- The Washington Times - Tuesday, July 3, 2001

Michael Novak a leading Catholic social theorist of our fractious world, an adviser to the Vatican, a winner of the prestigious Templeton Prize and the holder of the George Frederick Jewett chair in religion, philosophy, and public policy at the American Enterprise Institute here re-examines the bedrock laws and concepts that conceived, nurtured and built the greatest economic machine and benefactor of the poor in the history of mankind: capitalism. He defines it as a tripartite process: a market economy, a political democracy and, "most importantly, a moral-cultural system based on respect for individual freedom."

Editor Edward Younkins, a business professor at Wheeling Jesuit University in West Virginia, should take a bow for putting together "Three In One," this big basket of Novak articles and lectures. They are premised on, broadly, a free, open and remarkably productive society, a society that challenged communism, that pierced the Iron Curtain, that led Ronald Reagan, standing before the Berlin Wall, to call on the Soviet leadership: "Tear down this wall." And down it came.

Yet capitalism is a market society that somehow gets hit if not denigrated for assorted sins such as "income inequality," "price gouging," "environmental neglect," "suburban sprawl," "corrupting government" and that old standby, "naked greed." Sins charged over and over despite the fact that capitalism itself fits to a T the Abraham Lincoln idea of "government of the people, by the people, for the people."

True, notes Mr. Novak, capitalism is not without warts. It's a human institution and nothing human can be perfect. Take corrupting government, for example, the art of artful lobbying for, if not buying outright with so-called soft money, government privileges such as sugar import quotas or discriminatory income tax exemptions of one kind or another, all defying the constitutional idea of the rule of law, including equal rights.

Mr. Novak hails Nobel economist James Buchanan, who sees the rule of law rotting away, especially since the New Deal, of politicians steadily ceding the framers' model of government checks and balances, as Congress succumbs to back-door bribery, to vote buying and selling. Mr. Buchanan and Mr. Novak remind us that power corrupts, that government corruption is a function of government abandonment of constitutional restraints.

Abandonment, too, of Christian restraints, adds Mr. Novak. Note how dependent free enterprise is on a moral code, how political and personal sins ignore the Ten Commandments, especially the First Commandment against invoking "other gods" (e.g., the state), the Eighth Commandment against theft and the Tenth Commandment against covetousness.

Mr. Novak holds that "capitalism is a necessary (but not sufficient) condition for democracy." He salutes Pope John Paul II's l99l encyclical letter, Centesimus Annus. Here the pope "describes the business corporation as a community that is a model for truths Christianity has always attempted to teach about the human person and community."

Mr. Novak deserves credit for alerting us to what I call America's Other Democracy, a giant endless plebiscite in which consumers vote not every other year but daily, frequently, directly, scrupulously, a democracy disciplining producers everywhere to toe the mark, a democracy meriting the observation of Milton Friedman bearing on the state that nobody spends other people's money as carefully as he spends his own. Ludwig Mises called the process "consumer sovereignty." Michael Novak, a man who makes you think, calls it, simply, "democratic capitalism."


William H. Peterson is an adjunct scholar at the Heritage Foundation and a member of the Investor's Business Daily editorial "Brain Trust."