According to Wikipedia, “Capitalism is an economic system and an ideology based on private ownership of the means of production and their operation for profit”. (A read of the Wikipedia article on Capitalism is worthwhile and recommended.) Capitalism has become and is accepted as an integral part of the American democratic system. It brings both benefits and risk to our society. Most importantly on the benefit side is that it incentivizes individuals to work hard for self benefit. Stories abound of individuals who participated in a risky start-up venture that became successful, went public and employees became rich by cashing in their stock options. Stories abound in Silicon Valley of young twenty-somethings who buy million dollar houses for cash. Capitalism fuels the growth of new business, new industries, innovation and the creation of jobs.
Capitalism, however, has a huge downside. It tends to concentrate wealth. With wealth comes the incentive and means to generate more wealth. Small enterprise evolves into huge corporations. Success seems to become defined by size and the magnitude of wealth accumulated. Large corporations are motivated to operate in their own self-interest. Sometimes this self-interest is in conflict with societal interest and the interest of individual citizens. The examples are numerous – mining companies not taking proper care with the disposition of pollutant byproducts; banks creating fake accounts; contamination of food products due to inadequate sanitary practices.
The answer to this disparity is clear, there need to be rules/regulation. Unbridled capitalism creates the extreme disparity in the distribution of wealth that results in financial classes – the “1%” and everyone else. The ‘Haves’ and ‘Have nots’ have little to nothing in common. It is this extreme inequality that is alien and poisonous to a healthy American democracy.
The discussion, therefore, must be on how much regulation – protect the system that creates jobs and opportunity and fosters innovation, but at the same time protects society from abuse and exploitation and the resultant degradation of our democracy. This debate is a government role – legislators debating with a full understanding of their constituencies needs and desires, uninfluenced or biased by the self interests of corporations that are the target of the debated regulations. This is a government “…for the people” and corporations are not “people” (discussion of the Citizens United supreme court decision is a topic for another day.)
Clearly there are some essential priorities for the democratic process as related to capitalism:
- There needs to be regulation
- Definition of regulation is a legislative function where the needs of all citizens are represented. Although the staffing and background research is clearly a staff function, either legislative or executive.
- The executive needs the ability to enforce regulations – staff and funding
- Recognition that we live in a period of rapid change – technology, global relations, societal needs, intellectual understanding – is critical. This implies that all regulations have sunset date that requires review, revision, replacement or repeal.