Is capitalism destroying democracy? A new report from the Competitive Enterprise Institute examines that question at a time when progressives increasingly assert democracy in the United States is being destroyed by the profit motive and too much economic freedom.
“Critics of the free market contend that the will of the majority to transform policies and lives should not be constrained by inconvenient limits on government power,” said Iain Murray, author of the report, Democratic Capitalism: Why Political and Economic Freedom Need Each Other. “Yet the American democratic system was designed by the Founders specifically to be constrained. Constraints on government are precisely what prevent government from doing unjust, harmful things to people of all political persuasions – including the progressives who now chafe at those limitations.”
The report makes several fundamental points about the importance of democratic capitalism, including:
- In American democracy, “negative rights” – the right not to be subjected to an action of another person or group – are enshrined in the Bill of Rights. For example, we do not allow a democratic majority to use its power to ban any form of political speech, to segregate their communities on the basis of race, or to impose religious views or obligations on others. We have explicitly rejected the idea of “unfettered democracy.”
- Liberal democracy performs better than democratic socialism. Societies with greater economic freedom have higher standards of living and lower rates of crime. The difference is that liberal democracies recognize and protect economic rights – property, contract, access to capital.
- Even in America, economic rights are constrained much more than other rights. The federal government regulates most aspects of the nation’s economic life, and state and local governments regulate much of the rest.
- Capitalism has an important moral imperative. For example, if we believe in the morality of free association, we must respect the right of people to associate – combine interests – in a corporation.
- Virtuous capitalism strengthens democracy. By providing a better standard of living for all, it reduces the need for divisive political solutions for important things in life like employment opportunity and financial security.
- Conversely, using government to trample economic freedom – the right of people to seek out opportunities and build financial security – will only reduce or eliminate those opportunities and hurt the wellbeing of everyone.
View the report, Democratic Capitalism: Why Political and Economic Freedom Need Each Other by Iain Murray.