On at least a couple of occasions, I have mentioned The Battle, a book by Arthur C. Brooks of the American Enterprise Institute which defines a fast approaching pivotal moment in the form of a question that we must answer: Does America recover its commitment to free enterprise and ordered liberty or does it continue to drift toward European-style welfare statism? This he believes is the real culture war, and I believe that he is in many respects correct, primarily because the underlying question is in essence a moral issue. In fact, we are in constant need of reminding ourselves that Adam Smith, the traditional godfather of capitalism, was not really an economist; he was a moral philosopher and his Theory of Moral Sentiments is much more instructive of the underpinnings of the capitalist system than his more widely acclaimed Wealth of Nations.
In a recent essay in National Affairs, Yuval Levin points out that the two key moral features of Smith’s political economy–its democratic or popular character and its disciplining effect–have been under assault in our time: the first by a growing collusion between government and large corporations, and the second by a welfare state that has expanded far beyond its needs. And the case for capitalism is a case against these two trends against the morality of the system.
So back to the issue raised by Brooks. Can we rise above the questions involving the functionality of government and get to the underlying moral questions suggested by Levin? For it seems that the liberal vs. conservative battle has boiled down to a debate about which ideology is served by government, rather than the classic opposition between big and limited government, which is the moral debate we should be having. As former Congressman Bill Archer once asked me, “would you rather balance the budget at 40% of GDP or 20%?”. This is critical, for the impact on the underlying values that we subsidize with larger government is destructive in ways that Adam Smith understood very well. Business leadership is the key. Will corporate leaders be in the forefront of this effort of moral restoration, or will they be largely rent-seekers from government?