Democracy and Capitalism

The apparent contradiction of private wealth in a democratic republic is best examined by viewing democracy in the only economic context in which it can flourish: a free market system. Largely capitalist economies can exist outside the context of democratic political systems (Singapore and, increasingly, China, are examples), but democratic political systems cannot exist outside the context of free market economies. We cannot be free politically but enslaved economically. The institutions of civil society that liberal democracies establish and protect—especially private property and the rule of law—enable extremely diverse populations to coexist and work together productively; they enable, in short, free civilizations to exist.⁴ Because this is the case, there will be consequences flowing from the economic system that would not necessarily be welcomed if the political system could somehow exist independent of its economic context: the production of wealth that is not evenly distributed is a principal consequence.

American democracy is, far more than elsewhere, intertwined with a capitalist attitude. The opportunity to pursue one's economic aspirations—the opportunity to become rich—is inextricably a part of the American dream, a dream that captures the imaginations of the poor worldwide, as well as immigrants to America, our working poor, the lower middle classes, and aspiring middle-class families. Reinventing America to establish a society that prevented people from getting rich wouldn't hurt those who are already wealthy, but it would seriously damage the aspirations of the poor. An America that was no longer perceived as the land of opportunity would be an America essentially unrecognizable to most Americans, as well as to most non-Americans and most would-be Americans.

We are so used to the vigorous spirit animating America that it is difficult to keep firmly in mind how rare this spirit is, especially among our peer group—the largely Western⁵ postindustrial liberal democracies. It is worth our time to examine in some detail the nature of these societies, if only as an example of what America would look like without private capital to fuel its competitive spirit and to irrigate its exotic garden of ideas.