·        Because political gridlock protects special privileges, the government does not properly support economic freedom.  

·        Universities, the media, the religions, and the intellectual community have yet to discover democratic capitalism as the best way to improve lives and eliminate the violence.   

·        The Information Age revolution has the potential to transform and unify the world through democratic capitalism.  

Democracy as a social philosophy means equal rights, equal responsibilities, and equal privileges for all; capitalism as an economic system means private ownership of production and distribution motivated and disciplined by competition.  Democracy and capitalism become synergistic in democratic capitalism because they support and enhance each other.  From democracy comes the involvement and participation of all; from capitalism comes the energy and resources to excel.

            In democratic capitalism, capital and labor are not in conflict because the source of capital and the people doing the work are the same people.  All become owners in general ways through pension and savings plans and in more direct ways through ESOPs (Employee Stock Option Plans), stock purchased in payroll savings plans, and profit-sharing distributed in stock.  Ownership is the motivation that maximizes surplus; broad wealth distribution builds demand and sustains economic growth.  On the global level, incremental spendable income from these plans makes free trade a universal benefit.  Because rising compensation is productivity based, it cannot be a cause for inflation.

Governments need to give priority to economic freedom by providing civic order, fiscal and monetary policies that distribute wealth broadly, and capital for growth that is stable and patient. Governments can

also design realistic programs for better education, good health, protection of the environment, and assistance for people to learn how to help themselves.

Democratic capitalism is built up from individual development in a harmonious whole.  Because of the power of cooperation, the whole is greater than the sum of the parts.  The benefits deriving from this simple foundation have been confirmed by the wisdom of many thinkers over many years.  Economic freedom that can improve lives and stop the violence is a potentially common ideology because it has demonstrated this capacity under both democratic and authoritarian governments.

Many believe that society cannot sustain or improve itself without a common ideology defined as a body of doctrine, including ways through which to put the ideal into operation, that is, the end and the means.  Economic freedom is acceptable to all cultures because it addresses the needs of all people for food, clothing, shelter, education, health, and hope; further, it can unify people through a growing sense of interdependence in pursuing these goals.

Beginning with this common ideology, the progression from economic freedom to political freedom becomes possible.  Ethnic and religious animosities recede before growing worldwide affluence and education, while problems of over-population are resolved by the same forces.  The world’s environment will be protected by cooperative action, funded by optimum economic growth from capitalism built on sensitivity to the human condition and planning for the very long term.  Each generation assumes responsibility for the next generation to make the world a better place. The culture refines and promulgates the commercial means to make the ideal become the real.  

An ideal world of peace and plenty is the common goal of innate human yearning, the secular goal of both divine providence and of humanistic perfectibility.  This is the natural or rational order in human affairs that was sought by the 18^th century Enlightenment philosophers.  The question is not the universality of the goal but why the only species capable of reason has persistently failed in attaining it.

Despite the demonstrated capacity of economic freedom to be the common ideology that improves lives and unifies people, the world continues to be dominated by folly and violence.  Consider the following mistakes that happened a century apart, caused by poorly educated intellectual and political leaders,  that led to disastrous social consequences. If these human errors had been avoided by a more rigorous truth-seeking process, the course of history would have been changed for the better:  

·        Late-1880s:  The world was moving towards economic freedom.  The process was imperfect, but more and more people were improving their lives through the coupling of democracy and capitalism.  Reform-minded intellectuals were excited by Marx’s legitimate criticism of the excesses of capitalism, but they did not subject his radical theories to rigorous examination, including a synthesis with the refinement of free markets as presented by Mill.  Reformers working within a narrow spectrum of knowledge made a tragic error in choosing Marx over Mill and missed the opportunity to move the world towards peace and plenty.  The bloodiest century in history was the result of their error.  

