared.” Upward. Between 1967 and 2018, the proportion earning middle-class incomes fell from 54% to 42%. But the proportion earning less also fell, from 36% to 28%. The missing middle class moved up. The share earning more than $100,000 tripled from 10% to 30%.

Workplaces got dramatically safer. Fatalities dropped from 20-25 per 100,000 workers in the 1950s to about 3.4.

Job satisfaction went from 35% “completely satisfied” in 1993 to 56%.

David Graeber’s “bullshit jobs” thesis doesn’t hold up to scrutiny. His claim rested on 37% of Britons saying their work doesn’t “make a meaningful contribution to humanity” — a threshold so high that most worthwhile jobs would fail it. When the EU asked whether people feel they do “useful work”, only 4.8% said “never” or “rarely”, down from 7.8% a decade earlier.

People romanticize manual labor as “real jobs,” but humans have always built leverage. Oxen pulling plows, machines assembling products. Creating tools that let us do more with less is literally what makes us human. Being fixated on manual labor as the only authentic work is the unnatural stance.

The book uses Schumpeter’s hotel analogy for income distribution. The rooms get nicer as you go up, and people move between rooms throughout their lives.

The fact that entry-level wages haven’t risen much in forty years isn’t necessarily a failure. It means new groups of young people and immigrants can still check in at the ground floor. If you could only enter at a higher wage, many wouldn’t get in at all.

The steps between floors are steeper than they used to be, but easier to climb. Usually, people move up.

Inequality: the good and the ugly

Inequality from creating value is good. You invested exceptional effort, made smart decisions, built something people want. You should be rewarded proportionally.
That’s positive-sum: you got rich by enriching others.

People say entrepreneurs need to “give something back to society” to compensate for their profits. The fact that they made a profit is the evidence they gave something. They paid salaries, purchased materials, created jobs, produced something people wanted enough to pay for. They took on all the risk upfront — business model, materials, labor — with no guarantee of return. If they don’t make a profit, tough luck, they still owe for everything. Profit means everyone got paid and something of worth was produced. That’s the contribution.

The ugly kind of inequality comes from corruption, lobbying, regulatory capture. Crony capitalism, where companies compete for politicians’ favor instead of consumers’. Subsidies, tariffs, bailouts. “Socialism for the rich.”
It’s zero-sum or worse: one group gets to reach into everyone else’s wallets while propping up business models that should have died.

A common worry is that rich families hoard wealth across generations, creating permanent dynasties. The data says otherwise. About 70% of a rich family’s wealth disappears in the second generation. After the third, 90% is gone.
Carnegie and Rockefeller aren’t on the billionaires list anymore.

Capitalism must be a system of profit and loss. The losses are the important signals.
When companies know they’ll be bailed out if their bets go wrong, their only incentive is to take bigger and more reckless risks. Artificially keeping zombie companies alive does nothing for innovation or growth.

And established companies that aren’t bailed out still tend to fail when the world moves on. IBM should have developed the personal computer, Kodak the digital camera, Sony the digital music player, Lego Minecraft, Blockbuster video streaming. They all had the technical expertise. But they were too fond of their existing markets to cannibalize their own products. That’s why great empires fall.

Innovation comes from freedom, not government planning

Mariana Mazzucato argues the state is the primary driver of innovation and the private sector just leeches. Norberg spends an entire chapter dismantling this.
Researchers have criticized her work for telling stories (often wrong ones) rather than doing actual research.

Internet pioneer Robert Taylor (who was there when ARPA built the foundations of the internet) directly contradicted Mazzucato’s claim that ARPA was “aggressively mission oriented.” He said mission-directed funding “enormously weakened the quality of the work.” Innovation comes from solving practical problems step by step, expanding knowledge, stumbling upon opportunities. “We didn’t do it by planning.”

Pornography has played a documented role in developing the printing press, photography, film, video streaming, online payments, chat, P2P sharing, and VR. By Mazzucato’s own logic, we should pour tax money into porn to stimulate innovation. But obviously that would be absurd — and it’s absurd for the same reason her thesis is.
These innovations didn’t come from anyone’s committee meetings. They came from chaotic, competitive interactions between industries and customers.

