I take capitalism as a given, at least for the foreseeable future. Its roots lie in the same instinct that makes one child trade her corn dog for a second orange juice, and another child trade her orange juice for a second corn dog on the playground. Our complex economy emerged out of those instincts and has grown more powerful as our transportation and communication technologies and networks have grown. The current incarnation of capitalism produces much harm, but also much good. We should try to keep the good and eliminate the harm to the best of our ability.
Capitalism can serve us well if we:
- regulate industry intelligently,
- redistribute an adequate portion of the profits, and
- insulate our democratic institutions from the influence of big money.
We once did a better job of carrying out those three missions. And those who were privileged to do so enjoyed the benefits of a strong middle class and realistic dreams of upward mobility. At the very least we need to get back to where we were, but bring everybody along this time. We should also strive to make further improvements.
We should develop better forms of tax and transfer. We should aim for transfer programs, like a citizen’s dividend, free universal basic health care, and free universal higher education for those who qualify on merit. Such programs don’t require the have-nots to abase themselves before the haves. And we should aim for tax policies that tax the wealthiest and not the poorest. Progressive income, consumption, inheritance, and capital gains taxes are better than sales taxes, lotteries, and flat taxes (or even corporate taxes — more on that another time).
We should be more deliberate about separating the public-protecting and market-promoting functions of our government. And we should regulate better to ensure competition, protect the environment, and protect third parties from a greater range of harms.
With these changes (and a few others) we could have a robust capitalist system where people can still get filthy rich with hard work and great ideas. But they would have to return much of their wealth to the tribe when they’re done with it. More people would have a chance to be well off. Poverty (and its symptoms, such as drug abuse, suicides, and property crime) would be dramatically reduced. The economy would grow. Small businesses would thrive. The environment would improve. Average happiness would go up. Our people would be better prepared for the future. And the government would be more responsive to the will of the people.