Capitalism is not a force for good, it’s a force for profit. It’s the best economic system we know of out there, but it requires restraint and limitation by an external system that does not have a primary profit motive, in order to temper its worst excesses and address the issues it doesn’t particularly care about.
That’s why we have capitalism AND government. Does the latter make the former less purely efficient? Yes, of course: restraint will always do that. But it is necessary to do so, in order for society to take care of aspects of itself that capitalism is quite incapable or naturally unwilling to address:
– The public good: education, justice, protection and defense, health, unemployment, the “safety net”
– Long-term infrastructure development that has little or no short-term return on investment, and no direct ROI other than diffuse benefit to the overall population (e.g. roads, public schools, environmental protection)
– Inappropriate excesses of the pure capitalistic urge, which can easily become greed (e.g. protecting worker’s rights and well-being at the expense of profit)
Democracy just happens to be the best governmental system we know of, but it ALSO requires restraint and limitation by an external system that does not have control as a primary motive, but rather a desire to increase personal liberty (and in this case, profit). Hence the tight relationship in our society between capitalism and democracy. Both of these systems, left unchecked, run roughshod over the common good or personal rights, respectively: it is only in their combination and mutual restraint that we find balance.
Are both of these systems (government and capitalism) riddled with corruption, inefficiency, ineptitude? Sure. That’s a side effect of the fact that they are both guided by humans, who have a tendency towards those things (especially when left unchecked).
Is it hard to find a balance between the two? Clearly. It’s one of the reasons we have such sharp political divisions today: any attempt to increase government control and improve what is perceived as the public good will be met with shouts of “socialism!” and “government overreach!” by the other side, as well as disagreement over what constitutes the common good. Any attempt to loosen restraints on capitalism and allow profit to be the single unchecked driver will be met with accusations of cold-heartedness, shouts of “tragedy of the commons!”, pointing out unfair advantages to the already monied from the other side, and disagreements about the definitions of greed vs. profit-seeking.
And both sides can point across the aisle and accuse each other of corruption, inefficiency and ineptitude. The problem is that neither side is actually wrong: but when you do so, you should not be pointing at capitalism and democracy as the sources of those blemishes. It’s the humans behind it. Whenever you have two groups of people and there is the possibility of one of them gaming the system (whether economic or governmental) to take unfair advantage of the other, the probability of this happening over time is, for all intents and purposes, one hundred percent. Of course we will find these things in institutions devised by humans, because… well, because they’re devised and run by humans.
But that’s why you need both sides, constantly monitoring and restraining each other, and constantly testing the always-present tension between the two.
Some would argue you need a third element: an agent of morality. I would agree, in general, but note that the individual is that agent. Among the huge problems of introducing a formal organization to control the definition of morality (a role that religion seems to pounce on whenever it gets the chance) is that it rapidly confuses its role with the governmental one. Morality formally organized and defined eventually becomes imposed law that can be managed and coordinated by the government: that’s a good thing when the agency of morality is the individual, but a bad thing when it is a self-appointed authoritative organization, in particular the religious ones that claim moral authority on a basis over which reasonable people will inevitably disagree. It’s even worse and becomes more abusive when the religious authority starts claiming not merely moral authority, but also the right to both impose and punish moral transgression, which is why we separate church and state in the first place.
The agency of morality has to remain with the individual, who collectively monitors the other two but ONLY at an informally organized level if it is to remain restrained. As an aside, this also means that the altruistic initiative must remain at the individual level: it is not something that capitalism will naturally nurture, and if it is formally organized and imposed in any way (whether by government or by religion) it ceases to be altruism.
Capitalism: good but flawed. Tends to overreach.
Democracy: good but flawed. Tends to overreach.
Humans: overall good, intrinsically flawed. Tend to overreach.
Morality: required, but individual in nature (albeit decided collectively)
Inevitably contentious, and today seemingly unachievable in political debate, but it MUST be pursued. And do you know what helps that pursuit? If we don’t yell “SOCIALISM!” every time someone notes the benefit of a public good, and if we don’t yell “GREED!” every time someone else sees the benefit of profit. Things are rarely that clear-cut in the pursuit of that balance, otherwise we’d already be in full agreement on everything.
We need both, and we need them to be constantly checking and restraining each other. We’ve had both in this country for decades, and the experiment is an overall success, in spite of imbalance swings (in both directions) over the years. Those swings are a natural consequence of our human imperfection, which is why we need each other as checks and balances at the moral level too.