Economist Josh Lerner tried to write a book about what governments can do to stimulate innovation. The experience was so bleak he titled it Boulevard of Broken Dreams. For each successful industrial policy, there were “dozens, even hundreds, of failures, where substantial public expenditures bore no fruit.”

Private projects work because they get ruthless feedback. Costs, sales, profit, valuation. A constant stream of signals showing what works and what doesn’t.

Public projects get feedback too, but from politicians who aren’t risking their own money and who optimize for re-election, photo ops, and history books.
The Swedish Energy Agency captured the dynamic: “We celebrated with cake every time we managed to get money out of the door.”
Not getting rid of the annual budget means smaller appropriations next year, so the logic becomes: accept any credible application. If there isn’t one, take the most credible one available.

Worse, industrial policy can make capital destruction rational. In a free market, when your last unit costs more to produce than you can sell it for, you stop. That’s the signal. But with grants and co-financing, you get more money the more you expand — even if the expansion is unprofitable. The incentive flips.

The tragedy is that there are things government could do that would actually help. Legal security, efficient bureaucracies, good infrastructure, the freedom to build, good education systems, liberal labor immigration. Remove barriers to growth instead of picking winners.
As Lerner puts it, politicians skip setting the table and go straight to serving the main course — it lets them focus on the fun activity, but it ruins the dinner.

China’s rise and the wrong lesson

People see China’s growth and assume its current policies caused it. But the explosive growth came from Deng Xiaoping’s liberalization after Mao’s death in 1976, not from Xi Jinping’s centralism after 2010. Mao, as economist Steven Radelet put it, “single-handedly and dramatically changed the direction of global poverty with one single act: he died.”

The same pattern played out in India. After a debt crisis in 1991, Finance Minister Manmohan Singh dismantled trade barriers and stifling regulations. Growth took off, average income tripled, extreme poverty fell to a fifth of previous levels. The “Hindu growth rate” wasn’t cultural. It was policy.

The lesson isn’t that the West needs to become more like China. It’s the opposite. China’s centralization under Xi, refusing to let capital flow to promising ideas, restricting entrepreneurial freedom, allowing markets in goods but not in ideas, will cap how innovative and rich China can become. The despotism that makes it dangerous is also what limits how powerful it can get.

Degrowth is a catastrophe, not a solution

Some environmentalists want degrowth: consume less, travel less, settle for less. The pandemic was an unintentional experiment in exactly that. Machines stopped, borders closed, planes grounded, half the world locked inside. The result: 70 million people thrown into extreme poverty, millions of children facing malnutrition.

This global lockdown reduced carbon emissions by about 6%. Meeting the Paris Agreement by degrowth alone would require a pandemic-scale shutdown every single year for a decade, with no recovery between them.

Phasing out 85% of global energy supply by 2050 through negative growth would threaten half of food production (dependent on fertilizer from coal and gas), eliminate agricultural machinery and cold storage, and collapse healthcare systems. The second-order consequences would kill far more people than climate change itself.

Degrowth would also make global warming more dangerous, because we need prosperity and technology to adapt. Rich countries don’t have fewer natural disasters. They’re just dramatically better at surviving them.

The risk of dying in a climate-related disaster has dropped over 90% since the 1950s, not because disasters decreased, but because we got richer and more capable. Zero growth since the 1950s would have meant nearly half a million more climate deaths per year.

The better approach is putting a price on the environment. A carbon tax at the wholesale level spreads costs through the economy, hitting everyone’s wallet proportionally. It incentivizes reduced emissions and drives innovation toward green technology — not through central planning, but by making people feel the consequences of their actions. The same market mechanisms that created the problem can solve it, if the incentives are set right.

If you assume nothing changes, the future looks bleak. But we solve problems. The track record of human ingenuity is hard to bet against.