·        Late-1990s:  Mexico , Indonesia , Malaysia , and many other countries were—despite various imperfections—making impressive progress in improving lives by moving towards economic freedom.  Their economic growth depended on stable, patient capital.  Instead, lethal ultra-capitalism struck with short-term, volatile, speculative capital.  Economic momentum was reversed, social upset was caused within the countries, and tensions increased among nations.  Indonesia , the world’s fourth-largest country in population and the largest Muslim nation, had through economic freedom reduced the percentage of their people under the poverty line from 40% to 10% in only a few decades. This nation was suddenly thrown into economic reverse and more than 50% of Indonesians were forced back to living in poverty (see chapter 7). A downward social spiral was precipitated by bad economics that ended the Indonesian sense of economic common purpose and would cause religious, political, and ethnic chaos for years to come. The media failed to examine the economic causes, converted the unnecessary economic tragedy into a political event, and thereby failed to inform the public.  

·        Late-1990s:  Under Mikhail Gorbachev, Russia had gone through an extraordinary, bloodless revolution and was prepared to move towards economic freedom.  After Boris Yeltsin replaced Gorbachev, he depended heavily on the advice of American government officials, academic economists, and finance capitalists to apply “shock therapy” to effect a quick transition to “free market” capitalism.  None of the foreign advisors and none of the Russians involved demonstrated comprehension of the complexities of the management of change or of the disciplines required for economic freedom to function well.  The result of their collective errors and the inevitable corruption proved to be the worst peacetime economic disaster of the twentieth century and the worst asset stripping in history when hundreds of billions of dollars of economic value crucial to Russian economic growth was bled out of the country into foreign bank accounts.^[7]   

In the late-19th century, following Marx, the world took a wrong turn toward communism, socialism, and collectivism that resulted in the bloodiest century in human history.  In the late-20th century, following the implosion of communism, the world failed to make the correct turn toward economic freedom.  Instead of uniting in economic common purpose, the world turned again to violence, epitomized by the attack on America , September 11, 2001 .

The common denominator of these failures was lack of an understanding of exactly what economic freedom means and what support it needs from government and the rest of the culture, if it is to succeed.  The world had naturally looked to the United States for leadership, the country that had demonstrated how to couple democracy and capitalism in order to improve lives, but the United States failed spectacularly.  Instead of leading the world towards economic freedom, it led to ultra-capitalism, a hardening of mercantilism and finance capitalism that treats the worker as an expendable cost commodity, and takes making money on money quickly as its dominant mission.  The best opportunity in human history to improve all lives, unite the world in economic common purpose, and stop the violence, was lost.  Many emerging economies suffered the reversal of their strong economic momentum; many others went into decline—including the American economy; and, the world’s economic growth slowed by half.

Also lost was the opportunity to use a rising standard of living to lift relations among nations from traditional force of arms and geopolitics to the rule of law and global collaboration.  Instead of strengthening the U.N. and world cooperation, the United States weakened it by unilateral actions. America , the “light on the hill,” became known around the world instead for “the American model” of short-term and greedy capitalism, and a cop-of-the-world attitude.

The reason for the failure of American leadership was abandonment of essential purpose by the United States government, which is mandated by its own founding document, the U.S. Constitution, to “promote the general welfare.”  Instead, the government’s fiscal, monetary, and regulatory policies were increasingly providing lobbied privileges to the few to make money on money.  A failure of the democratic process was to blame because the citizens had failed to benefit from the clear advice of Adam Smith about economic freedom as the means, what is required, and what to avoid. In the 19^th century, America ignored further benefit of Marx and Mill’s advice about how to maximize and distribute wealth.  American education did not present citizens with the opportunity to earn the functional knowledge of these vital matters, and consequently they were unable to express the will and wisdom upon which democracy depends. The lobby power of finance capitalism and, finally, ultra-capitalism filled the vacuum.

The citizens’ choice between a world of peace and plenty or more folly and violence was further illuminated during the 1990s in two books.  In 1992, Francis Fukuyama proposed in The End of History that, the economic and social logic of economic freedom having become clear and in the absence of any competing ideology, the world was moving towards democracy and capitalism.^[8]  A few years later, Samuel Huntington wrote in The Clash of Civilizations that the bipolar world aligned with either Russia or the United States was being replaced by fault lines among a half-dozen cultures along which the sad history of human violence would continue to run. ^[9]  Many regarded the 9-11 attack on America as confirmation of Huntington ’s bleak view.

