Longer ago than I like to think back I wrote a book, Capitalism and the Permissive Society, the title of which puzzled some people, as I was in favour of both. Like most books on political economy it was highly imperfect. But its faults were those of omission rather than commission; and, looking back on it, nearly two and a half decades later there is almost nothing I wish to withdraw.
There is no need to pretend that market rewards reflect personal merit. As Lord Melbourne said in another context: “There is no damn’d merit about it.” Redistribution is best carried out by a (preferably unified) tax and social security system, and not by interfering with prices and wages.
Successful capitalism is also compatible with – and in my view requires – the use of monetary and fiscal policy to moderate fluctuations in economic activity, and to prevent long periods of demand deficiency causing needless unemployment as well, of course, as to prevent runaway inflation.