Consumerism, tech criticism, and filter bubbles

Companies don’t create our desires, they serve them. We’ve always wanted to look good, stand out, show status. From cave paintings to Instagram, smoke signals to smartphones, tattoos to… tattoos. The forms change; the impulses don’t.

We are not capricious because companies make money out of it, but companies make money out of it because we are capricious.

Planned obsolescence gets a lot of airtime but is hard to document. France passed a law against it and mostly proved how rare it actually is. Apple was fined after older iPhones slowed down following a software update, but the court found Apple wasn’t forcing upgrades. Older batteries couldn’t handle the power demands of new software, so Apple throttled performance to prevent crashes.
That is the opposite of planned obsolescence: it extended the phone’s useful life.

The filter bubble narrative is also weaker than it seems. An index of isolation from opposing views shows that people reading news online are less isolated than newspaper readers. Workplaces, neighborhoods, and families are tighter echo chambers. The worst filter bubble is your kitchen table.
The internet, for all its flaws, exposes you to a vastly larger and more diverse set of opinions than you’d encounter otherwise.

And the “data is the new oil” framing misses the point. Data is the new sand. Sand is worthless on its own, but refine it into silicon and you get the most powerful productive force we have. Data works the same way. It is abundant, cheap, useless until you have the expertise, investment, and innovation to extract something from it.
Like oil to cavemen: if you don’t know what to do with it, it’s worthless.

More broadly, I think we hate too much on big tech companies. They’ve created enormous value through services, products, innovation, economic growth, and jobs.
People will always find something to complain about. Either it costs too much or it’s horrible that it costs nothing. Sure, if it’s free, you’re the product. But you’re using the service, that’s why you’re complaining. If you find a tradeoff that works better for both you and the business, they’d be all ears.

And maybe part of why we dislike what we see online is that we’re bad at curating it. We blame algorithms but don’t think to just close the app.

Money does buy happiness (and freedom is the point)

The Easterlin paradox (the idea that once basic needs are met, more money doesn’t make us happier) was influential but wrong. With more data from more countries, the pattern reversed. Even Daniel Kahneman, who championed the paradox, changed his mind:

“We had thought income effects are small because we were looking within countries. The GDP differences between countries are enormous, and highly predictive of differences in life satisfaction… The implied conclusion, that citizens of different countries do not adapt to their level of prosperity, flies against everything we thought we knew ten years ago. We have been wrong and now we know it.”

Growth and prosperity correlate with wellbeing across the board. Richer countries have longer lives, better health outcomes, and higher life satisfaction. The relationship holds even within countries over time.

The most important word in economic freedom is not ‘economic’ but ‘freedom.’

If you don’t like the rat race, you can leave it, provided you live in a growing economy that lets you do so without financial ruin. That’s what capitalism makes possible.
Working hours halved over 150 years. In 1870, Britons worked more between January and August than we now work in the entire year. You have the luxury of sitting around debating economic systems because capitalism gave you the time to do it — a pastime that used to require either aristocratic wealth or a generous patron. Like Marx had.

Protect what works

The book ends as a call to action, and it’s hard to disagree. Free markets produced the greatest social and economic progress in human history, and a large number of people respond by rejecting them in favor of something they’ve never tried. Many historical golden ages of openness have been destroyed by authoritarian revolts.

It is not inevitable that progress continues.

The growing popularity of movements like “late stage capitalism” or “antiwork” is concerning. We live in better times than any before. The system isn’t perfect — crony capitalism, welfare traps that punish work, environmental externalities — but the answer is to fix those problems within the framework, not to tear it down and hope for something better.

The welfare trap is one that deserves more attention. Some welfare systems actively punish work: earn above a threshold and you lose benefits, but you don’t earn enough without them, so you stay on welfare. The death toll from despair in the US is a wake-up call. We can probably afford the financial cost of letting more people leave the labor market. We can’t afford the human cost.

We pro-capitalists of the world have nothing to lose but our chains, tariff barriers, building regulations and confiscatory taxes. We have a world to win.