Tuesday, June 28, 2016

The Genius of Capitalism and a Federal Separation of Powers


Especially since the 2008 financial crisis, capitalism has come under attack, most recently culminating in Bernie Sanders’ attempt to mainstream socialism as an alternative during the Democratic presidential primary—and getting 12.4 million votes in the process. With this in mind, it’s worth remembering just why capitalism is the most successful economic system in history, and why it so effectively complements America’s unique system of a federal separation of powers—another system under attack by both the current President and the two major-party nominees to succeed him.

Unlike economic systems such as socialism and communism, which attempt to redistribute wealth, enforce absolute financial equality on everyone, and are in general overly idealistic to the point of delusion regarding basic economic principles and human nature, capitalism is an essentially realistic model that is clear-eyed about human nature. While socialism attempts to enforce social equality based on what a few people believe human nature should be, capitalism incorporates what human nature actually is. People will generally, for good or ill, act based on what is best for their own interests. Capitalism, unlike socialism, acknowledges this—and then harnesses basic human impulses for good results.

Capitalism rests, essentially, on greed—the idea that people will always want more money, compared to both other people and their own current wealth. What the capitalistic economic model does so effectively, however, is to channel that greed, generally considered a negative impulse, into a force for good. In a free market, capitalist society, greed becomes competition, as rival businesses and corporations attempt to outdo each other with regard to two major factors: the quality of the product or service being offered, and the comparative price of that product or service, relative to a competitor’s price for a similar product. Greed is channeled into a drive to create better-quality, cheaper products, all to the benefit of the consumer and the ordinary citizen.

Aside from the obvious (and related) philosophical arguments regarding freedom of choice, capitalism over the long term raises up the working and middle classes far more effectively than socialism. The latter, using brute force in an attempt to make the population equal, instead traps them in poverty (even in the most well-intentioned socialist nations); while the former, embracing and channeling human vices such as greed, lifts the population to higher standards of living, a fact proven by a simple analysis of standards of living worldwide, compared to national economic systems.

What truly highlights the genius of this basic concept, as well as America’s unique relationship with capitalism, can be highlighted by our Constitution’s basic concept of a federal separation of powers. Where in the capitalist economic model greed was the propelling aspect of human nature, in the government model of separation of powers it is power. The three branches of the federal government—legislative, executive, and judicial—are set against each other, with no branch clearly superior or subservient in terms of delegated power. The legislative branch makes law; the executive branch implements those laws; and the judicial branch applies the law, and enforces the Constitutional restrictions on law. Meanwhile, the federal government as a whole is also set against the various state governments, which have their own distinct spheres of influence.

As with the system of capitalism in economics, the American theory of separation of powers is a realist perspective on human nature, recognizing that people will in general seek to accumulate power for themselves. The Founders, knowing this human propensity would endanger the long-term survival of the experiment of the American republic, decided to instead channel the quest for power as a means for the government to control itself. Well-versed in the work of Adam Smith, a British contemporary who helped establish the economic theory of free market capitalism, the Founders saw that his basic economic philosophy could be applied to government as well.

Something the Founders never expected, of course, was that members of one branch of government would willingly cede power to another branch. This relatively recent phenomenon, in which primarily Democratic members of Congress have increasingly pushed for more legislative power to be taken on by the executive branch, is a result of several factors the Framers of the Constitution could be forgiven for not entirely accounting for—including an increased willingness to defer to the judgments of unelected bureaucrats, and the emergence of a party system that many, such as George Washington, argued against.

Nevertheless, the basic model of American constitutional government remains sound, absent a continued willingness by members of multiple branches to damage it in the future. The basic model, unique in government when the Founders first envisioned it two centuries ago, demonstrates both the genius of the Founders and an inherent compatibility—if not symbiosis—between capitalism and the basic structure of American government that few Sanders voters would likely appreciate.

No comments:

Post a Comment