Now the first question: Why should there be nonprofit organizations in the new democracies? Why not let the new political parties form the government and the new economic interests build the economy? What is the need for a third sector at this point? 

The first answer -- the easiest and most familiar answer -- is that the political parties and the governments they form will fall well short of addressing the full array of problems left behind by a misguided and incompetent state socialism. The first sector in eastern Europe has a long and honored tradition of trained bureaucratic incompetence to overcome. Not all the old bureaucrats will have fled the scene; many will have to be driven out. There will be no bright and eager cadres of well-trained new bureaucrats ready to replace them. The free markets of the second sector do not develop in some smoothly expanding process but entail all sorts of disruption and dislocation. There will be sharp increases in unemployment in some areas and new crowds of homeless and ill-fed. Entrepreneurship is a beneficial weed, as someone once said; the free market is not a pretty place but a rose garden with a thorn for every petal. The imposed disciplines of authoritarian organization is well known in eastern Europe; what has to be learned is the self-discipline of responsible professionalism. The new virtues of the free market and of democratic government will not come quickly or easily. 

Why a third sector? In view of what has just been said, the most common rationale for the third sector is the failure of the other two. Voluntary associations are often formed simply because the government and the market fail to provide all the things that people want, fail to protect all the people who have a claim to be protected. Governments fail when their only answer to ethnic minorities or voices of protest and dissent is oppression. Governments fail when bureaucracy operates for the benefit of bureaucrats. Economies fail when they fail to produce the goods and services that people need and can afford to buy. Economies fail when large numbers of people are excluded from the benefits of economic activity or when small numbers of people keep a large share of the benefits for themselves. 

As Albert O. Hirschman pointed out so succinctly in Exit, Voice, and Loyalty twenty years ago, governments and other organizations go bankrupt when they fail to hear or to heed voices of dissatisfaction. As John Gall summarized it, governments and other organizations fail when bureaucrats believe that INTRASYSTEM GOALS COME FIRST. 

II 

The startling and inspiring promise of democracy in eastern Europe provides us with an extraordinary opportunity. We can use the experience now unfolding there to reflect on how our own system works. You may believe, as I do, that on balance and on the average the United States is a "free and open and democratic society," a good society in some serious sense despite its failures. You may even share my sense of urgency that the underlying values and principles that make American society free and open become part of the working knowledge of the generations that will soon succeed us. It will be important for us to know the reasons why we are so fortunate in these matters, in contrast to those who are Hungarians or Albanians or Lithuanians. 

My own search for the values and principles of democracy has focused on the third sector. It seems empirically demonstrable that the United States has the largest, most comprehensive, and most vigorous third sector of all the so-called great nations of the world. I have argued elsewhere that voluntary action for the public good is in fact America's most distinctive virtue. If those convictions are roughly true, then there must be some link between American philanthropic values and American democracy. 

My search has pulled me in two directions: first, toward the religious traditions and practices of charity and philanthropy in western civilization, and second, toward the secular roots of democracy in modern western liberalism and rationality. Religion is important in this quest not only because of the values and principles to be found in religious philanthropy but in its magnitude. Religion is by far the largest category of voluntary giving and voluntary service. It is the category least deflected in its purposes by aberrations of the economy and of tax policy. Most of the religious tradition that still dominates our third sector is "Judeo-Christian." The parable of the Good Samaritan is but one of the powerful stories that shape our philanthropic attitudes. The principle of stewardship as articulated by Calvin and Wesley showed up in the behavior of the nonreligious philanthropy of Andrew Carnegie. 

Research also seems to confirm that people who go to church frequently play a disproportionately important role in all areas of voluntary action, not simply the religious. Religious values permeate our public lives, even when we are being scrupulously observant of the separation of church and state. The arts and the environment, both dominated by secular values, are sustained by philanthropic values borrowed from religion. Education itself, public and now determinedly secular, expresses the religious value of serial reciprocity. 

Balancing the religious and the secular is clearly one of the vital arts of our form of democracy. Arguments about the place of religion in democracy have persisted throughout our history. We can see in the futile efforts to eradicate religion in eastern Europe and the Soviet Union that religion lie entrepreneurship is also a beneficial weed and probably ineradicable.