Capitalism and Democracy I

Someone* said institution that are not self-correcting will not survive.** Basically this is a statement of social evolution. Institutions that can adapt to change survive. However, it is not a statement of survival of the fittest; rather it is a statement of survival of the flexible.

On the face of it capitalism and democracy are self-correcting institutions. 

Capitalism is inherently self-correcting. It is first and foremost a competition.  People with ideas invest or attract capital to create products that compete in the marketplace.  Consumers are free to choose the products they like the best. As in any competition there are losers as well as winners. Money moves from bad or obsolete ideas to ones that work or at least what people want through this process of creative destruction. As a result wealth is transferred to those with winning ideas for enriching the lives of the consuming public with inexpensive and efficient products.  In addition to increasing the material well-being of both the individual and the general public, capitalism gives people the opportunity to maximize their creative talents.  The human spirit is nurtured by the vision of people like Bill Gates, Michael Jordan, and the Beatles who followed their dreams, amassed fortunes, and captivated us with their vision, creativity, and talent. 

Democracy is self-correcting by both by design and purpose.

The structure of government, three co-equal branches with a system of checks and balances, was specifically designed by the founding fathers to be self-correcting. The fact that virtually every country that has a right to call itself a democracy follows this model is a testament to the effectiveness of this design.

Democracy, the system for distributing political power, aspires to distribute that power equally.  The rule of law, one man one vote, and equal justice under the law affirm that the very purpose of Democracy is to put no one person’s interest above another regardless of difference in talent, intelligence, race, or gender. No secular idea has enriched mankind more than the knowledge that we all stand equal before the law.

This reinforces the self-correcting nature of Democracy in two ways.

First, it allows for a marketplace of ideas so that ideas can compete and ultimately the best can rise to the top. 

Second, it gives the citizen a sense of buy-in so they are part of the process and will work to make the process work.

To say that these systems are successful because they can continually evolve is to imply that there is something organic in their nature.  If that is the case then while on the face of it capitalism and democracy are self-correcting it is possible that any given democracy or capitalistic system can age, ossify, and ultimately be replaced by a more nimble and flexible one.

In summary then self-correcting institutions survive.  Capitalism and democracy are self-correcting institutions and therefore are likely to survive. However, any given system can age and ossify and ultimately be replaced.

While capitalism and democracy are both self-correcting systems they do make strange bedfellows. Democracy is the source of our egalitarian principles, which says we are all equal, while capitalism is the mainstay of our meritocracy which implies we are all different and should be differentially rewarded according to our variable talents.  In the next few entries I would like to look at first capitalism then democracy and then create a framework in which they both fit.

*20 or so years ago I read a book review of a biography in the Economist that attributed this idea to the subject of the biography.  I have never been able to retrieve the name of the person who said this. If any of you know who it is I would love to hear from you.

**This is the ultimate “THEY said it” statement and therefore clearly dogmatic. (I readily acknowledge I don’t know who “They” are.) I offer it as a way to look at the systems I mention and see if it fits for you. This also suggests another continuum; should institutions be flexible or steadfast or more negatively relativistic or rigid. Your underlying emotional predisposition toward this continuum will influence how willing you are to accept the premise.

Core Beliefs: what we feel is true; the second framework

“In anything at all, perfection is finally attained not when there is no longer anything to add but when there is no longer anything to take away.”[1]            Antoine De Saint-Exupery

“You get out what you put in minus the friction”

The first principle of engineering and a more perfect expression of the former

“Go.”

The sentence an engineer wrote when asked to write a sentence on a mental status exam. A practical application of the first principle of engineering

In the book, The Righteous Mind, (which I highly recommend), the author Jonathan Haidt convincingly makes the case that moral judgments arise from innate instinctive reflexes; they are not derived from reason.  That is we respond spontaneously and emotionally when we see a baby harmed, or the flag desecrated, or a criminal get away with their crime.

He goes on to say that these innate moral intuitions or appetites seem to fall into six categories, care/harm, fairness/cheating, freedom/subjugation, community/anarchy, authority/insubordination, and sanctity/degradation.  Different groups tend to value these moral appetites differently. Haidt points out that, universally, liberals put far more weight on the appetites of care and fairness whereas conservatives give more balanced weight to all six appetites.

He sights data to make the case that this differentiation begins genetically and then is influenced by our cultural surroundings. Once we have developed these moral intuitions they tend to color how we see the world and that is the point I want to make.  Our view of the world is continuously colored by emotional undercurrents and intuitions that incline us to favor one set of facts over another. 

However, I would contend that these intuitions are more diverse than Haidt’s six moral appetites. The following is an example from my own life. I continue to be amazed at what an influence my father has been on me.  He was first and foremost an engineer (and the author of the sentence in the introduction). I don’t have the discipline to be an engineer but “you get out what you put in minus the friction” is in my marrow. Whether this was passed on to me from my father by genetics or example, it is clearly the intuitive response I have that colors my emotional response to any situation or problem. Mediation is better than litigation not because it is morally superior by any of Haidt’s moral intuitions but because it is more efficient (less friction).

Having identified this predisposition or coloring of the landscape I have at times been able to, if not see a situation from another point of view, at least acknowledge that the other point of view is legitimate.  For example, flowers, especially cut flowers, (as I have written in another venue) are completely non-utilitarian and often expensive.  However, since all the women and particularly the most important woman in my life don’t share that view I have been able to put aside my predisposition for a variety of reasons (for instance survival).

Much, no most of our view of the world is based on dogma (It’s true because THEY said it). And what we choose to accept of the many facts that are presented to us is colored by emotional undercurrents that run through us.  If one can step back and try to identify those emotional undercurrents one need not change the way they see the world but might have a better understanding of why they see it the way they do. A mutual acknowledgment of these undercurrents between people of different viewpoints could go a long way to improving understanding.

My next series of entries will be about capitalism and democracy.

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[1] Wind, Sand, and Stars, Chapter 3 The Tool p.42, Antoine De Saint-Exupery