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These developments, however, also involved wrenching social changes, as people whose families had lived on the land for centuries moved to often crowded, filthy urban industrial centers. Yet this early capitalism represented for millions an escape from a still more oppressive rural poverty. Even Karl Marx and Friedrich Engels wrote in the Communist Manifesto that capitalism "during its rule of scarcely 100 years, has created more massive and more colossal productive forces than have all preceding generations together."
Capitalism has exhibited a phenomenal ability to provide what consumers demand. It has consistently outperformed socialism. Writes Catholic Theologian Michael Novak: "No other system has so quickly and universally raised the levels of health, longevity and income of the entire world."
Early in the 20th century, Japan and Russia stood at approximately the same stage of economic development. Japan went the capitalist route and acquired Asia's highest living standard. Russia went the Communist path and has never produced consumer goods of quality or sufficient agricultural output.
The Great Depression beginning in 1929 was capitalism's harshest test. One-fourth of the U.S. labor force was unemployed, national output fell by half, and some 11,000 banks closed their doors. Capitalism was in large part saved by the innovative theories of British Economist John Maynard Keynes, who advocated temporary enormous government spending to get national economies growing again. Vast wartime expenditures in the early 1940s finally accomplished that.
During the quarter-century after World War II capitalism enjoyed its halcyon days. From 1951 to 1973 growth in the advanced industrial nations expanded by an average 4.8% annually, while inflation generally was low. U.S. presidential advisers by the late 1960s confidently claimed that they had captured the golden fleece of continued, noninflationary, high economic growth. The 53 recessions and depressions that had afflicted U.S. capitalism's previous 165 years were a part of history, they figured, much like the Black Death. This optimism came crashing down during the 1970s, a victim of excessive demand by Government and consumers and a sixteenfold increase in OPEC oil prices.
Yet, having survived wars, slumps and excessive booms, capitalism stands to surmount the current crises. Writes Left-of-Center Economist Robert Heilbroner, one of capitalism's most fervent critics and an advocate of central economic planning: "History has shown capitalism to be an extraordinarily resilient, persisting and tenacious system, perhaps because its driving force is dispersed among so much of its population rather than concentrated solely in a governing elite." After predicting its imminent collapse for well over a century, even capitalism's critics recognize the staying power of its ideas.