De Rugy: What is ‘common-good capitalism,’ and why are some conservatives so enamored?
“Common-good capitalism” is all the rage these days with national conservatives. But what exactly is it, you may ask? That’s a good question. As far as I can tell, it’s a lovely sounding name for imposing one’s preferred economic and social policies on Americans while pretending to be “improving” capitalism. If common-good capitalism’s criticisms of the free-market and prescriptions for its improvement were ice cream, it would be identical in all but its serving container to what much of the Left has been dishing up for decades.
The wider adoption of the term common-good capitalism (CGC) can be traced back to a speech given by Sen. Marco Rubio, R-Fla., at Catholic University in 2019. While there are different strains of common-good capitalism, they all have in common the goal of producing a more balanced and stable economy that better serves the nation and its people.
The common good is, of course, a vague and subjective concept, the details of which are hard to pin down. Its advocates claim it’s an alternative form of conservative governance meant to promote things like tradition, workers’ dignity, religion, order and families, rather than the singular free-market focus of personal liberties and economic freedom. How exactly government policies will be used to mold capitalism into achieving these goals — many of which go further than economics — is unclear. This haziness explains why those defending common-good capitalism usually do so only by listing what they see as wrong with the free market, rather than by giving their audiences specific details.
For instance, common-good advocates’ complaints about no-prefix capitalism often include excessive income inequality caused by greedy, cosmopolitan capitalists who heartlessly offshore jobs to low-wage foreign countries, or gripes about corporations somehow simultaneously charging monopolistically high prices that hurt consumers and low prices that threaten small firms and damage local communities. I wouldn’t blame you if you thought these complaints were coming from the likes of Sens. Bernie Sanders and Elizabeth Warren.
While I don’t dismiss some of their complaints about the underperformance of the economy — specifically the hardships suffered by some workers and families — common-good capitalists make the same mistakes as their counterparts on the Left. They start by mistaking problems caused by government intervention for problems inherent in the free market. They end by offering up even more government interventions as supposed solutions.
It’s striking to listen to CGC advocates act as if today’s markets have been freed of all the fetters that I and other advocates of small government have warned about for decades. The size and scope of the government say otherwise. With $31 trillion in debt, more than $6 trillion in annual federal government spending and a future 30-year government shortfall of $114 trillion, it’s ludicrous to assert that the dominant governing philosophy in Washington over the past 50 years has been Milton Friedman-style market theory. Also contradicting the common-good capitalists’ mythmaking is the well-documented burden imposed by the regulatory state at all levels of government.
But rather than demanding fewer government-erected barriers to exchange, employment and housing affordability, the CGC crowd wants tariffs to obstruct consumers’ access to inexpensive imports. They want to line the pockets of the firms they favor while punishing those they dislike. Further, these “capitalists” want to forbid the business practices that they think favor capital over labor, when in reality capital fuels innovation, hiring and higher wages. And they want to make families artificially dependent on government design with policies such as federal mandated paid leave and extended child tax credits. These policies, of course, are favored also by the Left.
In the end, CGC champions the same tired policies that big-government types predictably propose whenever they see something they don’t like. Industrial policy, export bans and other forms of protectionism are, based on ample evidence, terrible for both economic resiliency and efficiency — and thus for workers and families. What’s more, research suggests that giving relatively large amounts of money to parents without any strings attached disincentivizes work and makes more child poverty likely.
At every turn, common-good capitalism implies a greater role for government in regulating and directing the market to achieve the fancies of common-good capitalists. Who truly believes that such interventions won’t result in more inefficiency, corruption and political capture by special interests? I don’t. I also worry that common-good capitalists won’t be interested in balancing the rights and the freedoms of those persons who disagree with their economic and social designs.
Veronique de Rugy is the George Gibbs Chair in Political Economy and a senior research fellow at the Mercatus Center at George Mason University.