In recent years, the market economy has come under attack from both sides of the political aisle. In some cases, both Democratic and Republican policies are even converging to expand the role of the state in the economy. Young people remain disillusioned with capitalism, while CEOs of major corporations adopt “ESG” policies and focus on matters of social justice and equity while de-emphasizing shareholder value. It seems that the success story of the market economy—the dramatic increase in our living standards worldwide over the past two hundred years—has been forgotten.

In late 2022, Samuel Gregg, a long-time contributor to Public Discourse and Distinguished Fellow in Political Economy at the American Institute for Economic Research, addressed these questions and others in his book, The Next American Economy: Nation, State, and Markets in an Uncertain World, which has received acclaim since its publication. I was recently able to interview Gregg about the themes explored in the book. An edited interview follows.

Kelly Hanlon: In the opening chapter, you make the case that there are threats to the market economy from both the left and the right. On the left, there is what you call “stake-holderism” whereby firms are no longer focused solely on increasing shareholder value. On the right, meanwhile, there are calls for economic nationalism, with an ever-growing list of demands for the use of government action to engineer particular outcomes. What are the broad contours of the debate between the left and the right today? Where do the two sides converge? And why are you so alarmed at calls for intervention in the economy?

Samuel Gregg: Thanks for this conversation, Kelly. The first thing to note is that today’s economic debate is less between the right and the left per se. It’s focused on two things. One is the state’s role in the economy. Many on the right have embraced economic ideas difficult to distinguish from those on the left. If you look at some of the economic statements of two politicians as different as, say, Senator Marco Rubio and Senator Elizabeth Warren, you discover they effectively line up on the same interventionist page on many economic issues. Another division is between those who believe in using state economic intervention to try and realize particular moral–cultural ends like buttressing two-parent families, and those skeptical of the effectiveness of such measures.

Start your day with Public Discourse

Sign up and get our daily essays sent straight to your inbox.

But even deeper arguments lurk beneath the surface of these fights. They range from disputes about American economic history to the causes of America’s obvious social dysfunctionalities, the meaning of liberalism, America’s relationship with the rest of the world, and even how much conservative America considers itself bound to the American Founding. I’m convinced that many economic disagreements today function as proxies for other issues.

As for my alarm about creeping interventionism, it’s driven by several concerns. One is the very-hard-to-refute evidence attesting to such policies’ general failure to realize their ends and their propensity to inflict considerable economic, social, and political damage. Take, for instance, industrial policy. Its track record of success is utterly abysmal. It also breeds some of the worst cronyism. The same is true of tariffs. I’m also worried about the way that many conservatives seem content to use regulation and the administrative state to try and engineer particular social and economic goals. Leaving aside the fact that tinkering with, say, the tax code won’t do much to reverse the deep destruction inflicted on the family by, say, the disaster of the Sexual Revolution or LBJ’s Great Society programs, this involves acquiescing in the undermining of limited government constitutionalism in America. That is an odd position for American conservatives to hold, even tentatively.

KH: Part of the so-called stake-holderism of the left centers on the adoption of ESG policies throughout corporate America. Broadly speaking, what is ESG and why are corporate leaders advancing these kinds of policies? In a recent symposium at Law and Liberty, you suggest that one solution is that CEOs should better communicate their firm’s value and purpose. But, if CEOs are buying into the ESG agenda, doesn’t this suggest a deeper problem that goes beyond the value of the market economy—and into the realm of formation, education, and culture? How can we encourage CEOs to resist and reject the ESG ideology?

SG: ESG is about principles that purport to allow investors to invest their capital in ways that promote Environmental, Social, and Governance goals alongside profit and shareholder value. To no one’s surprise, most of these goals reflect progressive priorities.

Why do businesses embrace ESG? In a few cases, they’re led by CEOs and boards of directors who are “woke” true believers. That shouldn’t surprise us. After all, business executives swim in the same messy cultural streams as the rest of us. They’re no better equipped than anyone else to understand the degree to which ESG is an ideologically charged weapon.

