The GOP primary season is turning into a tutorial on capitalism—which no doubt will be a theme of the general election, so perhaps it's just as well that it's surfacing now.

It is interesting that Newt Gingrich, a former college professor, is responsible for making the election a debate about capitalism even before it reaches the general election. Professor Newt has done this with his attacks on Mitt Romney's tenure at Bain Capital, a private equity firm.

A PAC supporting Gingrich is sponsoring a film called “When Mitt Romney Came to Town” that purports to show that Romney’s career at Bain Capital was devoted to getting rich from looting companies.

As for the film, I haven’t seen it, but it does sound like the left’s critique of capitalism with some ominous music added. It is also riddled with errors, according to this story (“Gingrich’s ‘Bain Bomb’ Fizzles”). Yale corporate law professor Jonathan Macey also critiques the film and general anti-Bain theme that has emerged:

This is anticapitalist claptrap. Private-equity firms make significant investments in companies, mainly U.S. companies. Most of their investments are in companies that underperform industry peers. Frequently these firms are on the brink of failure.

Because private-equity firms are, by definition, equity investors, they make money only if they improve the performance of their companies. Private equity is last in line to be paid in case of insolvency. Private-equity firms don't make a profit unless their companies can meet their obligations to workers and other creditors.

Private equity firms don’t do well by destroying companies—they grow when they save companies. But because they invest in struggling companies they do see a percentage of failures. The “exit strategy,” however, is to save the company and have it go public.

That is why an anti-Romney ad featuring an unemployed steelworker misrepresents what equity capitalists do. The steelworker lost his job after Mr. Romney came to town. “We lost our jobs, and they made millions,” he says. “Mitt Romney likes to call himself a job creator. He doesn’t care about jobs. He cares about money.”

More likely, Romney and Bain lost millions on the venture because it failed. Unlike with the Solyndra debacle, they lost their own money, not the taxpayer’s. As for one person who claims to have lost his job because of Romney, he has found a new calling: attending Romney events and telling his sob story. He omits to mention that he was offered his job back but a union strike ultimately led to the plant’s being closed.

But do equity firms destroy jobs? Macey writes:

Private-equity firms not only help corporate performance, but in the long run they lead to more employment and higher wages as well. The alternative to the leaner, smaller firms created by private equity are bankrupt firms that do not employ anybody. And private-equity firms tend to use more incentive-based pay than other firms. A 2008 Government Accountability Office (GAO) report shows that the companies in which private-equity firms invested had low employment growth relative to their peers, and their employment growth rose after they were acquired by a private-equity firm.

So in 2012 the presidential race is going to be about capitalism. I hope the pro-capitalist side will come out swinging, armed not only with facts about how the system works but also able to make a moral argument that this is the best and most just system going. This might be helpful.