I take the opposite view.  The goal of peace and plenty in the 21^st century is uniquely attainable, and the means—democratic capitalism—is identifiable through multi-disciplinary truth-seeking protocols. Theses supportive of this conclusion are organized in the following four categories and are offered to serve as stimulants to a process of analysis and synthesis. One result of this synthesis should be a curriculum for citizen education, at all ages, and in all parts of the world.  Another result should be a political agenda for promoting the general welfare nationally and globally.  

·        Reaffirm Idealism:  People unify by believing in an ideal and working towards it.  The elimination of material scarcity and violence through economic freedom is the means for humans in all cultures to reach their full potential.

·        Refine Capitalism: To reach full potential, capitalism needs broader wealth distribution and ample, low-cost, non-volatile, patient capital.  Thus sustained and democratized, global capitalism can eliminate material scarcity, improve the quality of lives, and unify people.  Conversely, the capitalism now dominated by abandonment of market disciplines, speculation, instabilities in the monetary system, treatment of workers as cost commodities, and a feeding frenzy in executive compensation, is provoking a populist revolt against global capitalism that can ruin this best-ever opportunity for social progress.

·        Restructure Government: Citizens need a functional understanding of fiscal, monetary, and regulatory matters so that they may pressure their representatives to democratize capitalism and eliminate privileges lobbied by ultra-capitalists.  By combining the principles of participatory democracy with Information Age technology, the government can fulfill its missions at dramatically lower cost, and it can eliminate wasteful micromanagement.

·        Reposition Foreign Policy: The global mission of the United States should be to promulgate economic freedom while recognizing that moral economic leadership and warrior-state geopolitics are mutually exclusive.  Only a growing sense of worldwide economic common purpose can phase out reciprocal atrocities.  All countries have the responsibility to use economic freedom to improve the lives of their people in ways consistent with their cultures and at their own chosen pace.  By accepting this reality, the United States can become a strong team-player while purging its own imperfections.  

21^st Century Citizens’ Choice: Peace and Plenty or More Folly and Violence?  

            The human species is poised at the beginning of the 21st century either to use its reason to build a world of peace and plenty or to fail again and repeat its history of folly and violence.  America , the world’s most powerful nation, will be pivotal in the direction taken, which makes American citizens ultimately responsible.

            Democratic capitalism that has demonstrated the capacity to eliminate material scarcity, elevate spirits, and unify people, was rational when Adam Smith first defined it, but because of the impediments, it was only partly attainable.  Now it is both rational and attainable because the Information Age has further raised productivity and can function only with educated, involved, and motivated people.  For the first time, democratic capitalism has become not merely an ideal but also a competitive necessity.

            American citizens are still confused, however, by the lack of a comprehensive and integrated agenda to implement democratic capitalism fully.  Many citizens are disenchanted with their government because it is dominated by the special interests of both the collectivists and the finance capitalists.  The vision of the American Founders of a better life for all has been confirmed as attainable, but early fears of overgrown government and wealth concentration by the financial oligarchy have also proved to be well founded.

            The Founders of the American republic successfully separated church and state, but they failed to separate finance capitalism and state.  This violation of democratic principle inevitably results in the concentration of wealth and the lobbied domination of political power by the few.  The threat to both democracy and capitalism from this violation is increasing.

            The fate of the world will be heavily influenced by the choices made by American citizens.  If, however, the government does not reflect the people’s will and wisdom, where do the citizens go for help in the exercise of their ultimate responsibility?  Fortunately, opportunities for education and political action are numerous:  

·        Universities:  An epiphany in the universities, perhaps led by young philosophers, would enlighten their overdue responsibility to perform the multi-disciplinary examination of the optimum organization for human affairs.  For those who have abandoned idealism, this is a difficult task because too many remember the “single solutions” that have failed because they were political and top-down.  An examination of the history and philosophy of democratic capitalism, however, reveals the economic solution that is built up from individual development in a harmonious whole.

