- - Sunday, April 30, 2017

The first thing to understand is that “democracy’ is a system of governance, and “capitalism” is an economic system. The genius of America has been to unite these two elements into a synergistic whole with the goal of providing every American “the right to life, liberty, and the pursuit of happiness.”

The foundation of capitalism is “profits.” A profit occurs when you sell something for more than you paid for it. All taxes depend on profits — no profits, no taxes; no taxes, no government. So, if governments (combining local, state and national) take too much of the profits generated by businesses, there will not be any profits, and the economy will fail — and people will go hungry.

Thus, there will always be a tension between government and business over the amount of profits government takes and the amount kept by businesses. Since there is no accepted “balance,” there is always a tug of war between advocates of “big government” and “limited government,” generally represented these days by the Democrats and the Republicans.

There are some basic issues at stake. First of all, governments generally have the guns, meaning the resources to enforce whatever they want to enforce, whether through confiscation (taxes), incarceration (prison), or militarization (martial law). The basis of democracy is to limit the powers of government so that it treats its citizens according to rules set by the representatives of those citizens. It is the responsibility of these representatives to in fact control the police, the military, and all law enforcement resources in such a way as to nurture the life, liberty and pursuit of happiness of all its citizens. These “rules” are what we call the “law of the land.”

Obviously, it takes money to maintain a government capable of providing all these critically important services. Thus, the need for taxes. But there are no taxes without profits. People have to be motivated to work hard and to take chances with their money. So, what motivations are there which are powerful enough to get people to work hard?

Many motivations have been tried throughout human history. Fear is the most obvious. There can be physical dangers, the extreme of which is slavery. There can be fears of illness, of survival, of boredom, and so on. Most of human history has witnessed fear imposed by masters on slaves as the principal engine of economic activity. This is still rampant in our times — on a macro scale, such as in North Korea and other dictatorships, or on a micro scale such as in human trafficking.

The early history of capitalism was based on a slightly upgraded form of slavery. Where capitalists had no fear of government — or were in fact the government themselves as kings, oligarchies, or dictators — many forms of abusive behavior prevailed, including child labor, company stores, beatings and actual slavery. All human labor was grounded in despair.

Somehow, by the grace of God, the Founders of America — though many were themselves slaveowners — allowed the ideals of hope to shine brightly in the documents and organizations of the new Nation. Nowhere else in human history to that time had a national constitution been adopted which recognized the fundamental rights of all people “endowed by their Creator” (not by the State or the Church or the King) to “life, liberty, and the pursuit of happiness”. That bias against big government pervades all the American foundation documents. The accompanying bias in favor of personal freedoms was a necessary byproduct of this view, which fit well with the frontier and the agricultural life of most early Americans.

Those early ideals were so firmly imbedded in the American character that we have spent the next 241 years trying to realize in practice the goals set forth by our founders, even to the fighting a war over these ideals, a war which cost 650,000 lives, an entire generation of young men. We have come a long way, but we have still far to go. Our only claim has to be that we never, ever stop striving to achieve for all our citizens life, liberty and the pursuit of happiness in the midst of our ever more complicated national life.

So, what motivation tops all others to make a person work hard, take chances, and create new ideas, new things, and new circumstances? That motivation is the desire to provide for a person’s family, to live in peace and security, and to dream big dreams. This is the spark of hope which underlies capitalism and entrepreneurship and a dynamic society. This is the motivation which moves labor from fear to hope, and which provides opportunities for a person to do and become whatever he or she can achieve. This is American capitalism at its best. Americans have spent two centuries rescuing the good of the capitalistic idea, shaving off the evil, and developing the most prosperous and egalitarian society in the history of the world.

The mechanism through which this integration of government and economic freedom has evolved is democracy – a means by which the will of ordinary people can be enforced against the evils of unbridled capitalism, as well as human slavery and degradation. Democratic capitalism, as it has evolved in 21st century America, has set the standard for all the world.

We must, however, be vigilant, and be aware that we have not achieved our ideals, that they are ever under attack, and that the challenges will forever be changing as we continue to create our own American history.


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