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Liberal Democracy

Liberal Democracy
The Free State

Wednesday, March 26, 2014

AEI: Opinion: James Pethokoukis: The New Marxism: What is Democratic Capitalism


AEI: Opinion: James Pethokoukis: The New Marxism

This post was originally posted at The New Democrat on Blogger

Winston Churchill famously said, "Democracy is the worst form of government except for all the rest." This logical form can be applied to other systems as well.

It works fairly well in economics, e.g., "Capitalism is the worst economic system except for all the rest."  Capitalism has many forms.  In one, Laisssez-Faire economics, government has no role in the economy and all capital is controlled by the private sector with no rules on how to operate. Whatever government exists is funded by trade tariffs.  This form was found seriously wanting and discarded at the end of the 19th century.

The beauty of capitalism, in whatever form, is that individuals are not guaranteed wealth.  They have to earn it.  This incentivizes them to get a good education and be productive in life so that they don't need public assistance to take care of them.  In a good capitalist economic system, as many people as possible are able to get the skills needed to be productive and successful in life.  Liberals, Conservatives, Progressives and Socialists have been arguing about this at least since the New Deal.

Even Socialists in Europe and in America now acknowledge that capitalism and private enterprise are here to stay.  The Marxists have lost, so the question now is what type of capitalist economic system should we have. I went into this on my blog yesterday but as a Liberal I believe in liberal capitalism or liberal economics.  Some on the far-left would call this "Neo-Liberalism" (because it is not Socialism). But it is is an economic system where, ideally, everyone has an opportunity to attain the  education needed to succeed in life. 

In such a system, the role of government is to protect workers and consumers not from themselves but from predators who would hurt them and to help people who fall though the floor of the system.  The  safety net exists to give them temporary financial relief and a hand up.  This is the outline of liberal capitalism.