The American Interest

In the American Interest, Hilton Root’s analysis of capitalism and democracy is flawed by the simple fact that the alternative is far worse. If there is no evidence that democracy and free trade bring greater stability and less corruption and the rule of law but in fact the opposite, then what evidence is there to suggest that less openness to trade and less democracy do the opposite and create more rule of law, less corruption and more stability? I guess there is stability, but is that the sort of stability we want?
Who said that China or Russia or any other country should have democracy overnight? Let’s face it: 20 or 30 years is not very long in historical terms. It took the US and Britain hundreds of years to develop their democracies. Some people think that both countries still haven’t developed the democracy they should have. It’s a constant experiment and a constant project. By the same token, it took hundreds of years for the burgeoning bourgeoisie in those countries to go from being ravenous, inquisitive capitalists to being interested in the political system or getting involved in it or carving out their position in it, let alone the workers of those countries. Why should we think that all of these things are going to happen overnight for those countries that are just beginning to democratize now? Why should we expect this when the US. after all, still has many electoral and democratic inefficiencies after hundreds of years of democracy, that a country such as India, or for that matter Iraq or Slovenia or Lithuania, are going to have perfect democracies after barely a generation of this form of government? To me, that approach is very experience-centric. It doesn’t have to do with the long game. It will take patience and generations for some of these things to develop. It doesn’t mean that we wait forever before true democratic institutions take route. The US should take the lead to open up those countries to more and more democracy and more openness of trade. But at the same time, it should not be instantly disappointed when those things have contradictory or less than satisfactory results. It will take a slow, steady approach, and if there is a criticism of the Bush administration it is the creation of the impression, however well intended, that these things could be done overnight. One should never forget not only the admonition of Churchill that democracy is a terrible system but it is the best of the worst. There is no real alternative.
We should also recall that history still tells us that democracies usually don’t fight with each other, especially those with free trade agreements. This is either an enormous historical coincidence or it’s something genuinely encouraging that we should continue to support and reinforce. The alternative is too terrible to contemplate.
I’ve also heard tell that shareholding corporations and other such limited liability companies are actually one of the reasons democracy thrived in the Anglo-American countries making it possible to do business, to invest and to have capitalism without being constantly exposed to the vicissitudes of the state directly. If it has changed into an evil form of super-capitalism, I don’t think that’s the fault of the original idea of limited liability and shareholding. I think it’s the fault of the governments who don’t regulate well enough and have forgotten that even Thatcher agreed that Schlessinger was right in that there was no unbridled capitalism. Smith would certainly agee.
Mr. Reich makes the same mistake that all critics of capitalist do in that they attack capitalism for mistakes caused by people and governments that are often anathema to capitalism.