Responsible Capitalism

In previous columns I have said that I am not an opponent of capitalism itself, but only of unregulated or uncontrolled capitalism, the sort that puts money ahead of ALL else and makes everything a commodity, including human values.

That is self-defeating capitalism, the kind that is weakening and could destroy our democracy, and one would think economists would deplore this.

Some of them don’t because recent history has made it crystal clear that capitalism works quite well with authoritarian dictatorships. China is the best example.  Although capitalism is theoretically based upon competition, large corporations from all over the world, including the United States, are willing to give up some freedoms (and even spy for the Chinese government) in return for subsidies or generous profits.

But this is not the only way to enjoy the benefits of capitalism.  We can have a healthy and even compassionate democratic capitalist economy that promotes a healthier life and physical and economic well-being for all. But for this to happen, democratic governments must put limits on capitalism and on its inherent desire for endless profits based upon endless growth.

The United States government did this for a generation after World War II. Until about forty years ago, we encouraged or at least tolerated (depending upon your political party) labor unions which brought prosperity to the middle and working classes. Banks were not allowed to speculate in stocks, companies provided adequate pensions to retirees to supplement social security.

During this period, until the late 1970s, despite continuing problems of poverty and racism, CEO salaries were not enormous, and business and corporation owners often lived in or near the neighborhoods where their employees lived instead of in gated communities or on off-shore islands to avoid taxes.

Democratic governments can also insist that capitalist enterprises, including banks, serve their customers instead of only their stockholders.  They can also “reclaim the public realm, in the words of Robert Kuttner,” by protecting Medicare and Medicaid, making higher education and home ownership affordable to all.

Kutter’s vision of a better capitalism is found in his book, Can Democracy Survive Global Capitalism? (2018). It makes the point that only a determined effort by a democratic government can keep capitalist exploitation under control.

Democratic government can introduce policies to keep businesses and corporations from moving overseas, an idea that was once attractive to political conservatives. In this way, jobs of American workers can be protected and companies can contribute their fair share of taxes.

We need to remember that Democracy is a political system with economic implications. It is based on the idea that people can govern themselves. This idea is based upon a belief that humans have the ability to relate to each other by voting, by cooperating and agreeing to share power peacefully.  It makes agreement more important than competition. It focuses, as Lincoln, said, on “our better angels.”

Capitalism is an economic system with political implications.  It too is based upon a particular understanding of human nature, one that promotes competition over cooperation (although governments subsidies to the rich are OK).  Defenders of capitalism often oppose help for the poor or underprivileged and argue that poverty is a sign of personal weakness and failure. 

This may sound abstract, but real people are suffering in many ways in this country because we are now governed by and for the very rich instead of by and for the people. 

For the sake of our future as a democratic republic, and for our survival in the face of the crises we are facing (rich as well as poor are dying of COVID-19 and suffering from climate change), we must regulate capitalism and make it responsible to all of us instead of just to wealthy stockholders.

Democratic and Republicans capitalists should support this for several reasons:

• We are reducing the number of future customers, especially children, whose health and future careers as consumers are being threatened by current policies;
• People who are fleeing from fires, hurricanes and sea level rise usually don’t have as much time or money to go shopping;
• When we help each other, we promote prosperity for all;
• Because it is the right thing to do, morally.