Democratic Capitalism: not just for 60 year old conservative men

Kay Douglas period 6

 

In chapter 2 of Naked Economics, Charles Wheelan writes about incentives in the market economy. He says that “a market economy inspires hard work and progress not just because it rewards winners, but because it crushes losers” [1].  A free market not only generates opportunity, but in itself develops incentives to better your fellow man. Capitalism requires three systems in order to function to the best of its ability. Michael Novak writes in the Spirit of Democratic Capitalism that an economic system, a political system, and a moral-cultural system all take part in making Democratic Capitalism successful. Capitalism has created a bad reputation for itself because it is believed to be a platform in which only the rich thrive.

Novak writes, “Democratic capitalism is not a free enterprise system alone. It cannot thrive apart from the moral culture that nourishes the virtues and values on which its existence depends” [2]. As a young woman, I was hesitant to fully embrace capitalism because of the lack of humanity that is embedded in its meaning.  Novak argues that capitalism insists upon compassion and concern for the common good, thus creating positive incentives. Incentives in a free market means developing and growing a business, which not only creates jobs, but can incentivize healthy competition among the market place, which in result, create even more jobs.

According to Steve Forbes, “The drumbeat against “greed” and “free markets” on the part of the media and politicians has also served to prevent a clear understanding of just what really constitutes a “free” market. Thus, people blame capitalism for economic disasters such as the mortgage meltdown and the astronomical cost of health insurance–when they have in fact been caused by government not allowing markets to function”[3].  Preconceived notions of what a free market entails has poisoned the minds of millennials across the country.  To fully understand the benefits of capitalism, it is important to understand how government involvement decreases incentives in the economic system which means the moral-cultural system fails behind it. When the government begins to regulate our economy, they indirectly control our moral compass. The compassion behind charity and giving to the less fortunate is eliminated because the government begins to regulate our compassion. In a free market, we are incentivized to give back to the less fortunate because it increases our own self-worth. For example, when my friends and I applied for college this past year, doing service work and giving back to our community made us more attractive to colleges. The incentive to get into college not only helped the less fortunate, but it maximized our own utility. The market place is competitive, so people are constantly trying to better themselves in order to keep up with the fast pace of a free market economy.

[1] Charles Wheelan. Naked Economics: Undressing the Dismal Science [New York: Norton, 2010], 46.

[2]Michael Novak. The Spirit of Democratic Capitalism [New York: Lanham, 1982], 57.

[3] Forbes, Steve. “How Capitalism Will Save us.” Frobes.com. https://www.forbes.com/2009/11/03/capitalism-greed-recession-forbes-opinions-markets.html.

 

 

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