In other instances, CEOs have told me that younger investors want more alignment between their investment choices and their political preferences. There’s certainly evidence for that, yet there’s also evidence indicating significant gaps between people’s stated political preferences and how they actually invest their capital. There’s a limit, it turns out, to the willingness of wealthy, uber-woke lefties to pay more for less return! Making matters even worse is that many companies see ESG as a way to charge higher fees. They’ll charge more fees to investors for putting their capital in ESG funds on the basis that the higher fees reflect your willingness, as ESG jargon says, “to invest your values.” When, however, you examine the composition of ESG funds, you discover that they’re not that different from non-ESG funds. When Elon Musk called ESG a “scam,” he had a point.

But maybe most importantly, corporate America’s present romance with ESG owes much more to CEOs’ trying to preempt government efforts to regulate them down such paths or get progressive NGO activists off their backs. Alas, corporate America doesn’t seem to grasp that these groups are unappeasable and that regulators like the Securities and Exchange Commission are already way down this path. Whatever businesses do in this area will never be enough for those activists or regulators trying to force companies to embrace progressive priorities.

So, those are some of the factors at work. As for the formation issues you mention, you’re right. Milton Friedman often stressed that most CEOs aren’t especially articulate when it comes to explaining the good that businesses do qua businesses, or what you might call the vocation of business: that it’s through pursuing profit and shareholder value that business makes its particular contribution to society’s general welfare. Wealth creation not only provides for people’s material needs and wants. It also facilitates employment over the long term as well as sustaining and growing the capital that people need to raise families, secure their retirement, be philanthropic, build schools, support religious congregations, educate their children, etc. And if enough CEOs embraced this vocational outlook and had the courage to make this case in a public way, it would go some way to highlighting the incoherences and ideologies underlying the ESG agenda.

Wealth creation facilitates employment over the long term as well as sustaining and growing the capital that people need to raise families, secure their retirement, be philanthropic, build schools, support religious congregations, educate their children, etc.


KH: On the right, there seem to be two camps who are increasingly calling for government intervention in many areas of private life—the industrialists and the integralists. Can you give a high-level overview of these two camps, and their views on economic policy? What are their fundamental assumptions? What problem is each camp trying to solve? What, if anything, do they get right—or wrong—about the policies they promote?

SG: Far, far more wrong than right, I’m afraid. Some people in both camps are pointing to obvious social problems that mark America. Well, few are going to dispute that much of American culture is in very bad shape, as indicated by things like divorce rates, a collapsing birthrate, the prevalence of gender ideology in the academy, the number of young men checking out of the workforce to embrace a life of drugs and video games, etc.

Advocates of industrial policy argue that things like trade liberalization have contributed to these developments and that it’s possible via a range of interventionist and regulatory measures to generate better economic outcomes than markets in particular economic sectors and more optimal social conditions for, say, families or blue-collar workers. Work is important, they say, and providing work is one way of addressing these issues.

Putting aside the dubious and highly economistic cause-and-effect logic underlining such diagnoses of America’s social problems, let me say this: work is a good in itself. Even the humblest types of work allow humans to acquire any number of virtues that make us who we’re supposed to be as humans. But using government to try and provide work, or even to try to rig the labor market toward providing particular types of work, is a counterproductive way of going about that. Protectionism and industrial policy generate massive misallocations of resources, trivialize economic truths like comparative advantage and trade-offs, and create massive disjuncts between production and consumption. In the long term, such policies corrode competition, incentivize entrepreneurs to become cronies, and give even more power to legislators, lobbyists, and bureaucrats in places like Washington, D.C., who are about as insulated from market forces as it is possible to be. The long-term results are economic stagnation, the displacement of market exchange in favor of a hyper-politicized economy, and the endless proliferation of barriers to economic growth—all of which severely cramp the economy’s long-term capacity to generate jobs.

Concerning the other group you mention, the integralists, some of them adhere to economic nationalist policies. So, to the extent they embrace such ideas, they’re subject to the same critiques. Other integralists, however, want to implement the economic policies associated with corporatism. Broadly speaking, corporatism means top-down coordination by state officials of an economy in which the forms of private property and market exchange are maintained but embedded in legal and political structures that prioritize the establishment and enforcement of a consensus focused on achieving specific economic and social goals.

The problems with corporatism are manifold. They include the creation of economic insiders and outsiders based on access to political power, the evisceration of economic freedom and property rights, the cronyism and clientelism it breeds, the marginalization of consumer needs and wants from the economic equation, etc. Then there’s some integralists’ determination to creatively reinterpret the U.S. Constitution, much like progressives have, to legitimate rule by unaccountable bureaucrats overseeing a corporate state via an imperial presidency, and to abuse the lexicon of the common good to rationalize such things.

