Wednesday, October 22, 2008

Democratic Capitalism

George W. Bush recently made a point of stressing that Democratic Capitalism is still "the best system ever developed". This, despite the fact that his administration has recently engaged in some economic activities that even his party members have called "socialist" or even "communist". I don't often agree with this President but I found myself nodding in agreement but also chuckling a little bit when I heard him make this pronouncement. It seemed like he didn't want anyone to think he was going all pinko on us, he just needed to pull some pinko tricks to save the banking system and stave off the worst financial calamity since the great depression of the 1930's.

Democratic Capitalism while clearly not perfect is a reasonable and efficient means to the end of maximizing happiness. What we've seen championed by the recent White House has definitely been Capitalism, but Democratic?... Not so much. As long as the Democratic side of that characterization is prioritized then Capitalism can be employed to arrive at some excellent results. What happens sometimes, as it has recently in the Western financial system is that we've forgotten that Capitalism is a means towards the ends of Democracy, not something that should be pursued at the cost of Democratic priorities.

Just because Capitalism is an efficient means of arriving at economic results doesn't mean that the most extreme version of laissez-faire Capitalism will therefore be the best possible road to success. Why do we create wealth in the first place? If you think it is only for the purpose of lining your own pockets at the expense of anyone else living on Earth now or in the future, then you might want the most open system of unregulated markets, especially if you already happen to be someone of wealth to begin with. If you think that wealth should be created so that you and as many of the people on your planet as possible could also live happily then you might accept that Capitalism is an efficient way to arrive at this goal. With this in mind you wont mind that the system is regulated and occasionally tweaked to ensure that we keep our priorities in focus. Trickle-down economics only works to a limited degree. After certain high levels of wealth have been attained the trickle mostly stops.

Capitalism went too far recently and the resulting pendulum swing may destroy wealth faster than it created it in the first place. Why can't we learn that fundamentalism of any kind is a dangerous and doomed mindset to embrace? The free market capitalists that were pushing for the deregulation of markets and the decommissioning of government are just as dangerously fundamentalist as the extremists who wish to destroy them. The key to surviving any crisis is to try to avoid whip-lashing in the opposite direction. Just because Capitalism is flawed and has caused this current turmoil doesn't mean that a hyper-controlling style of government is therefore better. Let's try to keep our heads, remember our priorities and move toward our New Capitalism to meet those needs.


Groucho Marx said...

Hey Jake, this is an interesting attempt at political economy, but I don't think you go far enough. If you want to link the efficiency of capitalism with the merits and controls of democracy, then I think you need to spell out the how, what, why, and when a little more. You accurately portray yourself in the middle of two extremes, the key is to convince the reader why they should share your position. It's not enough to condemn the extremes, you need to justify the middle.

JakeJakob said...

If I had the patience and discipline I would go deeper but I should just say that I am in fact an extreme fundamentalist when it comes to my abhorrance of fundamentalism.

kerrjac said...

Stimulating post on "Democratic Capitalism"!

Bush's awkwardness in addressing "democratic capitalism" is b/c democracy is a mode of government & capitalism is an economic system. Not to oversimplify, but they're very different, and they evolve on their own timelines.

As for the current crisis, I would argue that it's more due to government's impractical credit-laws than to capitalism.

JakeJakob said...

I agree but it is surprising how often Americans seem to conflate democracy and capitalism. Of course they are not the same nor do they always occur simultaneously. China is not democratic but is clearly capitalist.

When I write of democracy I am often referring not just to a possible mode of government but to a horizon concept of a form of social organization that always never fully arrives.