A big mistake those of us on the conservative side made was to think that anything that made the government bigger also made the market less dynamic. We failed to distinguish between the supportive state and the regulatory state. The supportive state makes better and more secure capitalists. The Scandinavian nations have very supportive welfare states. They also have very free markets. The only reason they can afford to have generous welfare states is they also have very free markets.

I don’t know if the Scandinavian welfare model would work in nations as big and diverse as the U.S. But its success points to a few truths: The state nurtures prosperity when it helps people become capitalists. The state causes incredible levels of misery when it gets too far inside the decision-making processes of capitalists. It creates enormous misery when it cripples the motivational system that drives capitalism. Its causes enormous misery when it meddles with the relentless learning system that market mechanisms make possible.

Capitalism is not a religion. It won’t save your soul or fulfill the yearnings of your heart. But somehow it will arouse your energies, it will lift your sights, it will put you on a lifelong learning journey to know, to improve, to dare and to dare again.

Last Sunday I attended a service with a young friend at a church that has quickly become a home for her. There were several hundred congregants. Ninety percent were under 30. Ninety percent were Latino. The service was two hours of joy and exultation — glow sticks and song and balloons.

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They weren’t worshiping capitalism, but something higher. But still their work lives came into view. “Look how far we’ve come! Look how far we’ve come!” different people kept saying. I saw my own family’s Jewish immigration history being re-enacted right in front of me. We, like they, started out as butchers and seamstresses and tailors, self-employed capitalists because it can be hard for immigrants to get corporate jobs. The opportunity explosion my family experienced and your family probably experienced is happening still, made possible by the ever-expanding pie that capitalism provides.

The theme that day was hope, transcendent hope and more immediate hope. “Move and miracles happen!” a young Latino woman sang. Every year, hundreds of millions of people march with their feet to capitalism.

Today, the real argument is not between capitalism and socialism. We ran that social experiment for 100 years and capitalism won. It’s between a version of democratic capitalism, found in the U.S., Canada and Denmark, and forms of authoritarian capitalism, found in China and Russia. Our job is to make it the widest and fairest version of capitalism it can possibly be.

This column was prepared for a Munk Debate on the future of capitalism, held Wednesday in Toronto.

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