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Ever since the Age of Reason, the advocacy of free enterprise—capitalism—has been commonly associated with democracy, as if there is mutual support between their frameworks, not to mention their adherence to Enlightenment principles (Agassi 1988). When equality and freedom are conjoined many authors have argued that the success and protection of the one is necessarily at the expense of the other (de Tocqueville 1945). Some economists of the nineteenth century worried about the ways in which equality and freedom were to interrelate, at least insofar as economic success would be viewed adversely as an act of selfishness with the unintended consequences of harm to others (Sassower 2013). Yet advocates of capitalism repeatedly claim that this conjunction of principles is as likely (or perhaps more clearly) to be found in free markets as in the halls of parliament, protected as much by market mechanisms as by democratic legislation (Friedman 1982; Soros 2000). More recently efforts have been made to present The Theory of Moral Sentiments [1759] (Smith 1976) and An Inquiry into the Nature and Causes of the Wealth of Nations [1776] (Smith 1937) of Adam Smith as one system: He presented his The Wealth of Nations as an effort to supplement his Moral Sentiments. Already there a balancing act is in evidence, if not a nuanced juxtaposition of one system—the market—on top of or within the contours of the other—social sentiments that predate market institutions and the state. Smith took it for granted that minimal government is the best way to handle human affairs, yet he insisted that it is no utopia: he mentioned that the Hanseatic League approached his ideal (Bk. III, Ch. 4). At the same time, Jean-Jacque Rousseau defended democracy as the best political order, and likewise insisted that it is no utopia: the city of Geneva had a regime that approached his ideal (1978, Bk. I, Ch. 6). The two ideals clash when the collapse of the free market requires government intervention far beyond a minimal level. Defenders of free enterprise, such as the Austrian economist Friedrich Hayek, claim that this is never the case (1944): in principle, he said, the quickest way to get market recovery is to let it alone, no matter the price to individual companies or private banks (in our recent US experience). His arch-critic John Maynard Keynes asked, how long should we wait to see the market recover before asking the government for help? (1964) He greatly appreciated the insights of the French physiocrats in regards to the circulation of money in the economy and its ongoing growth potential (Grospelier and Sophister 2005), and in line with this insight he focused on when and how the government should intervene to bring about growth. With government stimulus demand will increase, which will allow the entire market to rebound, paying off the initial government subsidy through increased tax revenue from wages of the growing number of taxed workers (Stigler 1965).

DOI: 10.1007/978-3-319-57669-5_35

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