Democratic Capitalism
The prospering of free societies depends on certain moral and cultural practices.

Statue of George Washington in the Capitol Rotunda.


In a genuinely democratic polity, each of the parties must argue strenuously for its point of view, try to learn a little from the others, try hard to discern the point at which each side has won something, reach a compromise that each side can live with — and then put all harsh passions aside for the day, and go out and have a cup of coffee together. That’s a good day’s work!

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What I have been trying to bring out in these brief remarks on the economy and the polity of democratic capitalism is the constitution of its third and most important part: its moral culture. For neither capitalism nor democracy can succeed without specific new virtues (virtues not often called upon in previous eras) and new sorts of institutions to support them. Thus, the moral-cultural system of democratic capitalism is more important, more fundamental, and deeper than its political system and its economic system.

Without certain virtues in the people, neither a capitalist economy nor a free polity will long endure. A free economy, for example, needs creativity, invention, self-sacrifice, and disciplined work. A free polity needs self-restraint. The first meaning of “self-government” is self-control — unless citizens can well govern their own lives individually, they cannot govern themselves as a polity. A free polity cannot long function unless there is intense cooperation among various parties. It must foster reasoned compromise, as against narrow-minded insistence on “my way or nothing.”

What is crucial about capitalism is the virtues that it inculcates and demands. What is crucial about democracy is the virtues that it inculcates and demands.

Briefly put, the third act in the history of democratic capitalism is the moral question: Granted that a people has gained economic liberty from poverty and political liberty from tyranny, what is the moral ecology necessary for its survival as a free people, its future improvement, and its prospering? A corrupt, lazy, dishonest, and decadent society cannot preserve human liberty. It will breed a nation of serfs and slaves, who do not want to carry the responsibilities of free persons, but want only to have others take care of their needs.

Rigorous reflection shows, therefore, that democratic capitalism is an exceedingly difficult model to live up to. Its costs in moral effort and moral training are formidable. That all nations fail at these preconditions in some respects is to be expected — free societies are made from poor clay such as us. But they must cultivate sufficient virtue among their people to survive and move ahead.

As to the question of how many different models for economic transition there now are in the world, note that compared with the years 1900, 1948, and 1980, we have today a far vaster field of empirical examples to consider. In 1900 there were not yet six democracies in the world. In 1948, the Universal Declaration of Human Rights was signed by only 48 nations.

By 1990, the worldwide icepack that had held together the socialist nations was dissolving into dozens of new “transitional societies.” Now the Middle East is alive with issues of human life and liberty. It is indeed a good time to take a new inventory, and I wholly support that idea. Experience is surely the most reliable teacher.

So far, we have learned that the first Guiding Star of these transitions is to face the truth, and not to accept lies. The second Guiding Star is to lift the poor out of poverty, so that they might exercise the mighty talents implanted within them. The third Guiding Star is to use institutions of liberty to live worthily of our human dignity, to live nobly.

What a disgrace it would be if we gained our precious political and economic liberty through the blood, sacrifice, and agonizing pain of so many millions in the 20th century, only to live as on an Animal Farm — and to allow so many millions of others to languish under tyranny and torture.

To cultivate a worthy form of moral ecology — that is the challenge we leave to the next generation. That is the challenge Vaclav Havel bequeathed all generations.

Michael Novak’s most recent book is his memoir, Writing from Left to Right: My Journey from Liberal to Conservative. He was a founding participant of Forum 2000 in 1997 and is still active on its leadership boards.