Education and Capitalism

Capitalism once did a superior job providing kindergarten- to-twelfth grade (K-12) schooling in the United States, according to Herbert J. Walberg and Joseph L. Bast, who say it would do so once again if the public could overcome its fear of markets and economics.

While the legal, sociological, and political cases for school choice have been made repeatedly, the economic case has become the weak sister of the movement, say Walberg and Bast, perhaps because a conversation with an average person about economics reveals many myths and misunderstandings. Many citizens misunderstand capitalism and cling to old myths about it.

Competition among schools and reliance on private rather than public financing were the rule in the United States until the mid-1800s. Literacy rates during that time were as high as, or higher than, literacy rates today, suggesting that capitalism did a superior job educating the nation’s populace. How to use competition and private financing to improve schools in the twenty-first century is the focus of Walberg and Bast’s new volume, Education and Capitalism, released by Hoover Institution Press.

Many people believe capitalism encourages greed and exacerbates inequality, tends toward monopoly and low-quality products, and allows corporations to manipulate consumers and waste money on advertising. The failure of economists to debunk these myths about capitalism poses a huge challenge for market-based school reform.

In this book, the authors contend that the U.S. public will not embrace market-based reforms beyond pilot programs for the inner-city poor or charter schools until they understand what markets are and trust them to provide quality education for their children, just as markets provide superior goods and services in nearly all parts of modern economies. The authors make the convincing case that markets can indeed be trusted to provide high-quality, universal schooling.

  • Part 1 of Education and Capitalism summarizes the most recent data on student achievement and school productivity, documenting the need for fundamental reform of the nation’s schools and describing the main reasons why schools and past efforts at school reform have failed.
  • Part 2 explains why capitalism can be trusted to produce safe and effective schools. It explains the institutions of capitalism and addresses the misconceptions about how it operates, putting to rest nine myths about capitalism such as, for example, that businesses earn obscene profits and that businesses would exploit workers were it not for government intervention. The authors defend the morality of capitalism along with its compatibility with religious and humane beliefs.
  • Part 3 examines the relationship between education and capitalism, explains why economics is an appropriate tool for studying how schooling is delivered, and presents important economic insights about reform.
  • Part 4 describes privatization options and choices, with a special emphasis on school vouchers including specific design guidelines for effective voucher programs.
Praise for Education & Capitalism
“Walberg and Bast have written a scholarly, readable and timely book that cogently explains how market competition can promote school improvement. I recommend it as a college-level text in economics, education or public policy, and to anyone who cares about the education of our children.”

— Joseph P. Viteritti, New York University

“A first rate book on improving America’s schools that challenges the popular fallacies, misunderstand-ings, and romantic notions that many have about capitalism and economics and that makes the case for market-based school reforms.”

— Bruno V. Manno, Annie E. Casey Foundation

“I highly recommend this book to my colleagues in the U.S. House of Representatives, and to parents and taxpayers everywhere who seek better educational opportunities for every child. Bast and Walberg have performed a tremendous service for the cause of school reform by putting in place a complete and objective defense of capitalism, the need for better schools, and the way to get there.”

— Hon. Philip Crane, Member of Congress