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re: Our Constitution Enshrines Democracy Not Capitalism
Robert — (archived)

Elegantly argued, Mark.

Americans over the years have freely adopted many other economic systems besides capitalism. Notable examples are the precursor-communistic systems adopted by the Amana colonies and many religious sects (Marx codified a type of communism, but he didn't invent it).

Laissez-faire capitalism carries within it the seeds of its own destruction, because it's a chaotic, unbounded, unstable system (and I mean that in a nice way ;-) ). The basic structure of laws and regulation that we've built up around it over a couple of centuries are benignly intended to preserve capitalism, not destroy it as Tom would argue.

The ratio of income that you mention, in the range of 10-20 to 1, is right on target. Adam Smith believed that the ratio was 10-to-1 in his time, and as late as around 1970 it held true: CEOs made about 20 times as much as their average workers. I think one factor contributing to the instability of the system nowadays is that the ratio has shot up to something like 432-to-1 in recent years. That's a good example of what I mean by nonlinearity. Chaotic systems are nonlinear by definition, but too much nonlinearity can destabilize the system and cause it to crash.

Speaking of Adam Smith, "The Wealth of Nations" was published in 1775. It might have made it to the colonies by the time of the Consititutional Convention, but there's little evidence that it did. The Federalist Papers don't contain the word "capitalism" anywhere, and the word "capital" appears only a couple of times in passing. I don't see where the Federalist Papers spend any time at all trying to choose the economic theory that should govern us. The Founders were wise enough to let us decide that on our own, despite Tom's insistence that they simply "forgot" to write capitalism into the Constitution.

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