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America's Two Democracies

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Tags Political Theory

08/29/2017

America has two democracies, one political and the other free market. The concept of a political democracy dates back to Plato and his “Republic.”

Ludwig von Mises and my mentor Dr. Bill Peterson (a student and colleague of Mises) wrote extensively about our market democracy. Both of these great men are now just a memory but their legacy defines America. The political class dominates the news, while the market provides the solutions chosen by our citizens.

Plato described the political democracy as “full of disorder.” Today, the political democracy provides a spectacle of unpleasant news and often nastiness. Fights endure about historic statues, taxes, wars, foreign influences, and the size and reach of government. Politicians are often brutish, unpleasant, and uninformed individuals who ignore history, cater to special interests, and place selfish motives as their highest values. Only on rare occasions do these politicians reflect the heart of so many great Americans, who are kind, generous, fair, and God fearing.

Thankfully, in spite of the daily circus, our political democracy has largely achieved freedom, order, and the opportunity for our market democracy to prosper, as envisioned by our founders. We all owe an extreme debt of gratitude to our founders for their extraordinary vision, understanding of human nature, and willingness to sacrifice their lives for this amazing country. The United States of America was divinely inspired and our freedoms are embedded into the greatest constitution in the history of the world.

“America’s other democracy,” as Dr. Peterson liked to call our market democracy, is a continuous plebiscite of every citizen. It is supremely fair and must please the users or fail. Bad actors are weeded out in real time, quickly and adroitly. New ideas and companies are constantly entering the market with their only goal the desire to please the voter (buyer).

Our modern democratic market is a marvel catering to every need and whim of the citizens. Government has a measure of control over business, but the ultimate control and outcome is determined by the minute-to-minute decisions of the buyers, users, and customers.

The market also reflects the values of our citizens including fairness, equal opportunities, and the widest range of choice as companies compete. Citizens hold the fate of every business in their hands (iPhones) with a plethora of buying prerogatives. Buying habits, and thus the market, are rapidly changing as users abandon department stores in favor of online ordering and delivery without ever leaving the home. Even food and grocery providers now participate in this new landscape with cooked meals delivered at the precise location and time desired, as dictated by the buyer.

America continues to demonstrate the wisdom of our Founders, exhibiting an extraordinarily high standard of living and decency in our society. Our private institutions and businesses solve most of the challenges that our political democracy fails to resolve.

Private education and homeschooling are blossoming, creating a wide variety of choices for families and students. Private boards lead and manage public charter schools. Private companies provide drugs and health care technologies that save lives and solve complex medical challenges. MOOCs and distance learning (online universities) are becoming the norm, disrupting the expensive and lethargic colleges and universities.

Our political democracy will always be chaotic, but thankfully we have Silicon Valley (a proxy for American ingenuity) and our market democracy transforming every industry from information technology, transportation, and education to communication and manufacturing. This process is disruptive and challenging but it continually improves the standard of living and quality of life of every American.
 

Robert Luddy is the founder and owner of CaptiveAire, a manufacturer of kitchen ventilation systems.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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