“Democratic capitalism is not a ‘free enterprise system’ alone. It cannot thrive apart from the moral culture that nourishes the virtues and values on which its existence depends. It cannot thrive apart from a democratic polity committed, on the one hand, to limited government and, on the other hand, to the many legitimate activities without which a prosperous economy is impossible.” – Novak 56

Using it’s a Wonderful Life as an Historical Source for Understanding Democratic Capitalism

Defending this idea and making it work for everyone in Bedford Falls is the mission of the Bailey Building and Loan. From the very beginning of “It’s a Wonderful Life”, defending and implementing this idea against the threat posed by a capitalism fueled by greed alone is its central social and political theme.

Long before we get to Frank Capra’s portrayal of a bank run at the Bailey Building and Loan on a properly rainy day in 1932, we are introduced to Bedford Falls in 1919, as the town is in the grip of the sharp but short-lived recession that came with the end of World War I. This particular economic crisis is the context in which we first witness the conflict between banker Henry F. Potter, “the richest and meanest man in the county,” and the two owners of Bailey Brothers’ Building and Loan, Peter Bailey and his son George (Basinger 116).

As we enter upon that scene, Potter, a member of the Bailey Building and Loan governing board, insists that Peter Bailey foreclose on homeowners who are thirty days past due: “Have you put any pressure on these people of yours to pay these mortgages?” The senior Bailey, looking exhausted, reminds Potter that “times are bad. . . . These people are out of work . . . and have children.” Potter remains implacable, saying, “They’re not my children. . . . Are you running a charity ward?” (Basinger 125–26). Ten years dissolve away, and we are on the doorstep of the next moment of crisis, the unexpected death of Peter Bailey in 1929. But Bailey Building and Loan has survived another decade.

The debate between George Bailey and Henry F. Potter identifies George as a believer in “democratic capitalism” because, like Michael Novak (and unlike Henry F. Potter): Bailey understands that “democratic capitalism is not a ‘free enterprise system’ alone”.  George Bailey and his father understand that capitalism “cannot thrive apart from the moral culture that nourishes the virtues and values on which its existence depends”.   When Peter Bailey and son defend their approach to borrowers, they do so on this basis.  When George Bailey confesses that his father was “no businessman” he is expressing o sentiments within Novak’s definition.

Questions for discussion and reflection

  1. How would you establish whether this idea exists in our community? What standards would we use to answer this question? (Only for small business? No national chains? Would you exclude corporations?)
  2. What does the film “It’s a Wonderful Life” tell us or teach us about capitalism?
  3. How do the lessons from the film compare to your own experience of how the world works in Norman and in other places you have lived?