Capitalism is the most productive economy for redistribution, efficiency, and innovation

In light of all these virtues of a free-market system, and with due cognizance of the evidence gleaned from the performance of various modern economies around the world, it seems almost undeniable that the starting point and fundamental institution of a successful advanced economy should be the capitalist marketplace. No form of a centrally controlled command economy is capable of matching the results of a free-market system when it comes to productivity, efficiency, economic innovation, and personal freedom. That said, it seems equally clear that collective action through government agency is an essential complement to the free-market system. Laissez-faire partisans want to insist that the only problem with a completely laissez-faire society is that it has never been tried. But there are in fact very good reasons that no democratic society has ever chosen to leave free markets totally unconstrained and supplemented. So let us now turn our attention to identifying the most important of these good reasons. They fall broadly under three basic headings. First, government actions are necessary to correct or manage the failure of the real world to provide the necessary enabling conditions of properly functioning markets. Second, governments need to prevent or buffer certain economically and socially destructive consequences that can be created by unconstrained market dynamics. And third, democratic governments need to act on behalf of important public goods that markets are incapable of providing.