·        New Political Leaders: During times of urgent political reformation, open societies tend to produce great leaders.  A platform based on the end and the means of a system with the demonstrated capacity of democratic capitalism, will be enormously attractive to the majority because it is basically a restatement of the promise of “life, liberty, and the pursuit of happiness” for all.  The potential idealism that can unite and energize will result from an understanding of the power for good inherent in the proper coupling of democracy and capitalism. America needs leadership in this direction.

·        Institutional Investors: The peoples’ capital managed by institutional investors is now the largest source of investment capital.  Institutional investors ought, therefore, to identify and promote the agenda most likely to lead to the kind of economic growth that gives comfort and security to wage earners.  This requires a change by the institutional investors who during the 1990s functioned paradoxically as the shock troops of ultra-capitalism.  To meet their fiduciary responsibility to wage earners, institutional investors must recognize that surplus is maximized only by the involvement of all, and motivation is sustained only by broad wealth distribution.  Institutional investors are the change agents best positioned to identify the agenda and organize the lobbying forces to countervail ultra-capitalism in a short time.

·        Business Schools , Law Schools , and Schools of Public Administration:  If democratic capitalism does, in fact, maximize surplus and govern best, then it should be presented especially in the schools that train leaders for industry and government.

·        Unions:  If democratic capitalism maximizes surplus by the greatest development of each and then spreads wealth broadly, then its promotion should be the mission of unions, including their powerful pension funds.

·        Civic Groups: Thousands of civic groups and NGOs (non-governmental organizations) represent the best of democracy in their dedication to make the country better; however, they lack a comprehensive, integrated agenda.  By using Information Age technology, these groups could begin to develop the people’s agenda for reform with a goal to identify those matters of common agreement.  Taking this approach, most civic groups and NGOs would find much to agree on and be better prepared to instruct their political representatives.

·        The Popular Media: Television, radio, and the print media must recognize that their special responsibility in a free society can be met only if their analysts, writers, and speakers are trained in the many disciplines that reflect human affairs.  Most in the popular media are economically illiterate though sensitive to the human condition—a bad combination that regularly leads to misinformation and misdirection.

·        The Internet: The truth-searching process that can lead to greater ideological synthesis among all cultures needs to be facilitated by the most democratic of media, the Internet.  The analysis, debate, challenge, and experimental verification process must be made available on the Internet for universal access and critique.  As the various hypotheses supporting democratic capitalism become available and survive debate, they will gradually become the building blocks for the best organization of human affairs.

·        Religions:  Religions can recognize that economic freedom is built on the worth of each individual and represents a common secular goal of harmony. When religious people come to understand that economic freedom can eliminate material scarcity, elevate spirits, and unify people, then they will affirm this secular ideal as the way to achieve the goal of a just society.  

            The 18th-century Enlightenment first challenged humanity to apply scientific truth-searching protocols to the management of human affairs.  The intellectual community was, however, culturally conditioned to reject an economic solution to the problems of society; consequently, society was not consistent in its application of reason. Although rigorous truth-searching in the natural sciences became improved, expanded, tested, and codified, equivalent protocols have not been developed for the human sciences.  This default has been the cause of continuing folly and violence in the world.

            The Information Age is the technological basis of a truth-searching revolution that simultaneously educates, inspires, and unifies.  Use of the Internet also forces recognition that cognitive power is released best in an environment of democratic capitalism.  The Internet can become the catalyst for a worldwide truth-searching revolution that I call “Enlightenment II”.

            The world’s most successful societies combine economic freedom with certain minimum disciplines, such as the rule of law.  In emerging economies, an architecture of law must be put in place, one block at a time, to provide the foundation for economic freedom to function.  An intellectual architecture of theorems applicable to the best organization for human affairs can similarly be constructed when many people all around the world participate in the building process and see it grow.  In an open society, this responsibility rests with the universities, stimulated and held accountable by civic groups, democratic capitalists, institutional investors, NGOs, religions, unions, and the media.  Peace and plenty in the 21^st century is uniquely attainable, but it will depend on the quality of truth-searching by this second Enlightenment.