The Fading Light of Democratic Capitalism: How Pervasive Cronyism and Restricted Suffrage Are Destroying Democratic Capitalism as a National Ideal…and What to Do about It

What are we to do about declining public trust and confidence in democratic capitalism, which many citizens consider a cornerstone of our national ideology and identity? While the answer is not entirely clear, I argue in this essay that any effort aimed at restoring public trust in U.S.-style democratic capitalism must start with the understanding that our system of economic and political governance has become less democratic in recent decades and that restoring public trust in democratic capitalism requires its further democratization. In making this argument, I begin by defining what democratic capitalism includes as a system of economic and political governance and then explain how this governance system has become corrupted in recent decades by the toxic combination of pervasive cronyism and restricted political voice and suffrage. On one side of this “democracy squeeze,” cronyism has led to a relatively small but wealthy and influential group of individuals and corporations advancing their private interests by the capture of legislators and regulatory agencies through campaign contributions and lobbying, often with scant regard for the interests of ordinary citizens. On the other side, restricted political voice has made it difficult for ordinary citizens to countervail this elite power due to constraints on their right to vote, to run for public office, and to hold elected officials accountable to the public will. This situation hardly qualifies our political economy as either truly democratic or truly capitalist. And it forces the question of how best to strengthen democratic capitalism as our primary governance model going forward. To this end, I call attention to the principle of political equality, as well as the two related sub-principles of reciprocity and power sharing, as essential guides. Based on these ideas, I suggest a series of practical steps to make our economic and political markets more democratic by curbing cronyism and expanding citizens’ access to the political processes governing our nation. I also address what the restoration of democratic capitalism means for the management of firms and end with thoughts on what kind of ethical culture or moral ecology is required to restore and sustain public trust and confidence in democratic capitalism as a realistic ideal for the U.S.