Fellow blogospherian educator LK gets ready for the school year by posing the following essay question:
...[D]emocracy must write the rules for capitalism, not the other way around.
In what ways are the observation and conclusion valid or invalid? Give concrete examples from the United States that illustrate either validity or invalidity. If the conclusion is invalid, explain why capitalism should write the rules for democracy [LK, "Quotation Of The Day: Capitalism, Democracy And An Essay Question Edition," The Displaced Plainsman, 2012.08.06].
That classroom question got to be worth some merit pay. Let me see if my response can win some extra credit.
Capitalism is an economic system. Democracy is a social system. We do not serve the economy; the economy serves us. Because the economy is a means to the end of a just society, democracy should write the rules for capitalism.
We build community to protect human dignity, liberty, and security. Democracy embraces and protects those three values. Democracy acknowledges the dignity of every individual by granting every individual an equal right to participate in community decision-making. By acknowledging that dignity, democracy provides liberty by allowing us to live, as Rousseau put it, in "obedience to a law which we prescribe to ourselves." While some fear that democracy will allow an angry majority to tyrannize a minority, the respect for dignity and liberty inherent in democracy provide more security, more universal protection of minority rights, than does rule by an arbitrary few, a capricious dictator, or anarchy.
Capitalism has practical effects that protect dignity, liberty, and security. But its core goal is to distribute goods efficiently, not to secure particular values. In pursuit of its economic goal, capitalism can take away dignity, liberty, and security. In capitalism, one's dignity, the ability to participate in the system, is a function of one's wealth. Capitalism leaves some individuals with no wealth and no ability to participate. Without wealth, one has no practical liberty or security in a capitalist system. In pursuit of economic efficiency, capitalism inevitably leaves some citizens behind.
To protect fundamental social values, we must check capitalism with democracy. Adam Smith recognized that capitalism alone could not meet all needs. Economic competition will not protect the dignity, liberty, and security of all citizens equally against invaders and criminals. Economic competition will not produce roads, parks, or schools that all citizens can use. Smith saw meeting those needs as proper roles for government. Democracy allows all citizens to work together through government to meet those needs.
We can see the primacy of democracy over capitalism in the United States' policies during World War II. Faced with the Axis threat, the United States did not allow the normal capitalist system to determine the use of resources. The government imposed rationing on numerous consumer products to ensure a reliable supply of materials for military production. Still, in the middle of global war, the government stuck with democracy, giving ultimate authority over those crucial economic decisions to all voting citizens.
Democracy and capitalism both have their perils. But democracy provides the moral check that amoral capitalism needs. If we want a society in which the economy is a tool toward higher ends than the production of profitable widgets, we must use democracy to write the rules for capitalism.
Whew! Now time for some breakfast, produced by the wonderful capitalist machine of Topco Associates of Skokie, Illinois!