Friedrich August von Hayek: Review of Carl Snyder’s Capitalism the Creator (1940)

Hayek’s journal book review offers an appreciative but methodologically critical assessment of Carl Snyder’s account of modern industrial progress. Its central distinction is between the value of evidence supporting capitalism and the adequacy of that evidence to resolve theoretical disputes. Hayek largely endorses Snyder’s economic conclusions, praises his statistical knowledge and intellectual courage, and nevertheless argues that a persuasive defence of capitalism requires explicit concepts and abstract reasoning.

The review begins by identifying obstacles to the book’s reception: its unfashionable subject, its methodological commitments, and its occasionally irritating style. Hayek treats these as possible impediments to recognition rather than reasons to dismiss the work. Snyder addresses problems of profound importance lucidly and effectively, while maintaining positions likely to alienate contemporary readers. The opening commendation establishes that Hayek’s subsequent objections concern the strength of Snyder’s argument, not disagreement with its principal conclusions.

Snyder’s distinctive position combines enthusiasm for applying natural-scientific methods to society with support for freedom of enterprise. Hayek finds this combination unusual among scientists and engineers interested in social questions, whose methodological outlook often leads them toward planning and conscious control. Snyder’s monetary views do involve control, but Hayek places them closer to nineteenth-century liberal writers, particularly the Currency School, than to contemporary fashions. The review thus separates methodological allegiance from political conclusion: admiration for natural science does not necessarily entail economic planning.

Hayek credits Snyder with assembling impressive evidence of the progress capitalism enabled over the preceding two or three generations. Drawing on wide-ranging knowledge and specialised statistical studies, the book makes illuminating aspects of economic evolution accessible to a broader public. The difficulty arises when Snyder asks these facts to refute arguments about excessive saving, the necessity of planning, and the abolition of capitalism:

Yet, although I happen entirely to agree with him on almost all these points, I fear that his facts will convince few who hold contrary opinions.

This reservation marks the review’s argumentative turn. Agreement with a conclusion does not establish that the route taken to it will persuade an opponent. Snyder’s sound common sense confronts elaborate theories capable of interpreting the same evidence differently. Hayek urges economists who discount the importance of savings to industrial progress, or reject preventing credit expansion as the feasible means of preventing depression, to study Snyder’s findings. But he expects the dispute ultimately to require the abstract reasoning Snyder distrusts.

Although he would probably not admit it, his own interpretation of facts is everywhere, and inevitably, based on theories which differ from those of the theoreticians only by not being stated explicitly.

The objection is not that empirical inquiry lacks value, but that interpretation cannot dispense with theory. Leaving assumptions unstated makes them less open to scrutiny, while neglecting precise definitions weakens the connection between evidence and conclusion. Hayek’s characteristic example concerns the book’s governing term:

To give a single, but characteristic instance, the author leaves it rather obscure, whether by "capitalism" he merely means production with the help of large quantities of capital, or the system of free enterprise and private ownership of the means of production to which it is commonly applied.

This ambiguity distinguishes a technical condition of production from an institutional arrangement. Evidence that abundant capital promotes industrial development does not by itself establish the merits of private ownership and free enterprise. Snyder’s reference to Böhm-Bawerk and his application of “state-capitalism” to Russia suggest the broader, capital-intensive meaning; Hayek observes that much of the book’s argument would lose its point if that meaning were intended.

The review closes by returning to the book’s empirical strengths. Hayek singles out its account of the circumstances shaping Federal Reserve policy in 1927–1928 and recommends separate study of its forty-four statistical charts, while regretting their insufficient integration with the text. The resulting judgment is both supportive and exacting: Snyder supplies valuable evidence and a courageous defence of capitalism, but the defence needs conceptual precision to meet opposing explanations. The review’s broader relevance lies in its insistence that facts acquire argumentative force through clearly articulated theory, even when author and reviewer substantially agree about economic policy.