The Limits of Liberalism: Pragmatism, Democracy and Capitalism

Mike O’Connor

Liberalism sanctions both democracy and capitalism, but incorpor- ating the two into a coherent intellectual system presents difficulties. The anti-foundational pragmatism of Richard Rorty offers a way to describe and defend a meaningful democratic capitalism while avoiding the problems that come from the more traditional liberal justification. Additionally, Rorty’s rejection of the search for extra- human grounding of social and political arrangements suggests that democracy is entitled to a philosophical support that capitalism is not. A viable democratic capitalism therefore justifies its use of markets on the consent of the governed, rather than appeals to liberal notions of individualism, liberty, and property.

1. Introduction

One of the perennial philosophical problems of liberalism is that of the appropriate relationship between democracy and capitalism. Both systems justify themselves intellectually by applications of core liberal principles – personal liberty, the primacy of the individual, and the preservation of property rights – to the political and economic realms, respectively. But the fact that democracy and capitalism might derive from the same theoretical basis does not necessarily render them compatible with each other. Politics and economics intersect and overlap at so many points that it is impossible to preserve political freedom without significantly impeding the liberty of trade, and vice versa. Additionally, markets themselves depend on a minimum level of security and law-enforcement for their very existence, which makes the existence of capitalism dependent upon prior non-market arrangements. Finally, a government that is unwilling to use its power in ways that could influence economic free agents in their choices is one that could not, for example, enact a tax code, raise an army, or provide infrastructure; it is, in short, one that does not govern. Political scientist Gabriel Almond pointed out this problem in his influential bibliographic essay “Capitalism and Democracy,” in which he referred to the relationship between the titular systems – “this tension between the two major problem[-]solving sectors of modern society” – as one of 82 MIKE O’CONNOR

“ambivalence and dialectic.” Reviewing “a rich literature,” he claimed to find “[a]ll the logically possible points of view.” Almond then divided this discursive universe into four presumably exhaustive camps. “There are those who say that capitalism supports democracy,” he wrote, “and those who say that capitalism subverts democracy. And there are those who say that democracy subverts capitalism, and those who say that it supports it.”1 Thus the relationship between democracy and capitalism is fraught with complications and controversy, despite the fact that both are rooted in liberal thought. Yet this tension only reflects the contradictions in liberalism itself. From its earliest origins, it has struggled to reconcile its own divergent ideals of freedom and equality. Since theorists traditionally ground democracy on egali- tarianism, and capitalism on the primacy of liberty, the tension between democracy and capitalism is a specific manifestation of this broader conflict inherent in liberalism itself. In this article I offer a pragmatist take on the problem of democratic capitalism as it is viewed from the perspective of the intellectual history of the United States. Rather than proposing to square the circle once and for all by finally reconciling freedom and equality, I will instead argue that as long as democratic capitalism can underwrite practices and institutions that yield the results that citizens desire, then there is no need for any philosophical theory to justify it. Thus a nation can continue to affirm democratic capitalism without the need for the unnecessary baggage of classical liberalism. This argument is a specific application of the insights of the American pragmatist philosopher Richard Rorty, who holds that the value of political institutions is largely independent of the elegance of their philosophical founda- tions. “[L]iberal democracy,” he argued, “can get along without philosophical presuppositions.”2 After an overview of liberalism and its influence on the democracy and capitalism of the United States, I will present Rortyan pragmatism as a more satisfying theoretical system. Further, I will argue that this approach can justify democracy, but is not able to offer the same support to capitalism. Under this interpretation, a polity is under no moral obligation to employ the tools of the market; instead, citizens can implement capitalism, or choose not to, to the extent that it meets their needs.

2. What is Liberalism?

Liberalism is traditionally understood philosophically as the belief that the primary function of government is to protect individual freedom. To the contemporary American reader, such a sentiment might seem so obvious as to constitute a platitude rather than a philosophy. But the many functions of government are not all compatible with an emphasis on liberty. Nations around the world and throughout history have been organized around other missions: the stockpiling of gold, the implementation of God’s will on earth, the conquest of territory, provision for an elite, and so on.