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Alexis De Tocqueville came to America from France in 1831. He was just 26 years old and had been sent by the French government to examine the American prison system. He did the job and published a book on it, but what captured his interest, and made his name, was the wider subject of democracy—how it worked so well in America when it had failed to work in France or, indeed, anywhere else in Europe.
Were he to revisit America today Tocqueville would be gratified to see how many of his insights and predictions have stood the test of time. He forecast, for instance, that America, which was then a country of only 13 million people, would within a hundred years be one of two great powers in the world, the other being Russia. But his fascination today would be less with America's now well-established tradition of democracy than with capitalism. As he had in 1831, he would want to bring back to Europe and to the rest of the world the lessons learned from, and the questions raised by, the American experience.
How is it, for instance, that Marx's prediction that capitalism would inevitably lead to the rise of socialism has been so conclusively falsified in America? The U.S. Socialist Party has never received more than 6% of the vote in presidential elections and has never won more than a couple of seats in Congress. America has, throughout this past century, been the only Western democracy dominated exclusively by parties sympathetic to liberal capitalism.
Why is business so admired in the United States and so often denigrated in Europe? How is it that America could create 30 million net new jobs in the last 20 years while the European Union, with a bigger population, could manage only 5 million? What is feeding the apparently inexhaustible appetite for growth in America and the dramatic improvements in productivity in recent years? Or, given that liberty and equality are two desiderata that are mutually incompatible, why is it that Americans are apparently so willing to trade economic equality for individual liberty, tolerating income differentials that in Europe can seem unjust, even obscene?
Tocqueville once said that he wanted to "remove the demon from democracy." Today there are still many outside America who sense the demon in capitalism, but just as Tocqueville believed that the advent of democracy was inevitable and universal, so now has capitalism become the irresistible force in a global economy. We need to understand it better so that we manage it better, so that we make it work for all and not just for the successful minority.
Tocqueville was not blind to some of the defects of American democracy. Slavery and racism were then the specters at democracy's feast; women were not thought to have any place in political life. Capitalism, too, has its downside in modern America, and it is not yet proven whether the discomforts and distortions that seem to come in capitalism's train are inevitable, and are the acceptable price of growth, or whether they are a virus that eats at the very fabric of the society that capitalism is seeking to improve. That is one critical question now preoccupying those countries that are following in America's wake, and a question that has to be one focus of this essay.
The other burning question is whether a capitalism that evolved from a property-owning democracy—where things were made and traded and where small battalions of local communities and workplaces held society together—can now adapt to a dematerialized world, where it is experience and access that are traded more than things, where property is intellectual rather than physical, and where communities are as often in cyberspace as in physical locations. Once again, the world will be watching to see where America leads.
The Cultural Roots
Anyone visiting America from Europe cannot fail to be struck by the energy, enthusiasm, and confidence in their country's future that he or she will meet among ordinary Americans—a pleasing contrast to the world-weary cynicism of much of Europe. Most Americans seem to believe that the future can be better and that they are responsible for doing their best to make it that way. It is an attitude that is both infectious and attractive, and it probably accounts for much of the dynamism of their economy, even if it irritates some Europeans on occasion. Isaiah Berlin, the great British philosopher, spoke of "the great big glaring overarticulated scene of America" and described Americans as "an open, vigorous, 2 x 2 = 4 sort of people, who want yes or no for an answer." He said that he longed for the nuances of Europeans, and yet he spent some of his happiest and most fruitful years in America.
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| "…just as Tocqueville believed that the advent of democracy was inevitable and universal, so now has capitalism become the irresistible force in a global economy. | |
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| — Charles Handy |
The early Puritans have often been credited—and blamed—for much of the American way of life, most recently by the Australian Robert Hughes in his impressive history of American art, American Visions. The Puritans arrived in America in 1630, a few years after the Pilgrim Fathers but with a very different purpose. The Puritans saw themselves as successors to Moses, leading their people to a promised land and starting a new phase of history. That vision still holds today. On the back of every one-dollar bill are the words novus ordo seclorum—"a new order of the ages" John Winthrop, their leader, famously preached a sermon in mid-Atlantic in which he spoke of creating a"city upon a hill" where "the eyes of all people are upon us."
Hughes argues that the Puritans' values infect the great bulk of Americans to this day. They implanted the American work ethic, as well as the tenacious primacy of religion in American life, equaled only by the Muslim world. In no other country would presidential candidates feel it electorally desirable to proclaim their religious beliefs.
The Puritans, says Hughes, also invented American newness—the idea of newness as the prime creator of culture—a dramatic contrast with the Spaniards who reached the continent earlier. No haya novedades, those Spaniards would hopefully say, "Let nothing new arise;' reminding one of the member of the General Synod of the Church of England who, not so long ago in a debate on the ordination of women, asked plaintively, "Why cannot the status quo be the way forward?" In sharp contrast, the Puritans lived in expectation of something new—even the restoration of Christ's reign on earth brought about by the action of his living saints, as they imagined themselves to be.
Puritans also believed that being well-off through one's own efforts was a sign of God's approval. There was nothing wrong with outward signs of wealth and status so long as the pleasure that they gave was neither profane nor licentious. Tocqueville, too, was impressed by the fact that most wealth in the America of his day had been earned, not inherited—inherited wealth being, as he saw it, one of the causes of the decline of the aristocratic societies of Europe.