KH: As I talk to young people, particularly in their late teens through late 20s, there’s an underlying desire for equality. We see this in some of the conversations around wealth inequality, with the assertion that a new tax policy could eliminate inequality. There seems to be a related sense that the accumulation of wealth is itself deeply immoral. Have you encountered these concerns? And, if so, what arguments have you found compelling in persuading others that the creation of wealth is not inherently evil?

SG: Let’s start with equality. Have you noticed the selective character of contemporary equality-angst? I haven’t heard many of the people you describe expressing worries about the visible decline of the rule of law throughout America. And if anything is grounded on the equality in dignity enjoyed by all humans and the principles of natural justice that flow from that, it’s the rule of law. Or the blindingly obvious injustices that are integral to the workings of affirmative action programs? Or how “anti-racism” and DEI programs legitimate discrimination against large numbers of Americans because of their race or sex? I don’t hear such things even being acknowledged, let alone discussed.

Wealth inequalities are inevitable in any economy in which market exchange, economic creativity, and the satisfying of consumer preferences prevail. They’re also a precondition for, and a byproduct of, economic growth. If you want a “no-growth” economy—a sentiment I’ve heard expressed by some traditionalists and, ironically, radical greens who hold basically pagan religious views—then you’d better saddle up for life in an impoverished society in which most people are desperately poor while the wealthy are those skilled at using force to extract large pieces of an ever-shrinking economic pie for themselves. As for trying to eliminate wealth inequalities, that’s a sure-fire way of opening up the path to all the evils—not just the inefficiencies but the evils—of socialism.

Is the accumulation of wealth in itself immoral? Well, if it occurs through, for example, lying, theft or, say, owning a brothel, it’s obviously immoral because such choices are intrinsically evil. I’d even argue that it’s morally dubious to accumulate wealth through rent-seeking insofar as cronies effectively engage in wealth-extraction from the rest of us. But there are so many more ways to increase one’s wealth that are completely legitimate and also provide opportunities for vocational growth by everyone involved in a business enterprise.

The real action concerning the morality of possessing wealth concerns its use: the free choices that we make about how we use the wealth that we have justly acquired. You really can’t go wrong if you follow Aquinas on this topic. He neatly summarizes all the entitlements and obligations associated with property ownership, including wealth that exceeds our vocational needs and responsibilities. A few years ago, my friend Adam J. MacLeod wrote an excellent book that addresses these questions in a manner cognizant of twenty-first century economic life. It’s really worth reading.

If you want a “no-growth” economy, then you’d better saddle up for life in an impoverished society in which most people are desperately poor while the wealthy are those skilled at using force to extract large pieces of an ever-shrinking economic pie for themselves.


KH: Another point that I’ve encountered with some frequency is the view that other (non-American, perhaps even non-democratic) political and economic arrangements are better suited for life in the twenty-first century. By all measures, we’re living in the most prosperous time in human history. For those who advocate state capitalism and economic nationalism, are there examples in history where those regimes have worked well? Have they ever outpaced the free market in terms of the general welfare of a country’s population? If state capitalism doesn’t work on the whole, are there areas where state intervention may be helpful? Or, more broadly, what role should the state play in the market economy?

SG: My book highlights several cases where economic nationalist policies have been widely deployed and details the long-term damage they inflicted on otherwise healthy economies. Japan is the classic example. When I was a teenager, numerous policymakers, books, novels, and even films like Black Rain, Rising Sun, and Die Hard suggested that Japan and Japanese-style industrial policy was the future. And just as all that hysteria crescendoed, Japan collapsed into what became a 20-year economic slump.

There are several reasons for that, but in the early 2000s, the Japanese finance ministry published an official paper conceding that Japan’s extensive use of industrial policy had been a major contributor to Japan’s economic stagnation. I’d argue that China is now making similar mistakes because they’ve used more and more industrial policy since 2008 in an economy what was only ever very partially liberalized. No one should be surprised that we’re now seeing the same problems emerge on a mass scale in China—something those American conservatives who are fans of Chinese economic policy studiously avoid mentioning. The more Xi Jinping continues deepening the directive role of the Chinese Communist Party, the Chinese state, and the Chinese military in China’s economy, the weaker and less productive that economy will become.

