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We are not suffering from significant threats to economic freedom and capitalism. Instead, our political challenges mostly flow from the triumph of capitalism. And American conservatism is in trouble because it can’t acknowledge much less respond to this fact.

These are two admittedly sweeping claims, and Robert Miller thinks I’m mistaken about both. I’m quite sure I’m right about the triumph of capitalism. I wish I were wrong about the troubled state of American conservatism.

R.R. Reno Margaret Thatcher died recently. When she defeated James Callaghan in 1979, the United Kingdom was a country with many nationalized industries, large, powerful labor unions, and a governing elite so thoroughly socialized into the command-and-control outlook that few could imagine alternatives. By the end of her long domination of British politics things had changed dramatically, and Tony Blair, who explicitly repudiated the long-term Labour commitment to socialism, made no efforts to turn back the clock.

The same story can be told about Germany, France, Italy, many countries in South America, and, most famously of all, China. To a degree few in 1975 were able to foresee, capitalism is triumphant. It is accepted across the world as the only option for organizing economic life.

Miller is certainly right that our regulatory regime is much more complicated, and in many areas much more extensive. But the number of rules and their complexity is not necessarily a sign of declining economic freedom.

As Miller reminds us, government must intelligently regulate markets for all sorts of purposes: to ensure transparency, to prevent manipulation, to limit pollution and other socially negative consequences. This partially explains the explosion of regulation. (A culture of anxiety about being held responsible also encourages regulation designed to cover all contingencies). As economic freedom expands”which is to say as capitalism and free markets expand and take on new modes and forms”legislators and regulators run behind, trying to catch up to remedy the social problems freedom always creates.

That’s right, freedom creates problems. It’s a good thing, often rightly encouraged, but it has costs. This is true of political freedom, as the Founders recognized, which is why they feared pure democracy. It’s also true of moral freedom: see the decline of marriage and rise of illegitimate children. And it’s certainly true for economic freedom.

Miller very likely agrees. If companies have the freedom to sell products, some will lie about them. If bank executives can shift gains to themselves and losses to shareholders, some will. American conservatism is in disarray because it refuses to squarely acknowledge the obvious truth that the great good of economic freedom also creates problems. And addressing these problems means in some way limiting freedom.

Here’s an example. The freedom of those with capital to invest in tire factories in China and to ship the tires to America (both very new freedoms flowing from the triumph of capitalism across the globe) undermines the livelihood of workers in tire factories in Akron, Ohio. Here as elsewhere the free flow of capital and goods (however restricted on the edges by regulations) forces factory labor in America to compete with factory labor in China and other low-wage countries.

This consequence of economic freedom is one of the causes of the declining economic prospects of middle-class America. (The other is the new moral freedom that releases us from social mores that once pushed people toward marriage.) Democrats propose responding by in some way limiting economic freedom through regulations or harvesting its fruits (increased wealth) through taxation. (They can’t admit that middle-class decline is also a function of moral freedoms that progressives endorse.) Thus the Obama campaign: redistribution from those who benefit from expanded economic freedom to those who don’t.

Republicans? In many cases they can’t even admit that there’s a problem. “Sure, the middle class suffers from stagnant wages,” I’ve heard some conservatives say, “but we’re all so much richer now, and therefore the middle class is actually better off. Even the poor have flat screen TVs!” It’s a response that reminds me of Marxism and its habit of explaining away what people say about their lives by calling it “false consciousness.”

Other conservatives admit that there’s a problem, but they insist it’s caused by the fact that there’s not enough economic freedom. This was Mitt Romney’s position. If only tax rates were even lower, and the economy even freer, entrepreneurs would emerge to create jobs.

Boiled down to its basic form, this response amounts to the view that what looks like a problem caused by economic freedom is actually caused by distortions brought about by limitations on economic freedom: regulation and taxation. If we had “real” economic freedom, the market would solve the problems on its own. Once again I’m reminded of my Marxist friends in college. The Soviet Union? That’s not “real” socialism, they’d say.

I’m interested in American conservatism as a political phenomenon and not an intellectual one. Here Miller must face the political facts. American conservatism can’t admit that economic freedom creates problems. Today it’s Grover Norquist and not Richard Epstein who polices the boundaries of contemporary conservatism, funding primary challenges to those who deviate from tax-rate orthodoxy.

I predict that many will read this column as “attacking” capitalism, which makes as much sense as saying that if I warn against the dangers of sunburn on the beach, I’m denouncing sunshine. True conservatism affirms ordered liberty, not liberty pure and simple. This is as true for economic freedom as political and moral freedom. We’ll only be politically and socially relevant if we can explain how we plan to bring order to the economic liberty that global capitalism has so dramatically expanded. We need to show how conservative sources of order are more dignifying of the human person and more conducive to economic prosperity than liberal plans and policies.

R.R. Reno is editor of First Things . He is the general editor of the Brazos Theological Commentary on the Bible and author of the volume on Genesis . His previous “On the Square” articles can be found here .

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