An Economy Where All Can Flourish

The current debate between Trumpian capitalism and AOC socialism is unhelpful, if for no other reason than that the words are used as political bludgeons to shut down opponents instead of fostering real discussion. Capitalism and socialism also sound elite and distant, conjuring up different definitions and understandings, obfuscating what we are actually talking about when it comes to individuals’ daily lives.

Instead of centering the debate about economic policy on these politically-charged and often disembodied words, we should take the debate to its foundational level: What kind of society do we want to be?

One place to begin is by agreeing that we want to create a society where all people can flourish. And while seemingly innocuous, this immediately raises the question of what flourishing means. 

Instead of centering the debate about economic policy on these politically-charged and often disembodied words, we should take the debate to its foundational level: What kind of society do we want to be?

How do humans flourish?

Nobel Prize-winning economist Edmund Phelps attempts to answer this question in his illuminating book, Mass Flourishing. Phelps takes a historical deep dive seeking to define what it means for humans to flourish: Is human flourishing best achieved from wealth accumulation, the pursuit of pleasure, continuous learning for learning’s sake?  

After reviewing some of humanity’s best thinkers from Aristotle to Rawls to Jefferson, Phelps concludes that human flourishing — or us at our very best and most purposeful — is most appropriately described as “the experience of the new,” humans filled with a sense of agency to experience and to create, and thus mass flourishing as broad involvement of people in innovation and creation.

On its face, Phelps’ finding on the good life seems startlingly simple. The idea that each person has something unique to contribute and should have the opportunity to engage with society around them in a meaningful way feels like gravity — a rule of nature — something that’s always been there.   

But it wasn’t until the 18th and 19th centuries that humanity began experimenting with this idea as a governing philosophy with the birth of the modern economy. Representative democracy and capitalism, political and economic freedom emerge around the same time — not as an ends to themselves — but as a means to allow for the widespread engagement of individuals as part of a cultural revolution.

As we know, this newfound political and economic freedom unleashed historic wealth, innovation, breakthroughs, and improved living standards nowhere better epitomized than here in America —  the land of opportunity and the American Dream. But the resulting prosperity was the fruit of the tree, not the tree itself, and here even economic freedom can be thought of as a branch of the tree, with the trunk itself being the belief that each person is valuable and at their best when they are creating and engaged in the society around them, of which economic and political freedom were logical outgrowths.

In recent years, it appears that we have confused the ends and the means. While the U.S. currently outranks the rest of the world in competitiveness and economic freedom, according to the World Economic Forum, it’s become clear that America has drifted from a model of broad engagement and widespread opportunity that used to define it (with critical exceptions for certain ethic and gender groups).

Phelps stops the flourishing clock in America around 1960, when productivity growth and economic opportunity for workers on the margins began to decline, as the control of the federal government increases. The academic literature on economic opportunity notes an inflection point closer to the 1980s, where upward mobility stalls. 

This is a crisis. Not just for capitalism, but for having a flourishing society marked by creativity and dynamism. Capitalism will only be as strong as the ability of its participants to engage.

This is a crisis. Not just for capitalism, but for having a flourishing society marked by creativity and dynamism. Capitalism will only be as strong as the ability of its participants to engage.

Yet we have 20 million people with felony convictions who have difficulty finding a job after serving their sentence; 11 million undocumented immigrants are forced to operate in a shadow economy; nine million Americans on permanent disability insurance who are essentially prohibited from work to keep getting payments; and millions of parents and mothers in particular who face a false dichotomy between work and family because our labor policies haven’t been updated to reflect current reality.

In this way, our current debate over supply-side economics or massive redistribution, capitalism or socialism, misses the foundational issue.  At issue is how to create a flourishing society.  

Mass flourishing is not a high level of topline economic growth and roaring stock market with stagnant opportunity. Nor is mass flourishing a massive redistribution of free jobs, free health care, and free education without increased opportunity for integration into society and individuals having a sense of agency. (On this point, Phelps takes great care to document how socialist economics in particular have been marked by a lack of dynamism, lower wages and employment, and a diminishment of the individual by fanatical alignment with the state and her objectives.)

Mass flourishing is found in a dynamic society that provides each person the ability to engage, to create, to take initiative. This is the spirit that gave birth to capitalism in the first place. And it is what will keep it alive.  

Mass flourishing is found in a dynamic society that provides each person the ability to engage, to create, to take initiative. This is the spirit that gave birth to capitalism in the first place. And it is what will keep it alive.

Economic freedom is a vital prerequisite to this, as history attests with nearly all of her breakthroughs occurring in the relatively small band of time when such freedom was birthed, but not sufficient. By focusing only on capitalism we may miss what gave rise to it in the first place —  a means for widespread engagement and opportunity.  

What might help to reduce the barriers to innovation and opportunity? Reforms could include, but by no means be limited to: wage subsidies for low-wage workers to encourage labor force participation; curbing special interests that hive their industry from change; regulatory reform that considers the impact of regulations on innovation; entitlement reform to allow for productive investments where needed; and ultimately a cultural change from the ground up that values creativity, innovation, and thinking over entitlement and the pursuit of an adolescent culture.

Opportunity should be the measure of capitalism’s success. This is the debate we should be having.