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Capitalism

What is Democratic Capitalism?

By Lawrence J. Fedewa

The first thing to understand is that “democracy’ is a system of governance, and “capitalism” is an economic system. The genius of America has been to unite these two elements into a synergistic whole with the goal of providing every American “the right to life, liberty, and the pursuit of happiness.”

The foundation of capitalism is “profits.” A profit occurs when you sell something for more than you paid for it. All taxes depend on profits – no profits, no taxes; no taxes, no government. So, if governments (combining local, state and national) take too much of the profits generated by businesses, there will not be any profits, and the economy will fail – and people will go hungry.

Thus, there will always be a tension between government and business over the amount of profits government takes and the amount kept by businesses. Since there is no accepted “balance,” there is always a tug of war between advocates of “big government” and “limited government,” generally represented these days by the Democrats and the Republicans.
There are some basic issues at stake. First of all, governments generally have the guns, meaning the resources to enforce whatever they want to enforce, whether through confiscation (taxes), incarceration (prison), or militarization (martial law). Keep Reading