Social Capitalism: An American Tradition

"What Americans should by now be able to see is that neither the laissez-faire marketplace nor strong government has given them a satisfying or permanent resolution. The problem is not the marketplace and it is not government. The problem originates in the contest of clashing values between society and capitalism and, since this human society cannot surrender its deepest values, it must try to alter capitalism's. As we look deeper for the soul of capitalism, we find that, in the terms of ordinary human existence, American capitalism doesn't appear to have one."  -William Greider, The Soul of Capitalism


Capitalism has many virtues.  As an economic system, it has so far been unmatched in its ability to generate wealth.  Moreover, the American form of capitalism has been the envy of the world for decades.  Historically, industrial scions amassed great wealth while wages increased, cheaper goods became available, and general welfare increased.  These advances in society were the bedrock principles of history's prominent capitalist idealogues.  Ayn Rand stated:


 "America's abundance was created not by public sacrifices to the common good, but by the productive genius of free men who pursued their own personal interests and the making of their own private fortunes. They did not starve the people to pay for America's industrialization. They gave the people better jobs, higher wages, and cheaper goods with every new machine they invented, with every scientific discovery or technological advance -- and thus the whole country was moving forward and profiting, not suffering, every step of the way."


This ideology culminated in America with the Reagan Revolution of the 1980s.  "Reaganomics" promised a host of benefits for all Americans by promoting economic initiatives aimed at the wealthiest among us.  The increase in the wealth of the elite would "trickle down" to all society.  This was the promise of the laissez-faire capitalists. 


Thirty years after Reagan's election, we can now effectively say that the laissez-faire ideal has not worked according to the measures provided by Rand.  Real wages have stagnated.  Innovation has not been able to produce cheaper goods and services in many critical industries, most notably health care.  The vast number of unemployed workers currently will attest to the lack of "better" jobs produced by the free market.  For all that capitalism has given us, where did it go wrong?


The answer is evident in Rand's flawed logic.  The laissez-faire capitalist, she argued, did not operate with any notion of altruism.  However, her measures of capitalism's success are inherently altruistic.  Rising wages, cheaper goods, and better jobs created a "whole country moving forward."  The ideology called for no altruism in the naive thought that altruistic results would still occur.  The inherent cognitive dissonance of Rand's ideal has infiltrated the American politic, and what is good for the wealthy has become good for everyone by virtue of the ideology, regardless of results.  This is not inherently capitalistic; this is inherently selfish.  The two are not the same.


Look back on American history and the things that have made us great, and you will see not just a capitalist society, but also a strong thread of altruistic tendencies and successes.  The values of our nation have not been inherently selfish.  Social Security and Medicare are prime examples that cut against the grain of laissez-faire capitalism and the ideals of Rand.  These programs are widely popular and have had clear benefits to society.  I do not posit that they are perfect programs, but they demonstrate strongly a moral fabric in our society that is not aligned with the selfish tenets of Rand.  Moreover, these programs have been institutionalized while maintaining the basic framework of a capitalist society.  This is the reality of our history.  Though we have valued the capitalist model, we have done so because of the perceived benefits to society at large.  This is our history.  This is our heritage.  By reclaiming our moral compass, we can restore and improve the system that has made our nation great.