Capitalism is culture. To sustain it, while laws and institutions are important, the more fundamental role is played by the basic human spirit of independence and initiative.

Edmund S. Phelps, a professor of economics at Columbia University and a Nobel laureate, discerns a troubling trend in many countries. He is worried about corporatism, a political philosophy in which economic activity is controlled by large interest groups or the government. Once corporatism takes hold in a society, he says, people don’t adequately appreciate the contributions and the travails of individuals who create and innovate. An economy with a corporatist culture can copy and even outgrow others for a while, he says, but, in the end, it will always be left behind. Only an entrepreneurial culture can lead.

Why Innovation Is Still Capitalism’s Star
An economist says his own experience in starting a business has helped shape his thinking on the subject of capitalism and culture.

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