Will the 2012 election be a referendum on capitalism? If so, which party will win? The answer may depend on who defines capitalism, and how.

Mitt Romney claims to represent the private sector. He spent 15 years running and supervising Bain Capital, a private equity firm. He sees capitalism as a moral system. “Our Founding Fathers endeavored to create a moral and just society like no other in history, and out of that grew a moral and just economic system,” Romney argued in a speech in Missouri three weeks ago. He noted that free enterprise “has helped lift more people out of poverty across the globe than any government program.” As to the “fear that some might succeed more than others,” Romney assured doubters that “success breeds success.”

To Romney, these are articles of faith. Last fall, in a Republican primary debate, financial pundit Jim Cramer asked Romney whether “public companies have any social responsibility to create jobs” or whether, alternatively, they “should exist solely to create maximum profit for their shareholders.” Romney rejected the dilemma: “We don’t have to decide between the two, because they go together. … What happens with profit is that you can grow the business. You can expand it. You add working capital, and you hire people.”

These claims about capitalism—that it rewards risk, creates jobs, and spreads success—sound dogmatic. But they’re actually falsifiable. They demonstrate that faith in the free market rests on underlying values of risk-taking, shared sacrifice, and shared reward. When capitalism undercuts these values, it loses credibility. That’s why the attacks on Romney’s record at Bain are dangerous. They accuse him not of practicing capitalism, but of betraying it.

A compendium of polls, issued two years ago by the American Enterprise Institute, shows that voters judge corporate executives, often harshly, against larger measures of the public good. In a series of 14 surveys by Pew and Princeton Survey Research Associates from 1988 to 2009, Americans were asked whether “corporations generally strike a fair balance between making profits and serving the public interest.” The percentage who agreed with that statement never exceeded 45. The percentage who disagreed with it never fell below 50. The percentage who agreed that “there is too much power concentrated in the hands of a few big companies” never fell below 70. Two years ago, a Bloomberg survey asked Americans to choose between two statements about “big financial companies.” Only 40 percent of respondents said these companies “have a vital function that enables the economy to grow.” Fifty-six percent said the companies “enrich themselves at the expense of ordinary people.”

Harris Interactive polls from 1998 to 2010 reflect a similar pattern. According to the AEI report, the percentage of Americans who agreed that “Wall Street only cares about money and absolutely nothing else” never dipped below 53. The percentage who agreed that “people on Wall Street are as honest and moral as other people” or that “most successful people on Wall Street deserve to make the kind of money they earn” never reached 50. The percentage who agreed that “what is good for Wall Street is good for the country” maxed out at 43. In 1985, 2002, and 2009, clear majorities told pollsters for CBS and Fox News that most corporate executives weren’t honest.

Two years ago, Gallup asked Americans whether they had positive or negative feelings about various economic ideas and institutions. Capitalism outpolled socialism, but its level of support shifted considerably based on word choice. Ninety-five percent of the public had a positive impression of “small business,” and 84 to 86 percent had a positive impression of “entrepreneurs” or “free enterprise.” But that number fell to 61 percent for “capitalism” and to 49 percent for “big business.”

Over the years, Romney’s political opponents have exploited the public’s misgivings. They’ve argued that he didn’t really earn the money he made, that he put profits before the public interest, and that he enriched himself at the expense of ordinary people. The harshest of these critiques was a video distributed this year by a PAC supporting Newt Gingrich. It began by extolling the values of free enterprise: “Capitalism made America great. Free markets, innovation, hard work.” But it argued that Romney had subverted these values. Instead of building enterprises and communities, he had raided and stripped family businesses, “dumping” their stock and “playing the system for a quick buck.” Instead of improving products, he had cheapened them. Instead of hiring people, he had fired them to squeeze out extra profits. Instead of helping his country, he had “sent jobs overseas.” Instead of nurturing companies, he had loaded them with debt and siphoned out the money. Instead of serving small investors, he had suckered and fleeced them. Instead of sharing the pain when workers lost their jobs and investors lost their savings, he and his pals had always managed “to turn the misfortunes of others into their own enormous financial gains.” He had betrayed every moral principle of business: loyalty, quality, service, prudence, stewardship, risk.

This indictment didn’t come from the left. It came from the right. Gingrich, Rick Santorum, Rick Perry, and other Republicans based their criticisms of Romney on conservative beliefs about risk, stewardship, and debt, Romney accused these critics of heresy. In a debate in South Carolina on Jan. 19, he retorted:

We’re going to get attacked from the left, from Barack Obama, on capitalism. I know that people are going to say, “Oh, you should only practice it this way or that way,” and think they know better than the private market. My view is capitalism works. Free enterprise works. And I find it kind of strange, on a stage like this with Republicans, having to describe how private equity and venture capital work and how they’re successful and how they create jobs.

That dogma will now be tested. The latest ad from Obama’s super PAC shows a laid-off worker alleging that Romney “made over $100 million by shutting down our plant.” Over the past week, investigative stories in the Washington Post and New York Times, following up on previous work by the Wall Street Journal, have reported that Romney’s company invested in “firms that specialized in relocating jobs” to “low-wage countries like China and India,” and that “Bain structured deals so that it was difficult for the firm and its executives to ever really lose, even if practically everyone else involved with the company that Bain owned did, including its employees, creditors and even, at times, investors in Bain’s funds.” Yesterday in New Hampshire, Obama used the Post story to tarnish Romney’s agenda: “Governor Romney’s commitment to outsourcing is not just part of his record. It’s part of an overall economic vision that he and Republicans in Congress want to implement if they win this election.”

Was Romney a good capitalist or a bad one? Did he honor the values of free enterprise or forsake them? Romney might win that debate. But it isn’t the debate he wanted to have.

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