It's time to rename capitalism

The night of President Obama's re-election victory over Mitt Romney, a group of college students outside the White House was filmed chanting "Karl Marx, Karl Marx, Karl Marx!" They also claimed they supported Obama because of "socialism." Now, there was good reason to think these rowdy, frat-boy types were just making mischief. After all, they also started yelling the name of NBA superstar Karl Malone and ranting about "Obama phones." Probably just a bunch of Young Republicans trolling us all.

Still, plenty of worried viewers saw the viral video — likely on "the YouTube" — as more evidence that pampered young Americans were rejecting America's free enterprise system. As one commenter put it, "Let them go live in those Communist Countries and see what they get away with! They are fools!"

Of course, America's millennials are hardly some fifth column of communist sympathizers. Nor are they idiots. But they are at least a bit skeptical of "capitalism." A new Harvard University survey finds that 51 percent of young adults between the ages 18 and 29 say they don't support capitalism, versus just 42 percent who say they do. Feel the Bern, right?

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Yet, oddly, many of those same capitalism skeptics also hold views similar to those of any Ayn Rand-loving free marketeer. For example: Less than a third believe government should play a large role in regulating the economy, reducing income inequality, or stimulating economic growth. Likewise, just a third said they supported socialism.

Maybe one problem here is the word "capitalism" and what it evokes in the aftermath of the Great Recession and Wall Street bailout. Maybe "capitalism" really isn't the right word for the free enterprise system, the deep magic that has made America the richest, most powerful nation on Earth. Indeed, wherever and whenever there's been a bit of economic freedom, amazing things have happened — from Europe in the 1800s to China and India in the late 20th century.

That long story of human progress is beautifully told by economist Deirdre McCloskey in her new book Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World. It's the final volume in a trilogy that is really one long argument: McCloskey contends that what sparked the Industrial Revolution and subsequent Great Enrichment — the maybe 10,000 percent increase in Western living standards over the past 200 years — was a change in attitudes about the middle class and the innovative, entrepreneurial capitalism it practiced. The West slowly became a "business-admiring civilization," and got wildly rich in the process.

Now McCloskey doesn't much like the word capitalism, the "C-word" as she terms it. "Our riches," she writes, "did not come from piling brick upon brick... or bank balance on bank balance... but from piling idea on idea." Capital, in all its forms, was necessary but not sufficient.

But what to call the idea of encouraging a system of churn, of what Joseph Schumpeter later termed "creative destruction?" McCloskey has a devised a few possibilities:

Maybe millennials aren't capitalists as much as they are "innovists" or "innovationists." They believe the same dynamic economic system that created those amazing panes of internet-connected glass in their pockets will also create a better world. They may not like "capitalism," but they know the difference between Lehman Bros. and Google.

Editor's note: This article originally mischaracterized who coined the term "creative destruction." It has since been corrected. We regret the error.