In an article published on September 5, Josef Joffe, the editor of Die Zeit, examined the question whether capitalism is the enemy of democracy. This is a summary.
• Who invented capitalism, i.e., the market economy? Moses, who in his Seventh Commandment proclaimed You Shall Not Steal. In English: Your Home is Your Castle. It is no coincidence that the man who led his people from slavery to freedom also secured the basis of all freedom, i.e., private property.
• You can have capitalism without democracy, but not democracy without capitalism. Pinochet’s Chile had capitalism. There is quasi-capitalism in China, which is anti-democratic. Is there a modern democracy that is not also capitalist?
• In England Charles Dickens and Karl Marx described the miseries of the working class in early industrial capitalism. They did not anticipate that modern democracy evolved out of these miseries. In the U.S. ultra-capitalism evolved hand-in-hand with democracy.
• England and the U.S. are the oldest industrial democracies. The modern welfare state was created in England. The first laws against monopoly and trusts were enacted in the U.S. Capitalism does not lead to modern democracy overnight.
• The market, unless distorted by cartels, monopolies or state-interference, rests on freedom of choice, as does democracy. Before the Internet it was the best information system that had been devised.
• In the last third of the nineteenth century there was a sequence of economic crises. It was also the time of rapid democratization that continued into the twentieth century. This process was not stopped by capitalism but by fascism, Nazis and communism. Under communism there were no crises.
• Capitalism learns from its crises.
• Karl Marx grasped the sore point of unchecked capitalism – that it has a tendency to destroy itself. Adam Smith had already written in 1776 that if you leave people with the same trade or interests alone they will conspire against the welfare of the people.
• When capitalism is unchecked the rich have more power than the poor.
• Capitalism has created hitherto unimaginable wealth and at the same time promoted democracy. Democracy, in its turn, has protected capitalism from its ill effects.
• The free market radicals (do they still exist?) and the critics of capitalism will no doubt continue to debate these questions vigorously. Capitalism and democracy are not enemies but (at the minimum) half-brothers.
Which one was more important to the creation of the modern world?