Can a good government embrace both capitalism and socialism?
Capitalism and socialism have been blended together in differing amounts around the globe throughout the 20th century. What brought the two together in the first place? Pure capitalism emerged from the Age of Enlightenment’s revolutionary attitude toward personal liberty, individualism and a decrease in governmental meddling. With the onset of the Industrial Revolution, people started to realize something. Once capitalists saw how much dough they could rake in at the expense of their workers, and with those workers having very little say in the matter, it became clear that a little compromise could be helpful. So in the United States, as an example, the federal government started to rejoin the game and control the economy more closely. The push grew even stronger between 1900 and 1920, and some of the major agencies that were created to this effect include the Food and Drug Administration, the Interstate Commerce Commission and the Federal Trade Commission. Workers starting to raise a ruckus about low wages? Smack down: minimum-wage requirements and the expansion of labor unions in industries like steel and auto manufacturing. Federal agencies and programs from this decade include the Securities and Exchange Commission, the Federal Deposit Insurance Commission and the Social Security program. Eventually, enthusiasts of capitalism and proponents of industry started complaining about what they saw as a tarnished economic system – capitalism imbued with too much socialism. Social Security was in place, for example, and people were increasingly dependent on programs run by the Department of Health and Human Services, the Department of Housing and Urban Development, the Department of Labor, the Department of Agriculture and the Department of Education, among others. Ultimately, this article poses a difficult question to answer, because it also leads to another question: What constitutes a “Good” government? If you feel positively about your government – like the 46 percent of Americans who reported feeling that way in a 2010 Gallup poll – then the answer is yes, government can embrace both capitalism and socialism. If you’d like to see the situation swing a little further toward socialism or capitalism, then perhaps the answer is no.
Capitalism 2.0: The Need For Regulation
Never have I spent so much of my thinking energy on trying to understand, question, assess, debug, and dissect a value system that I had, for years, accepted as a fundamental principle of my life. This series, I hope, will provide a forum for many of us experiencing the same period of questioning, an opportunity to discuss. “Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.” “The recognition of individual rights entails the banishment of physical force from human relationships: basically, rights can be violated only by means of force. In a capitalist society, no man or group may initiate the use of physical force against others. The only function of the government, in such a society, is the task of protecting man’s rights, i.e., the task of protecting him from physical force; the government acts as the agent of man’s right of self-defense, and may use force only in retaliation and only against those who initiate its use; thus the government is the means of placing the retaliatory use of force under objective control.” Today’ we’re seeing the government take a role well beyond this rather simplistic definition, and we’re even discovering that some of it is desirable. Rand also goes on to say, “When I say”capitalism,” I mean a full, pure, uncontrolled, unregulated laissez-faire capitalism-with a separation of state and economics, in the same way and for the same reasons as the separation of state and church. Regulation, clearly, has become necessary, to control one of the basic forces of human nature: greed, especially that greed which is unconstrained by ethics. My personal analysis suggests that while in Rand’s definition, greed is good, and a part of the capitalistic equation, she missed one of the essential ‘bugs’ in the system: lack of conscience in human beings. Greed that is coupled with a strong ethical value system – a moral code – is the ideal. Unconstrained by morality, is the ‘bug’ that requires checks and balances in the system. It is quite obvious, today, that it needs to come in.
Bad capitalism got us into our current economic mess – good capitalism, which recognises social and public values, will get us out. Ed Miliband has been careful to dub this a crisis of a particular kind of capitalism, and his solution is more subtle: to build an argument – and the beginnings of a coalition – making the case for a different kind of capitalism. In the run-up to 2008, the social and public values that are paradoxically essential to a strong capitalism, were systematically torched. 12 Will Hutton Capitalism has twin roots – in the individualistic Protestantism of the Reformation but also the assertion of the public realm in the Enlightenment. The re-legitimisation of capitalism requires more balanced and long-term decision-making on behalf of all its stakeholders, which in turn implies capping the power of finance and giving employees more voice. Good capitalism Good capitalism rests on two interrelated building blocks: fairness understood as receiving one’s proportional deserts for the contribution that has been made; and the codependence of public and private, individual and society. Good capitalism is founded on an acknowledgement of interdependency and an acceptance of due desert. Good capitalism is indissolubly linked to good ownership – the recognition that owners have obligations along with the right to direct property autonomously. An enterprising, enabling state has watchfully to nudge, cajole, regulate, legislate and build the ecosystems in which good capitalism and the social contract can flourish. The creation of good capitalism is thus quintessentially an Enlightenment project. What creates a great and dynamic capitalism is the interplay between risk-taking entrepreneurs and companies, and a smart state creating the structures and processes that relieve them of risks that would otherwise crush them. Conclusion These goals – a responsible good capitalism; a twenty first century social contract; the creation of an open innovation ecosystem along with a commitment to science; the reinvention of the state as smart and enabling; and a reconceptualisation of economic policy – must be at the heart of the left’s agenda in power.