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Capitalism spreads freedom even as democracy falters

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By Carl J. Schramm

With the Fourth of July approaching, many politicians and pundits have been asking: What would the Founders do in our situation?

How would Presidents George Washington, John Quincy Adams or Thomas Jefferson handle Iraq? Afghanistan? The war on terror? The search for global peace?

One overlooked "founder" offers enduring answers: Adam Smith. Smith published the Wealth of Nations in 1776, the same year the Continental Congress declared American independence. By the time of the Constitutional Convention 11 years later, his ideas had been incorporated into the thinking of the new nation's leaders.

Smith's great revelation was that political freedom would most likely emerge and persist under conditions of economic freedom, what we now call capitalism. Our democratic system as defined in our Constitution incorporated respect for this economic system.

Like Smith's invisible hand in the market, the Framers saw an invisible hand in our politics. They believed that, if allowed to work freely, these hands together would shape America into the land where invention, creativity and entrepreneurial activity would flourish.

There would be no danger of an aristocracy of wealth because the instruments of financial success were available to every person.

In the two centuries since then, Smith's proposition has served to advance all of civilization. America has become the hope of the oppressed, the "mother of exiles" and the cradle of modern commerce.

Twice, America considered turning away from economic freedom. In the Depression, nationalization was seriously considered, and Presidents Roosevelt and Truman did attempt to take over several industries. In the late 1970s, in the face of low growth and high inflation, the nation nearly followed the advice of such economists as Harvard's Wassily Leontief and John Kenneth Galbraith to establish government central planning.

Instead, in the 1980s, we returned to our origins and bet on individual entrepreneurs rather than on government bureaucrats. The result has been today's extraordinary economic engine — Smith's entrepreneurial capitalism at work.

Indeed, research from the University of Maryland and Census Bureau shows that net jobs created by businesses less than five years old exceeded 20% per year during the '80s and '90s (equating to millions of jobs), while jobs created by more mature businesses remained essentially flat.

Even so, what do we do now in the face of a new enemy to freedom, driven by a notion that our democratic way should be eliminated?

More than the export of democracy, it is the export of entrepreneurial capitalism that can produce a new birth of peace and freedom around our globe. Entrepreneurial capitalism is based on individual invention, and because wealth comes from one's own initiative, it advances human dignity.

And here is the good news. Virtually every country, whatever its political system, wants to embrace it. They have seen the success of the American economy.

It has been said that when goods cross borders, armies don't. Today, China and India are the world's two largest countries racing toward entrepreneurial capitalism. They are the example and test of that thesis. Several decades ago, their armies clashed. Now no one talks of war, only of their economic emergence. Capitalism has promoted peace and, in China, better — though still inadequate — respect for rights.

If, with our assistance, Adam Smith's entrepreneurial capitalism were to become ubiquitous, the cross-border investment in the success of our brothers and sisters around the world, and theirs in us, would cause people everywhere to see the futility of ancient struggles, whether based on plunder, conquest or theocratic fervor.

In the insight of our invisible founder is the secret for achieving a future of global peace.


Take that Communism!

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should I point out that the "instruments of financial success" are not available to all, and that there is a degree of aristocracy? Nah, that'd be bad. Should I ask whether Smith was actually a founder? Of course not. Should I point out that the Islamists will willingly die to kill us, or that many of them don't want freedom? Those who make decisions don't always want democracy, freedom, and all that, especially when they already have vast oil reserves and are only concerned with maintaining their own wealth.

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Were is GPS… he loves to bash communism

I would also like to point out that what we have is not true capitalism. We have things like unemployment benefits, social security, and welfare. These programs wouldn’t be present in a pure capitalist system. These serve help individuals that are struggling, as apposed to the capitalist idea of “every man for himself”. Also things like the national bank, monopoly laws, trade restrictions, and market regulations would not exist a true democracy. These are ways of the government interfering in the economy.

In response to Burb, capitalism is essentially social Darwinism. In true capitalism more so that what we have today. The company that can do something better or cheaper that another will dominate.

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As much as I support capitalism, I can't imagine living in a completely capitalistic country. It's all nice and dandy ideologically and so is communism, but it won't be able to work for all countries in it's ideological sense.

Lovely how the article is so capitalistic, it fails to see how capitalism can tear society apart.

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It has already been shown that this is not nearly true in every case. -_-; Palestine and Israel, for example, are constantly bickering, occasionally bombing, despite Palestine's heavy reliance on Israeli loans and trade. Capitalism doesn't prevent wars- it merely adds in a new factor of complexity to it.

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You do realize that both true Capitalism and Marxism can only exist in anarchy.

And before you say anything remember I said Marxism not Communism, your history teacher may tell you that the only difference between Marxism and communism is that communism contains farm workers, this is un true. Marxism is the idea that workers should share the prosperity of the factory that they work in, as apposed to communism were there entire population shares the wealth. If anything Marxism is closer to a modern profit sharing or stock option type thing than what the USSR had.

This type of economy would have group owned enterprise and individuals would trade for there share of the products produced by there labor for the other things that they needed. In actuality it wouldn’t be too far way from the idea of modern corporations.

This type of system doesn’t need a government to control it the way communism does.

Capitalism by its very nature is an anarchist system. The idea that a government will in no way interfere with the economy can only be true if there is no government. Taxes, government spending, market regulations, monopoly laws, unemployment benefits, the list goes on and on…. Simply by existing a government will interfere with the economy

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So, communism is basically pirate codes, where each man gets a share of the take. Or, it's like profit-sharing for corporations.

Actually, that amounts to the same.

If done right, yes.

Also the main point of that was to say that all economic systems can function independently of government, I was trying to point out the flaws in the idea that capitalism means democracy and that communism means totalitarian or dictatorial

When I drink too much, I turn into Jack Sparrow.


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I will admit that I have no knowledge of any communist country that did not have a totalitarian or dictatorial government, but I know of some that have had those types of governments and not had communism. Take nazi Germany for example, the nazis hated communist, but they had a totalitarian government.

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The company that can do something better or cheaper that another will dominate.

But at what cost. I dont think capitalism can work without a strong societal dominating culture to back it up. With out it all culture get wiped away for pure matierialism, which leads to corprate servitude. Its almost impossible however to have a unyfing culture in such a large and diverse country. I see no reason why it wouldn't work with a small population in a culture that is runs hand in hand with capatilism.

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