Michael Novak’s Spirit of Democratic Capitalism Remains Essential for Our Time

Editor’s note: This essay appeared in Capitalism and the Common Good According Michael Novak: A Law and Liberty Symposium on First Things.

Rusty Reno’s recent editorial in First Things, which took aim at Michael Novak’s 1982 book The Spirit of Democratic Capitalism, was uncharitable. It also missed its target.

I have a personal stake in the matter, since Novak’s book played a pivotal role in my own intellectual journey. As a young graduate student, I struggled. My study of economics had convinced me (against my earlier instincts) that a free market was much better than the live alternatives at lifting societies out of poverty, and at allowing human beings to channel their interests in ways that benefit others. But I had read enough Ayn Rand to worry that “capitalism” clashed with Christianity. After all, that’s just what Rand had argued.

The result of this tension between my practical reason and my moral intuitions was, predictably, mental fog.

Novak’s book helped sweep away the fog. The Spirit of Democratic Capitalism was no partisan pamphlet. It was a nuanced and satisfying treatise that tallied up both the costs and benefits of the system. Novak understood that the economy is only one part of our social reality. Human flourishing, he argued, required not just freedom in the economic sphere, but rule of law in the political sphere, and virtue in the cultural sphere. Without all three elements, a society could not sustain itself for long.

Reno suggests that Novak’s work is now past its expiration date. He’s wrong.

Reno starts by missing a key lesson of Novak’s work: We must distinguish knowledge based on empirical evidence from ideology. Only by confusing the two can Reno manage to blame gender identity theory, of all things, on economic freedom. Does anyone really think that if we had more socialism (or, for that matter, feudalism), we wouldn’t face this problem? That gender identity theory—a mongrel creature of culture, academy and courts—would have been stopped in its tracks?

A perennial temptation of intellectuals in the humanities is to reduce every question to a contest between ideologies. An easy way to detect this problem is the use of sweeping, undefined terms. It’s “traditionalism” versus “neoliberalism.” “Libertarianism” vs. “Marxism.” “Global capitalism” versus “localism.”

Novak avoided this intellectual tic because he understood economic reality, and knew that some systems better conformed to it than others. That reality doesn’t change with the calendar. When I first read Novak, I thought: “Finally! A thinker who has integrated central economic discoveries with a robustly Christian vision of the human person and society.”

The relationship between supply and demand is not a propaganda tool of globalists. It’s a well-understood truth. The wealth-creating value of rule of law, private property rights, and expanding trade doesn’t depend on Rand’s egoist philosophy. We can discern these facts by comparing the economies of different countries. The role of prices in communicating underlying economic realities is a proven fact, not a deduction from Hayek’s philosophy.

It’s as misguided to dismiss such truths as the claims of a “global capitalism” as to wave away the periodic table of the elements as the poison fruit of Democritus.

It wasn’t Novak’s prior loyalty to “neoliberalism” or “neoconservatism” that led him to defend property rights, a patent system, and free trade. It was his fealty to the lessons of history.

The last three decades have confirmed his wisdom. More than a billion human beings, images of God, have emerged from absolute poverty since 1990. Why? Because of greater economic freedom in places like India and China. That’s nothing to yawn at.

Next, Reno suggests that “global capitalism” has won and so needs no defenders. It is “not a choice,” he writes. “It is our fate—and our problem.”* But it’s not our fate. Sam Gregg shows how tenuous, and in some cases illusory, its victory is in his recent piece at The Public Discourse.

Despite the evidence in its favor, and the lack of any humane alternative, it’s harder than ever to defend economic freedom. In the Reagan era, the influential critics of economic freedom were largely on the left. As Reno’s piece shows, the anti-market virus is now so widespread that it has infected influential corners on the right. Indeed, the current Republican president of the United States opposes free trade.

The Soviet Union is gone—thanks be to God. But bad economic ideas are more deeply rooted in the American psyche now than they were when Novak first wrote his book. Last year, a self-declared socialist gave Hillary Clinton a run for her money for the Democratic Party’s nomination for president. He might even have been a formidable opponent against Trump. (Sanders, like Trump, diagnosed real problems in the Rust Belt, though he’s clueless about the cause and the remedy.) And a 2016 Harvard IOP poll revealed that one in three young Americans support socialism, and one in six identifies as socialist.

Novak’s book was, if anything, ahead of the curve. It highlighted the centrality of the human mind, of human creativity, when even most economists were still fixated on land, labor, and capital. “Capitalism,” as he put it, “is the mind-centered system, springing from the creative power of insight, invention, and discovery.” With the rise of the information economy, this may seem obvious. But even many who studied the economy managed to miss it. As do many who see themselves as insightful commentators.

Rusty Reno fails to show that Michael Novak’s magnum opus is obsolete. He has, instead, confirmed what we already knew: that it is unfashionable. It’s as unfashionable now as it was in 1982, at least among those who write for a living. That’s fine. Novak was more interested in truth than in fashion. Those who seek the truth in matters of political economy can do no better than to study, not just Novak’s Spirit of Democratic Capitalism, but his many books that followed in its wake, almost until the year of his death.

*I’ll let pass the comment that it is “our problem,” since I’ve written at length about that claim elsewhere.