Peak capitalism, peak democracy

Peak America?

America is preparing to celebrate the 250th anniversary of its national existence, proclaimed to the world in 1776 by Thomas Jefferson's Declaration of Independence.

Another manifesto of the same year shouldn’t be overlooked. The Scottish philosopher Adam Smith published The Wealth of Nations, which became a blueprint for America's economic organization in the same way the Declaration of Independence became the guiding star of American politics.

Both were forward-looking, describing not the world as it was but the world as it ought to be. Jefferson's declaration asserted that all men are created equal. The merest glance at Americans’ condition in Jefferson's day belied any glib notion of actual equality, but his assertion became the standard toward which Americans felt obliged to strive. By the 1820s they had covered enough ground to plausibly call their political system a democracy. In truth it was a democracy in progress, with large segments of the population attaining the vote only in the 20th century. But no aspiring politician after the 1820s could gainsay democracy and hope to be elected.

Adam Smith's ideas required longer to take hold. Against the closely regulated mercantilism of his day, Smith preached the gospel of free market capitalism. The gospel won converts in the North before the Civil War, which, by ending the slavery on which southern feudalism rested, permitted capitalism to take root in the South. The American embrace of capitalism was both a cause and a consequence of the industrial revolution, which kicked into high gear in the final third of the 19th century. Capitalist ideas of free markets and private property inspired the hard-charging entrepreneurs of American manufacturing — captains of industry to their friends, robber barons to their critics. And the extravagant success of the moguls appeared to confirm the practical correctness of capitalism.

Capitalism peaked in America sooner than democracy did. America was more capitalist during the Gilded Age than it had ever been before or would be after. Capitalism found friends in the three branches of the federal government and in state legislatures across the country. Almost nothing stood in the capitalists’ way. Regulation was nonexistent. Labor unions were in their infancy. Income taxes didn't exist. And the taxes that were levied, chiefly import taxes, or tariffs, worked in the capitalists’ favor.

The capitalists indeed had things good — too good for the situation to last. In 1890 Congress passed the Sherman Antitrust Act. Not for another decade would it seriously cramp the style of the moguls, but it put them on warning that they were being watched. The Populist party in the 1890s demanded its stricter control of big business, especially railroads. The Populists didn't last the decade, but the Democrats adopted parts of their platform, as did progressives of both parties after the turn of the 20th century. Under presidents Theodore Roosevelt, William Howard Taft and Woodrow Wilson, American progressivism knocked capitalism down a few notches. Franklin Roosevelt and the New Deal Congress in the 1930s added further controls upon the activity of the capitalists. In America, Adam Smith's finest hour had passed.

Democracy was still rising. It had a long way to go. Women won the vote during the progressive era, but black people were often kept from the polls until the 1960s. The civil rights reforms of that decade finally made democracy a reality in most elections in most states.

But in the same way that American capitalism had reached a peak, so did American democracy. Some observers located the peak about the time Ronald Reagan was elected and the country took a turn to the right. Others allowed another three decades, placing the apex at the end of the presidency of Barack Obama.

But most students of American politics agreed that Donald Trump's refusal to accept the results of the 2020 presidential election, followed by a violent assault upon Congress in early 2021, signaled that American democracy wasn't what it once had been.

Different groups responded differently to the decline of capitalism and democracy. Liberals were happy for the fetters on the capitalists, while conservatives decried them. Nobody openly applauded the diminishment of democracy, but liberals were far more exercised about it than conservatives. Some of the latter made a point of saying that America had been born a republic but not a democracy.

What all this meant for America as a whole was difficult to determine. The American economy remained more capitalist than the economies of most other countries. For this reason America could still be recognizable as a capitalist country even as the public sector pushed toward 40 percent of the economy.

But could America be America if it wasn't a beacon of democracy to the world? America had invented modern democracy. A democratic wave swept the planet after World War II and again after the Cold War. Millions and millions of people around the globe wanted the politics of their countries to be more like the politics of America.

By the 2020s this no longer seemed so. America's democracy, even when it wasn't under violent threat, appeared increasingly dysfunctional. People in other countries, if they sought models of democracy at all, looked elsewhere than America.

The admiration of other countries wasn't a requisite for the continued existence of the United States. American democracy might give way to autocracy, and the country would go on. If the public sector continued to grow until it was larger than the private sector, America's economy might no longer be called capitalist, but Americans would still show up for work and they would still buy and sell with each other and with the world.

But something would have been lost. Once a country has passed its peak, it's hard to be the shining city on a hill.