The Peruvian economist Hernando de Soto has recently pointed out another major contribution by the early American settlers to the creation of wealth. By codifying and legalizing the emerging forms of property—the land that the early settlers appropriated, the dwellings that they built, and the businesses that they formed—the state made it possible for them to mobilize their latent capital, to borrow against their assets and thus grow wealth exponentially. We take that process for granted, but it is, de Soto argues, a lesson that the developing world has still to learn—how to transform the hidden wealth of their informal and illegal economies into legal assets, for you cannot borrow against houses to which there are no titles or businesses that have no legal existence.
The traditions of the Puritans seem to be alive and well in America today, albeit translated into more secular terms. Ronald Reagan could proclaim that "Today is better than yesterday, and tomorrow will be better than today" and expect no sniggers of doubt. History is seen not as a nightmare from which we cannot wake, as it often is in Europe, but as something to be transcended, to be fashioned anew. Adam Smith's belief in the "natural progress of opulence" means, to Americans, that life is getting better, because richer, for all. The world will continue to get richer, they assume; pockets of poverty will eventually disappear; knowledge will solve all problems in the end. America, most of its citizens feel, can and should lead the way to this newfound land of wealth and happiness. It can be an example to the rest of the world of what can be done if you combine information, incentive, investment, and innovation—the Four I's that British economist Peter Jay has recently argued have been the secret of progress throughout history.
The concept of wealth as a symbol of worth is another way the Puritan tradition has continued into the present day. It means that there is no embarrassment attached to the possession of money or material goods, no need to conceal one's riches—unlike in parts of Europe, with its continuing tradition of inherited, or unearned, wealth. There is, therefore, in America also every incentive for the rich to be generous, even ostentatious, in their giving. Because money earned is money to be proud of, money becomes the easiest way to reward effort and creativity and the simplest way to give back something to society. Philanthropy becomes a polite way of advertising a life well spent. No wonder, then, that private giving in America vastly exceeds anything that happens in Europe, where the state—that is, the taxpayer has to be the major benefactor of the arts, education, and medical research. Winston Churchill once commented that if we want a wealthy society, we will have to tolerate wealthy men. In America, it is admiration rather than toleration, provided always that the wealth has been decently earned.
The Puritan traditions were later reinforced by the stream of immigrants who followed in the succeeding centuries—immigrants looking for their own promised land, with apparently endless lands to the west still to be discovered, people who were happy to leave their past behind and to trust everything to a new future. That tradition of a future waiting to be invented still survives, even though Boston is older than St. Petersburg. America is a mature society now, but its mood of adolescent excitement, even at times its naivete, remains. It is what makes a trip to America so invigorating for so many. Other countries, however, will have to find their own ways to create some part of the optimism and self-confidence that still fuel the American dream because they cannot replicate its unique cultural tradition.
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The America Alexis de Tocqueville visited in 1831 was in the midst of revolutionary change. Seeking to understand democracy in action, Tocqueville in "Democracy in America" describes a nation at a crossroads. In this section, "Reflections on the Causes of the Commercial Prosperity of the United States", Tocqueville examines the unique nature of the American character. The excerpted text is from the first English translation edition of Democracy in America, London: Saunders and Otley, 1835. This is from the Goldsmiths'-Kress Library of Economic Literature, held in HBS' Baker Library.
The inhabitants of the United States are subject to all the wants and all the desires which result from an advanced stage of civilization; but as they are not surrounded by a community admirably adapted, like that of Europe, to satisfy their wants, they are often obliged to procure for themselves the various articles which education and habit have rendered necessaries. In America it sometimes happens that the same individual tills his field, builds his dwelling, contrives his tools, makes his shoes, and weaves the coarse stuff of which his dress is composed. This circumstance is prejudicial to the excellence of the work; but it powerfully contributes to awaken the intelligence of the workman. Nothing tends to materialize man, and to deprive his work of the faintest trace of mind, more than extreme division of labour. In a country like America, where men devoted to special occupations are rare, a long apprenticeship cannot be required from any one who embraces a profession. The Americans therefore change their means of gaining a livelihood very readily; and they suit their occupations to the exigencies of the moment, in the manner most profitable to themselves. Men are to be met with who have successively been barristers, farmers, merchants, ministers of the Gospel, and physicians. If the American be less perfect in each craft than the European, at least there is scarcely any trade with which he is utterly unacquainted. His capacity is more general, and the circle of his intelligence is enlarged.
The inhabitants of the United States are never fettered by the axioms of their profession; they escape from all the prejudices of their present station; they are not more attached to one line of operation than to another; they are not more prone to employ an old method than a new one; they have no rooted habits, and they easily shake off the influence which the habits of other nations might exercise upon their minds, from a conviction that their country is unlike any other, and that its situation is without a precedent in the world. America is a land of wonders, in which everything is in constant motion, and every movement seems an improvement. The idea of novelty is there indissolubly connected with the idea of amelioration. No natural boundary seems to lie set to the efforts of man; and what is not yet done is only what he has not yet attempted to do.