Sometimes it seems as if “compromise” has become a dirty word. It’s worth remembering that it was a compromise, Democratic Capitalism, that made the United States the country it is.
Democratic Capitalism is capitalism moderated by the power of democracy to ensure we all have a chance to participate in our economy, share in its benefits and that everyone plays by the same set of financial and legal rules.
Politics isn’t a history lesson, but the history is important. In the 1930’s there was a global conflict between two different economic systems, capitalism and socialism. Socialists believed that the government’s scientific management of the economy would generate greater wealth, which the government would share with everyone. Supporters of capitalism believed it would create greater wealth, and because that wealth was in the hands of citizens instead of the government, better support individual freedom.
Under President Roosevelt’s guidance our country essentially reached a compromise. We stayed with capitalism, with the free market instead of government control, but we used democracy to make sure capitalism worked to everyone’s benefit. Capitalists got to continue owning the means of production, the factories and mines and railroads and stores, but we used government to make them share the rewards with the people that worked in the factories and mines and railroads and stores. We applied government to the task of ensuring that every person would have the skills and opportunity to participate in our economy and that everybody played by the same set of rules.
This compromise, we stick with capitalism but use democracy to make sure everyone gets in the game and everyone plays by the same set of rules, supports the most fundamental promise of America, the promise of equality of opportunity. We have never believed in a guarantee of equality of outcome, but we have always believed that a basic purpose of government is to extend individual freedom – to make sure that every individual has the opportunity and ability to choose the course of his or her life. To make sure that everyone had a chance to get in the game.
By no means has the United States achieved equality of opportunity for all segments of our population. It took years of change in societal thinking and legislation to start to level the playing field. Even today racial minorities and women face barriers that constrain their ability to participate in our economy. But this idea has been the beacon that guided our country and our policies.
This compromise – we stick with capitalism, but everyone gets in the game and everyone plays by the same set of rules – helped create the post-WWII economic expansion that grew our economy to be the largest in the world. Because capitalism actually works better if there is one set of rules for everybody. If there’s one set of rules, free market competition decides the winners, not the government. Our economy is more efficient and produces more wealth.
Capitalism also works better if it can draw from the talent of the whole of our population. Talent doesn’t respect economic or racial boundaries. There are talented, motivated kids of all colors and creeds, with parents in all different economic circumstances. Our country wants those kids, regardless of their background, to be able to get in the game, to be able to participate in our economy. Talented kids become driven adults pursuing their dreams and growing our economy. Making sure that everyone had a chance to get into the game tapped into the potential in every part of our society and helped the United States become the economic powerhouse that it is.
We don’t think about it, but our government makes sure we have a chance to participate in capitalism – get in the game – in ways large and small. Making sure there are good public roads we can drive on to get to work. Making sure that every person, regardless of their parents’ situation, has access to an education. Making sure the meat you buy doesn’t poison you. Using 40 hour work weeks, minimum wage laws and support for unionization to increase wages, to make sure capitalists shared the benefits of capitalism with their workers.
It seems obvious, but to have consumer capitalism you need consumers. Making sure everyone got in the game gave our workers the money to participate in our economy. Clever entrepreneurs responded by creating things for people to buy, vacuum cleaners and radios and vacation packages. A virtuous circle was created – more money in the hands of workers created markets for more consumer goods, which led to demand for more workers to build the consumer goods. This compromise, we stick with capitalism but use democracy to make sure everyone gets in the game and everyone plays by the same set of rules, is what made the United States the country that it is.
For many decades our country was making progress towards the goal of equality of opportunity. But somehow we seem to have slipped away from a commitment to the compromise. We have allowed our roads and bridges to fall into disrepair and backed away from our commitment to public education. We stepped away from our commitment to one set of financial rules for everyone. And all of this has taken a toll on our country. All of this has put our future in question.
We as a nation need to return to the compromise. We need to again work to ensure all citizens have the ability and the opportunity to participate in our economic system. We need to again make sure that there is one set of financial, investing and insurance rules. We need to get back to Democratic Capitalism.