The ideology of capitalism is not the ideology of liberal democracy

 by John MacBeath Watkins

We have discussed in an earlier post the fact that none of America's founding fathers would have called themselves capitalists.

Some would have called themselves physiocrats, some were mercantilists, but the term capitalism had not yet been invented, and the system the term describes was still being invented. This matters, because during the Cold War, some people started to confuse capitalism with liberal democracy.

None of the founding fathers thought that their economic system was itself a mechanism that brought about freedom, because it was the same economic system used by monarchies and empires which lacked freedom. 

Liberal democracy was born only a little before the invention of capitalism, and long before the ideology of capitalism. By this, I mean that capitalism as an economic system is useful for organizing how we produce and distribute what we need, but it was not always a system of values, beliefs, and ideas that shape how we relate to politics and society. We know a great deal about what markets do well and what government does well, and could simply organize how we produce and distribute goods and have our form of government in a separate box, but we have had the ideology for so long that we typically think capitalism is a political ideology, not just an economic system. The problem is, it is not the same political ideology as liberal democracy, though it is often associated with it. Capitalism as an economic system and an ideology proved compatible with fascism, and seems to be compatible with oligarchy.