So: what should the state do in the economy? For a start, government has some very basic responsibilities like protecting and adjudicating property rights, providing public works, ensuring law and order, administering the rule of law, and maintaining monetary stability. None of these are small tasks, and the U.S. government is presently doing a lousy job in all these areas. I also think that a very basic safety net should be provided by the state, though I’d want strict limits on this, not least because of the economic and social damage that expansive welfare states inflict on society and the soft despotism that they facilitate. Lastly, governments should ensure that the rules governing international trade are being followed, and act when proxy actors for regimes like Communist China engage in activities like intellectual property theft. Again, it was only in 2018 that the U.S. government finally got around to begin addressing this decades-old problem with Chinese nationals and businesses in any meaningful way.

The more Xi Jinping continues deepening the directive role of the Chinese Communist Party, the Chinese state, and the Chinese military in China’s economy, the weaker and less productive that economy will become.


These are the state’s prime responsibilities as far as the common good’s economic dimension is concerned. Everything else, to my mind, is normally better handled by free economic processes and those non-economic associative institutions we call civil society. The latter is where most welfare functions should be located. Of course, there are always emergencies that may necessitate state action beyond the parameters I’ve just mentioned, but such interventions should be limited and never become permanent features of economic life.

KH: In the book, you make the case that Americans face a choice between state capitalism and a free market economy. It seems as though if we do nothing, we’ll continue down the path toward state capitalism. How do we move closer to a free market economy? What gives you hope that we will move closer to a free market?

SG: Let’s be clear. State capitalism is already the norm in America’s economy. The last time the federal government actually shrank was during Calvin Coolidge’s presidency!

Virtually all economic freedom indices show America as being in decline in the realm of economic liberties. Our economy is riddled with interventionism, industrial policies, and cronyism from top to bottom. Our default settings for macroeconomic policy remain strongly neo-Keynesian. The notion that American economic policy had been run since the 1980s by so-called “market fundamentalists” is absurd. The refusal—the refusal!—of many American conservative legislators even to discuss reforming those entitlement programs that are driving us into ever-greater debt and that facilitate so many social problems isn’t just disappointing. It’s plain irresponsible.

That said, those who believe in entrepreneurship, free competition, trade liberalization, and their moral, legal, and political foundations must rethink how they make their case. Yes, we must press for deregulation of our ever more regulated economy, we need to get incentives aligned correctly, we should get the state out of doing things that it does badly, and we must focus the government on those activities I just mentioned. But if the case for markets is reduced to more stuff produced more efficiently for more people, or associated with Davos Man borderless world delusions, or involves trivializing the very real bonds that many Americans have to their nation and communities, millions of Americans won’t listen to them, no matter how compelling the economics.

Those who believe in entrepreneurship, free competition, trade liberalization, and their moral, legal, and political foundations must rethink how they make their case.


The line I often hear is “America is a country with an economy, not the other way round.” To which I say, “Amen.” But America is also a country in which the idea of being a commercial republic is at the core of our identity. Much of my book involves spelling out how the idea of a commercial republic is inscribed into key texts, speeches, and documents of America’s Founding like the Federalist Papers and George Washington’s “Farewell Address.” As the historian Gordon Wood points out, this is where America finds its identity as a nation.

Put simply, key Founders believed that America’s future was to be a polity in which free and dynamic commerce would play a powerful role in defining society, as opposed to, say, the priorities of aristocratic or feudal societies. The “republic” side of this political economy equation is that this commercial society would operate within the context of institutions and sets of virtues that draw upon classical, religious, and moderate Enlightenment sources.

That, I’d suggest, is the vision that those who regard free markets as the most optimal economic system for America should embrace. Protectionists and industrial policy advocates play the patriotism card all the time. That’s ironic, given that tariffs and industrial policy are always driven by, and always focused on, promoting sectional and special interests rather than the general welfare of 330 million Americans.

Let me sum it up this way: America isn’t meant to be just another European social democracy engaged in managed decline. America isn’t meant to be a corporatist state like the World Economic Forum’s envisaged “stakeholder capitalism,” let alone Mussolini’s Italy. America doesn’t have to relive that miserable economic decade known as the 1970s. If those who believe in free markets can tap into that vision of America’s understanding of itself as a commercial republic and what this means for the United States’ place in the world, we have every reason to be hopeful.