The Spirit of Democratic Capitalism, published in 1982, was a landmark. Its author, Michael Novak, went beyond the usual arguments that free markets generate the greatest wealth and promote freedom. He made the bold claim that capitalism, when combined with a vital moral and religious culture and democratic institutions, encourages the full spiritual development of the human person.
The early decades of the 20th century encouraged suspicion of capitalism. The Russian Revolution inspired progressives, even those who lacked full faith in Marxism as a science of history. The crash of 1929 and the Great Depression, along with runaway inflation in Germany and economic turmoil throughout Europe, undermined confidence in capitalism. Many, perhaps most intellectuals thought that history was leaving liberal democracy and free markets behind. By the mid 1930s, collectivism, whether Fascist or Communist, seemed to own the future. Even in the United States, Roosevelt’s experiments in government control of the economy were viewed as the necessary and fitting application of scientific planning.
After World War II, however, the Soviet Union emerged as an existential threat. As the Red Army imposed Communist governments in Eastern Europe, New Deal liberalism saw the need to defend “the American way of life.” This included capitalism. Henry Wallace and others on the left who had substantial doubts about capitalism exercised power before 1945. Soon our political culture pushed them to the margins.
Nevertheless, the New Deal consensus remained ambivalent about capitalism, at best. William F. Buckley in God and Man at Yale inveighed against the Yale faculty’s atheistic and collectivist dogmatism (which he saw as linked). His jeremiad stirred up controversy and established Buckley as an influential young voice of conservative dissent, but it prompted no changes at Yale and was dismissed by establishment figures.
Throughout the 1950s and into the 1960s, the broad and dominant liberal consensus was pro-capitalist, but half-heartedly so. The children of Cold War liberals sensed this lack of conviction, and in the 1960s socialism made a comeback among young people rebelling against the “system.”
The upsurges of leftism in the 1960s and early 1970s had tremendous cultural consequences, but advocacy of socialism had little effect. Americans remained pragmatically capitalist. The New Deal consensus showed itself to be resilient. In that consensus, socialism was acknowledged as “idealistic” and therefore morally superior. But it was held to be unworkable, and the evils of the Soviet system showed it prone to totalitarian distortions.
Post-war America was capitalist, therefore, more by default than by choice. In such an environment, mainstream liberals felt they had a duty to keep the idealistic spirit of socialism alive. This consensus explains why our mainstream political establishment remained anti-Communist throughout the post-war era — and yet accommodated and even encouraged the presence of Marxists on university faculties. They were thought to be our national conscience — “liberals in a hurry,” as it was said.
Michael Novak was never someone capable of resting comfortably in a pragmatic and half-hearted consensus. He had a native idealism, fueled by religious faith. It ran in the family. His brother, Richard, joined the Congregation of the Holy Cross and served as a missionary in East Pakistan (now Bangladesh), where he was murdered. Michael also entered the Congregation of the Holy Cross. Although he left before ordination, he did not leave behind a dislike of half-measures and pragmatic compromise. As was the case for so many during the 1960s, the religious, moral, and political consensus of the time became his target of criticism. He made his first mark as a writer with a number of books promoting progressive social and religious ideas.
But Michael began to have doubts about the moral and spiritual integrity of the “idealism” he was championing. Like others who moved from left to right in the 1970s, he initially harbored concerns that were largely cultural. The universities became anti-American and anti-intellectual. The Democratic party pledged troth to an unlimited right to abortion. Instead of a pro-worker, New Deal liberalism, post-Sixties progressivism became antagonistic to the kinds of people Michael grew up with in western Pennsylvania and to whom he always remained loyal.
As the charm of progressive utopianism weakened, Michael turned his attention to political economy. He was a religious thinker and moralist, not an economist or policy expert. The efficiency of free markets left him cold. Wealth alone does not make a society healthy. Classical liberalism emphasizes property rights and individual freedom, and it plays an important role in American conservatism. But this struck Michael as morally inadequate. He was interested in the spiritual and moral dimensions of a capitalist economy.
His ability to articulate those contributions explains why The Spirit of Democratic Capitalism exercised such remarkable influence. The pro-capitalist, anti-collectivist consensus of Buckley’s movement had a decidedly individualistic turn, which could be dismissed by the liberal mainstream as a selfish lack of concern for the common good. The Spirit of Democratic Capitalism could not be dismissed so easily, for it argues that a free economy, while never perfect, promotes moral and spiritual goods throughout society as a whole. Michael was not a birthright conservative. Growing up in the industrial heartland, he was formed by the New Deal consensus. He knew how to challenge liberalism on its own terms.
Michael’s ideas had a significant effect in the Catholic Church. After the Second Vatican Council, many Catholic theologians and Church leaders became convinced that socialism fulfilled Christianity’s ideals of brotherly love and concern for one’s neighbor. The lines of thought Michael pioneered were taken up by Pope John Paul II in his encyclical on society and economics, Centesimus Annus (1991), which articulated a measured but clear affirmation of capitalism as the economic system most in accord with human nature. More broadly, Michael put paid to the conceit that the “good people” who care about social justice should favor a state-dominated economy.
Michael’s influence waned after 1989. The collapse of the Soviet Union gave us the impression that democratic capitalism was History’s inevitable victor. This created the illusion that we no longer faced profound political, moral, and spiritual choices about how we order our economy. Policy details and arguments about how to fine-tune the capitalist machine largely supplanted Michael’s way of thinking. Wonkery reigned supreme.
And continued to do so until recently. Populism in America and Europe now expresses open disregard for free-market principles. In these times, we do well to reread The Spirit of Democratic Capitalism. We need to remind ourselves what higher goods our economic principles serve.
Michael never imagined that capitalism was a perpetual-motion machine that automatically delivered wealth and freedom. Nor did he think we could deregulate our way to the Kingdom of God. Man does not live on bread alone. Capitalism’s contribution to a good society requires the counterbalancing influences of a vital religious and moral culture, as well as strong democratic institutions. Late in life, Michael recognized that these elements of a good society — especially the spiritual and moral dimension — have become weaker in America.
I admired Michael. He came through the revolutions of the 1960s with his religious faith and moral judgment intact, which is no mean thing. We are presently in another season of tumult and transformation in our politics and culture, one brought on by our complacent failure to recognize that after 1989 capitalism has taken on new, globalized forms that threaten rather than reinforce our democratic culture. I wish Michael were here to give us good guidance and counsel. We need it right now. May he rest in peace.
– Mr. Reno is the editor of First Things.