Capitalism and representative Democracy

by

Published: February 27,2011

Tags: Marty Wiseman, MBJ Columns

As we look at the recent rhetoric surrounding the federal budget and the Cairo-like demonstrations in Madison, Wis., it would be easy to get the idea that the relationship between free market capitalism and American-style representative democracy is threatened with coming apart. In reality, American democracy and capitalism need each other even if their adherents disagree on the nature of their influence.

Perhaps the most unique feature of the form of government created by the founding fathers is the discovery of a means to maximize the relationship between free market capitalism and our truly American form of representative democracy. In fact, over and over again we have learned to manage the almost natural tension between the role of government and private enterprise so that one is always nudging the other back into line. Rarely has there been a time when proponents of either concept were not working feverishly to make their cases that what they advocated as an approach to governance was more of what the citizenry needed.

The push and pull between these two siblings has been present since the Constitution was written. In the modern era the call for big government to deliver where everything else had failed can be seen in Franklin Roosevelt’s announcing of the institution of Social Security in August of 1935. He promised that while we could not assure against all of them, government had it within itself to insure “against the many vicissitudes of life.”  Prior to the advent of social security it was indeed rare that government would give money to individuals. Similarly, Lyndon Johnson announced his all-encompassing Great Society initiatives in a graduation speech at the University of Michigan on May 22, 1964. Johnson promised an all-out “war on poverty” in a way that only the national government could wage. A little more than a decade later Republican Ronald Reagan was elected, and the centerpiece of his campaign was an almost direct reversal of the claims made by LBJ. Reagan famously said that government could not be counted upon to solve the problem – “government was the problem.”  This phrase has been embraced as the battle cry of conservatives ever since. Now we have arrived at the moment that the likes of tax-cutter Grover Norquist has been waiting for when he stated the intent of conservatives to, “Shrink government until we can drown it in the bathtub.”  These are just snapshots of the decades of excesses and shortcomings on both sides of this usually balanced equation.

Lately, however, the hatred and associated rhetoric seem to be fraying this working relationship. There are even intimations by some that one or the other has got to go. This was a point fairly clearly made by a Wall Street Journal writer who stated that in a contest between capitalism and democracy that capitalism must come out on top. The implication was that in its most extreme form for capitalism to win democracy must lose. Is it the case then that our sacred notion of representative democracy is being pitted against our equally hallowed system of capitalism?

Perhaps it is because there is an optimum level of cooperation from both of these concepts that enables us to excel as a country as no other has in history. The success in World War II, putting a man on the moon and the interstate highway system could not have happened without the guiding hand and brave decision-making in government, fueled by the most successful free enterprise economy ever conceived. But when these powerful entities become turned against one another all either side sees is the heavy handedness of the other.

The left tends to embrace regulation of private sector practices, to express deep philosophical concerns over excess profits and the growing gap between executive pay and that of rank-and-file employees and it is prone to sweeping legislation like the recently passed national health care plan. All of these are viewed as excesses made possible by the private sector dollar. On the right, there is the belief that the free market should be unfettered to exercise its form of governance – an almost religious belief that only the market can make public life successful. Furthermore, the resentment on the right stems from government’s efforts to protect the “safety net” under the less successful. That resentment holds that in a market system there are winners and losers, but one can become successful by his/her own devices. Any assistance to the less fortunate should come as a direct choice of the successful, and not at the behest of the government.

The current debate then evolves as we attempt to once again meet in the middle. The same old questions are there. What role of government is too much of a role?  At what point, if any, are capitalistic excesses out of control?  Should we begin by repealing child labor laws?  Who will build the highways?

My guess is that it will be private companies going to work on funds generated in the market place and paid into the government in the form of taxes. It takes capitalism and representative democracy American style to make this work.

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