America at the Crossroads of Democracy and Capitalism

by R. Owen Williams

Given the Epstein Files, the possibility of war in Venezuela or Greenland, ICE raids, and the broken spigot of Truth Social, it seems the chaos will never end. Yet, amidst the exhausting cacophony of political vitriol in this country, there is one conversation we Americans seem hesitant to have. As pundits and politicians scream at each other about the fate of democracy, the reach of white Christian nationalism, or the composition of our shifting international alliances, the economic system that underpins it all goes largely unquestioned. There’s a reason for that.

Early American colonists determined that the best way to achieve their goals and protect their interests was through the competing forces of democracy and capitalism. Those were two very different models of social organization; democracy is leveling, capitalism is hierarchical. Democracy is predicated upon equality and shared participation, whereas capitalism produces inequality and disparate outcomes. The tension between these models has fueled political conflict from the beginning.

Americans never actually adopted a system of democracy. As Benjamin Franklin famously remarked in 1787, when asked at the conclusion of the Constitutional Convention what form of government had been created: “A republic, if you can keep it.” The Founders designed a governing system filtered through institutions, a representative republic rather than a direct democracy. Franklin’s response signaled the importance of virtuous citizenship, but it also reflected the Founders’ concerns about the dangers of democracy. The Founders worried about a “tyranny of the majority,” or mob rule, or any threat to the right of property.

Capitalism, by contrast, was written into America’s DNA. The British colonies of America were founded as part of a commercial or capitalist empire. The Founders were merchants, land speculators, and investors; they were quintessential entrepreneurs. The United States Constitution strongly protected commerce, private property, and contracts. Early Americans quickly created a two-party political system, with platforms that shifted over generations, but both parties remained stalwart supporters of capitalism.

Any political debate centered not on the system itself, but on the extent of government intervention in the nation’s commerce and financial affairs. Republicans historically advocated limited government to favor investment and corporate interests, while Democrats typically championed government regulation to protect workers and consumers. Whatever other issues arose—civil rights, healthcare, or the environment—those only clouded both parties’ unwavering commitment to capitalism. Both parties relied on capitalists—corporations and wealthy individuals—to survive.

Thus, neither party has ever contemplated a threat to capitalism; forget about revolution. The mere mention of socialism remains taboo in mainstream American politics. To prevent the slightest nod in that direction, political leaders distract and polarize, focusing attention on culture-war issues that excite audiences but obscure structural economic questions. Better that we concentrate on the minuscule number of transgender athletes who could prevent our daughters from winning blue ribbons, than to consider the successes of other economic systems or the pitfalls of our own.

Many of the ills we face today are the direct result of capitalism run amok. Some people celebrated, though most cringed during the 1980s movie Wall Street, when Gordon Gekko insisted, “Greed is good.” Now, years later, we have ample evidence that greed leads to corruption, extreme militarism, environmental degradation, and unjust distribution of the world’s goods and resources.

More immediately pressing, capitalism is displacing democracy in this country, even the limited representative form of democracy that has existed here for 250 years. We all can see that democracy is under attack. The tyranny we face today comes not from the majority that worried the Founders, but from an increasingly frightened minority, the “one-percenters.” The gap between the rich and the poor in America is a serious problem, but an even more startling divide exists between the top and bottom of the richest one percent. Financial success has always been part of the American dream, but the extreme wealth creation that has unfolded for a few hundred families over the past few decades would have stunned even Gordon Gekko.

Those few ultra-wealthy can (and do) fund gerrymandering, voter suppression, and the Electoral College, the combined effects of which conspire against the majority. The Supreme Court’s decision in Citizens United v FCC (2010) significantly exacerbated the problem, allowing corporations to wield disproportionate political power through campaign finance. Money talks, more now than ever. Big money selects our candidates, controls the media, and captures (or cripples) the legislative process. When threatened, the ultra-wealthy will even tolerate authoritarianism, as is happening in America today.

People keep asking, “Why are the Republicans letting Trump get away with his nonsense?” Primarily because he is a staunch capitalist. Crass and indecent though he is, Trump is a capitalist fighting for his own selfish desires and, by extension, those of his fellow capitalists. Drill baby drill, cryptocurrency, and unregulated development of artificial intelligence may be in the interest of our nation’s richest few, though probably not the rest of us.

Yes, capitalism has served many of us well, having played an important role in America’s development, economic growth, innovation, productivity, and rising living standards. But we need to stop kidding ourselves. Capitalism is about wealth creation, not social welfare. It is instrumental, not moral. Much of the progress that has occurred alongside capitalism came despite, not because of, capitalists. Capitalists have consistently opposed unions, occupational safety measures, progressive taxes, government regulations meant to protect us, and universal healthcare or education.

Without realizing it, when we talk about inflation and affordability, when we talk about the cost of education and healthcare, when we talk about the gap between the haves and the have-nots, with all of these, what we are really talking about (without actually talking about it) is the ongoing viability and usefulness of capitalism.

Savvy investors and successful corporations learn from the profitable approaches of their competitors, so why would capitalists not talk about the success of other economic systems? Socialism, like capitalism, is a work in progress; both are littered with successes and failures. How has China achieved its dazzling growth rates? How has Cuba, despite U.S. sanctions, managed to develop one of the world’s best educational systems? And how do the welfare states of Scandinavia provide universal healthcare? One does not have to convert to socialism to ask questions necessary for the improvement of capitalism.

The Founders worried about unchecked democracy and mob rule, but they also rejected the idea of aristocracy, inherited privilege, and rule by a self-perpetuating wealthy elite. They explicitly banned titles of nobility in the Constitution. Yet here we are, watching as the wealthiest Americans vie for a place in the court of King Trump. That is Trump’s true base, not the manipulated MAGA mass that won’t ever witness a Gatsby gathering at Mar-a-Lago.

The challenge for us now is to reimagine capitalism for the 21^st Century. Capitalism needs to evolve, just like the rest of life on earth. The investor Peter Thiel and his ilk want us to return to the excesses of the 1920s, but America would be better served by revisiting the New Deal of the 1930s. The policies of that era saved capitalism from collapse. Government oversight and regulation strengthened essential institutions necessary for growth, reduced the frequency and severity of financial crises, expanded infrastructure, and invested in human capital and labor stability. A revival of all that would be in the best interest of most Americans. And democracy.

The American Experiment was never guaranteed; the republic was entrusted to the vigilance and fair play of its citizens. The same principles apply to our economic system: we must consciously and intentionally improve it, or risk being consumed by it.

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