Published by EH.Net (May 2022).

Wyatt Wells. Permanent Revolution: Reflections on Capitalism. Stanford: Stanford Briefs (Imprint of Stanford University Press), 2020. 192 pp. $14, ISBN 978-1503612372.

Reviewed for EH.Net by Raymond C. Niles, Senior Fellow, American Institute for Economic Research.


Permanent Revolution is a superb integrative discussion of capitalism that unites history and economics with its political, cultural, and sociological foundations. When academics typically confine themselves to an in-depth “silo” of knowledge cut off from other domains, this form of integration is rare and welcome. Moreover, the author displays a deep, scholarly grasp of each area, although not without some shortcomings.

Capitalism is an ideologically fraught topic. Wells avoids the biases of ideology by ruthlessly focusing on facts. Unfortunately, he does this without any footnotes. This makes the book very readable – he is a talented writer and the text flows – but it is a shortcoming for the academic reader who may want to explore further the sources of his facts. Where this reviewer has first-hand knowledge, he can attest that Wells has captured them faithfully, but citations would allow anyone, even non-experts, to make that determination on their own.

The title, “Permanent Revolution,” is a nod to Joseph Schumpeter, the early 20th century economist and student of capitalism’s history and economics, whom the author quotes at length throughout the book. This is a wise choice, because Schumpeter, like Wells, takes a broadly integrative and historical approach to understanding capitalism, which allowed him to come up with insights that still seem profound and modern today, more than 70 years after his death.

Consider this memorable quote from Schumpeter that Wells uses to show that capitalism raises the standard of living of the “masses” even while simultaneously creating inequality:

“The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort.” (p. 122)

Inequality is not a bug of capitalism, but a feature. It incentivizes entrepreneurial innovation and harnesses the large chunks of capital required to fund large enterprises and achieve the economies of scale that raise our standard of living. Wells provides numerous fascinating case studies of this process in action, using well-known entrepreneurs such as Rockefeller, Carnegie, and Ford, but also less well-known ones, such as Chessie Cummins of Cummins Engine and Homer Laughlin, who invented the popular Fiesta tableware during the Great Depression.

Wells offers numerous examples explaining the beneficial role of Wall Street finance in mobilizing capital, directing it to its highest-valued uses, and reconstituting failing businesses. In one example, he recounts how financier J.P. Morgan “morganized” – i.e., restructured – the failing Richmond Terminal railroad conglomerate in 1893 by removing incompetent management, shedding underperforming assets, and creating the successful Southern Railroad.

Schumpeter famously said that capitalism produces “gales of creative destruction.” Similarly, Wells sees a “permanent revolution” where capitalism not only continually reshapes a nation’s economic institutions, but all aspects: political, cultural, artistic, and educational. Wells sees capitalism as the engine at the center of a beneficial liberalism, which flowered during the 19th century when capitalism swept the Western world:

“Moral advances have accompanied material ones. By the early twenty-first century, every country in the world had formally banned slavery, and most had substantially expanded the rights of women.” (p. viii)

Another virtue of the book is that it is free of Marxist cant, which mars too many histories of the capitalist era. He avoids such built-in pejorative language as “robber baron,” despite its common use. He implicitly acknowledges that the great entrepreneurs of the “Gilded Age” and the 20th and 21st centuries earned their fortunes by creating abundant beneficial products for the mass market. In that vein, in plain language he defends such practices as financial speculation and rebuts the common Marxist charge that capitalism alienates labor.

His defense of profit is masterful, making capitalism fundamental even to progress in the non-material, spiritual realm.

“Financial profit is inseparable from economic efficiency, however. Assuming competent accounting and reasonably efficient markets, profit is simply the surplus above and beyond the cost of production, and it pays for everything else in society – art, literature, religion, philosophy. Profit is necessary, though not sufficient, for ‘the good life’.” (p. 70)

If there is any criticism of the book, it is what I would call “status quo bias.” The author never explicitly defines capitalism and makes a common error among historians of equating mixed capitalistic economies with “capitalism.” This lets him fall into the trap of impugning some problems as capitalism’s failure when, in fact, they are the result of government intervention.

This is particularly true in his discussion of banking (despite his worldly discussion of Wall Street finance). He accepts without question that America’s problem with “wildcat banking” in the 19th century was a problem with capitalism. He is apparently unfamiliar with the work of financial economists and historians such as Lawrence H. White, George Selgin, and Richard Timberlake, which shows that the bank runs and failures of the 19th century stemmed from the state-level franchises and unit banking laws that prevented a robust national banking system from emerging. This is why when the Great Depression hit neighboring United States and Canada, the U.S. lost 40% of its 40,000 tiny, fragmented banks to bankruptcy while Canada did not have a single bankruptcy among its 12 national banking networks.

He makes a similar error when discussing the British economic malaise of the 1920s. He conflates as explanation the simple historical observation that the recession reflected the failure of new companies to employ enough of the newly unemployed workers from declining industries. This “employment” view of business cycles does not explain; it only describes. A close study of British economic history shows that the actual cause of the 1920s malaise was financial. It was caused by the Bank of England’s mispricing of the British pound after the war when it tried to restore the pound’s pre-war parity to gold. Because of inflation during the war, this merited a huge deflation, which hurt borrowers throughout the economy.

Permanent Revolution is a delight to read. In terse, lucid prose, loaded with numerous examples, it demonstrates that as capitalism permanently and relentlessly overturns the status quo, it simultaneously elevates us, economically and culturally.


Raymond C. Niles ( is a Senior Fellow at the American Institute for Economic Research. He holds a PhD in Economics from George Mason University, teaches economics at the university level, and is a former Wall Street executive.

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