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The Spirit of Democratic Capitalism
The Spirit of Democratic Capitalism is a book written by philosopher Michael Novak and published by Simon and Schuster in 1982. Irving Kristol described it as “unquestionably a major work for our times.” In this book, Novak aims to understand and analyze the theological assumptions of democratic capitalism, its spirit, it values, and its intentions. Novak defines democratic capitalism as a pluralistic social system that contrasts with the unitary state of the traditional society and the modern socialist state. He analyzes it as a differentiation of society into three power centers: a political sector, an economic sector, and a moral-cultural sector. Each sector needs the others. Democracy needs the market economy and both need a pluralistic liberal culture. Against the continuing growth of democratic capitalism, modern socialism has contracted from a robust utopian program into vague “idealism about equality” and overwrought criticism of capitalism, most notably in the “liberation theology” of Latin America. You can only have democracy with a market economy, nourishing and nourished by a pluralistic liberal culture: a threefold system. What is Democratic Capitalism?

People hate capitalism; its successes do not impress the “poets and philosophers and priests”(p31) “The more it succeeds, the more it fails.”(p32) Intellectuals indict capitalism for all kinds of sins: affluence, moral weakness, and vulgar taste. The intellectuals that do defend capitalism have not made a broad enough case. “What is the spirit of democratic capitalism?”(p36) Max Weber saw that commerce takes on a new meaning, or spirit in capitalist countries. Capitalism’s spirit required free labor, practical intelligence, planned and organized for profit in a continuous enterprise in a stable network of law operating mainly in cities and towns. But Weber did not see the “necessary connection between economic liberty and political liberty.”(p45) It is not just “an economic system dependent upon a moral spirit”.(p46) Rather than being an “iron cage” “democratic capitalism is demonstrably open”(p47); it reinvents itself constantly. “The spirit of democratic capitalism is the spirit of development, experiment, adventure. It surrenders present security for future betterment. In differentiating the economic system from the state, it introduced a novel pluralism into the very center of the social system.”(p48) Pluralism

The big idea in democratic capitalism is pluralism. A traditionalist or socialist society “imposes a collective sense of what is good and true... exercised by one set of authorities.”(p49) But can society work if no-one is in control? Many people, from Solzhenitsyn to popes, find such a society immoral and chaotic. Social scientists find it sickening, as producing anomie, alienation, etc. The founders of democratic capitalism “feared absolutism more than they feared pluralism.”(p52) In a plural society, people can question things. One can step out from under one’s “sacred canopy” and experiences “culture shock.” “In a genuinely pluralistic society, there is no one sacred canopy.”(p53) Society is renewed by crises of conscience, the “taproot of democratic capitalism.”(p55) Pluralism avoids the single “sacred canopy” by design. The founders deliberately separated economic institutions from the state, and limit the power of clerical and state bureaucrats to meddle in the economy. Political activists compete in the political sector, economic activists in the economic sector and religious and intellectual activists in the moral-cultural sector. By design it is hard for any one person to get power over all three sectors. But the three sectors need each other. Capitalism needs a moral culture to nourish “self-restraint, hard work, discipline and sacrifice”(p57) and a political system committed to limited government, a sound currency, and regulation of competition. The authors of The Federalist Papers wanted to avoid the...
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