Friday Interview: Douthat Makes Moral, Material Case for Markets | Eastern North Carolina Now

    Publisher's note: The author of this post is the CJ Staff, who is a contributor to the Carolina Journal, John Hood Publisher.

New York Times columnist stresses need to defend democratic capitalism

    RALEIGH     The Great Recession offered new ammunition to those attacking the American system of free enterprise, while defenders of that system have spent recent years refining their arguments. One of those defenders is Ross Douthat, conservative author, blogger, and New York Times columnist. Douthat shared his insights about democratic capitalism during a visit this fall to Chapel Hill. He discussed similar themes during an interview with Mitch Kokai for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)

    Kokai: Why is it so important to make the moral argument in favor of capitalism?

    Douthat: I think it needs to be made because, I mean, for two reasons. ... It happens to be true. I mean, there is clearly a case for the moral superiority of what I like to call democratic capitalism. I think that's the best term to use for the American system. Its superiority lies not just in the amount of wealth that the system piles up, but also in the kind of lives it enables its citizens to lead.

    And at the same time, it also needs to be made because ... a successful capitalist system, ultimately, also depends on forces outside itself. Capitalism is not purely self-sustaining. A purely capitalist culture can't sustain itself indefinitely. You need deeper sources. You need sources of community, family, and so on.

    The point that I'm going to try and emphasize is this kind of virtuous cycle, this kind of symbiosis between sort of the material and the moral - the practical case for capitalism and the moral case for capitalism - because I think it's very important to make the moral case, but it's also important, especially at a time when the economy isn't performing that well, I think in certain ways the material case for capitalism shouldn't be slighted.

    So, in a sort of odd way, I'm going to try and talk about both - both the case that capitalism delivers moral opportunities for people that other systems don't but also, I think, an emphasis on the link between the material and the moral that can sometimes get lost these days.

    Kokai: Let's delve further into some of these issues. First, the material case for capitalism. Now, this is the case that's been made ad nauseam.

    Douthat: It's the case that has been made ad nauseam, but I think that it's right. And in certain ways, it's the easiest case to make. If you look at the record over the last 500 years of Western civilization, if you draw comparisons between capitalist regimes and collectivist regimes in the 20th century, if you even look at comparisons between, you know, a free market society like the United States and a somewhat less free market but still market-based societies in Europe, in each case, it's clear that over a long time horizon, the market system delivers higher rates of return - higher rates of wealth, growth, and so on.

    But, it's also the case that capitalism as a system produces moments like the one we've been living through right now. Periods of recession, periods of stagnation, and so on. And there is, actually, I think, real value in reminding people of that bigger picture right now.

    Because I think there are a lot of Americans, right, who actually listen to the moral case for capitalism and say, "Well, of course I believe in that. But why don't I have a job? Why aren't my wages going up?" And so, again, you can't separate the two. You can't say to a man who doesn't have a job or who isn't as upwardly mobile as he expected to be and so on, you can't just say, "Well, this system is morally superior, even if it isn't delivering the goods." You have to say, "No, over the long term it will deliver the goods, and there's a link between that material case and the moral case, as well."

    Kokai: 2008 seemed to represent a modern low point for capitalism in the United States.

    Douthat: Right. Well, it was an election held amid a massive financial panic. And if you look back at the history of American capitalism, you know, this was a panic - probably the most severe panic since the Great Depression, but if you go back into the 19th century, you had periodic panics like this, you know, every 10, 20, 30 years, and so on. And those are the kind of moments when, inevitably, the system as a whole is up for a challenge, right?

    You saw this tragically in Western Europe, in the period between World War I, the hyperinflation of the 1920s, and then the Great Depression. Those are the moments when both fascist and communist alternatives to capitalism seemed most powerful. And the answer to those alternatives is, again, on the one hand, sustained moral and philosophical argument, but also, you ultimately - and this is, I think, an important lesson for political defenders of the free market - you also have to deliver the goods.

    Clearly, a big difference between Ronald Reagan in the 1980s and Barack Obama in the last four years is that Reagan's policies were more successful at delivering the goods, in a sense. And so, again, you don't want to sort of go too easy on that sort of more basic case, because we are living in a moment of great sort of material uncertainty for a great many people.

    Kokai: Are people now more attuned to the arguments in favor of capitalism? Is there an argument to be made that hasn't yet been made?

    Douthat: I think what we saw in certain ways in the 2010 midterm is what we saw in certain ways with sort of the best side of the Tea Party: a kind of reassertion of that case for capitalism. In the face of sort of the more, you could say, statist push that the Democratic administration and the Democratic Congress embarked on. I think you saw a very healthy, in certain ways, response on the right - a sort of return to first principles - [which] said, "OK, well, what is this system about? Why are we defending it?"

    So I think, in certain ways, that moral groundwork, it has been pretty well laid by figures like Arthur Brooks at the American Enterprise Institute - a number of other writers and thinkers who've done a good job. I think the challenge is, again, to sort of take that moral case and link it into a vision of broadly shared prosperity, to sort of close the circle between the moral and the material. So I think, compared to 2008, the case for free markets is in a vastly better philosophical position than it was when Lehman Brothers was going belly up and so on, but the sale has not been closed.

    Kokai: Many of the listeners of this program agree, without question, that free markets and capitalism are great. But I suspect many of your readers, especially when you're wearing your New York Times columnist hat, are a bit more skeptical about that idea. So what types of arguments do you have to make to convince these folks?

    Douthat: ... It's not really a debate about -- I mean, we have a consensus in this country, on the left and the right alike, that, in some form, free markets are the best way. There aren't any real communists in American life. And so the question is how much free enterprise do we want? How big a welfare state do we want?

    And so a lot of the arguments I end up having just are very practical arguments about the outcomes of the slightly larger welfare states in Western Europe versus the outcomes we have in the United States today, you know, sort of growth trajectories over the last 30 years. And this is probably part of why I'm so concerned with the practical dimension. Because I think in my engagement with readers and so on, I'll have a lot of readers say, "Well, sure, you know, I buy in to Adam Smith. I buy that. But I also think that, you know, we can sort of have our cake and eat it, too. We can have the benefits of competition, but we can also have more effective government investment in the economy."

    You know how Barack Obama is always citing the Transcontinental Railroad and so on. And we can have a much more robust welfare state than the U.S. has traditionally had. And so a lot of those arguments boil down to performance. What is the trajectory of Europe versus the trajectory of the U.S., and which model do you want to be living in for the next 50 years? And obviously, I think the answer is the American model, but I think it's an answer, you know, that requires sort of detailed statistical elaboration sometimes, as well as just sort of philosophical foundation laying.
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