“A favorite theory of mine [is that] no occurrence is sole and solitary, but is merely a repetition of a thing which has happened before, and perhaps often,” said the American author Mark Twain.

A hundred years ago, two years after Twain’s death, Americans were told by candidates in a presidential election campaign that their country stood before a crossroads, where profound choices would be made that would affect the nation’s wellbeing and prosperity for years to come. Parallels can be drawn between today’s candidates, Barack Obama and Mitt Romney, and their counterparts of a century ago, the Democrat Woodrow Wilson and Republican William H. Taft.

International observers will have noticed by now that this year’s election, quite like the contest of a hundred years ago, is chiefly about domestic issues and the U.S. economy. Parallels continue. The world was in upheaval in 1912. This year’s U.S. presidential election takes place at a similarly unstable moment and the United States may well be standing at a crossroads again.

The U.S. economy has never properly rebounded from the crisis that started in 2008. Entitlement spending is soaring and there has been no serious effort to tackle high levels of debt. This is a daunting problem that threatens long-term prospects for the prosperity and competitiveness of the country. In this context, Americans seem to be craving a vision that will unite, inspire, and unlock the potential for renewed prosperity. They are faced with two competing visions in this election.

One vision is fundamentally social democratic and sees the state playing a large role in the economy and society. Ed Miliband, leader of the UK’s Labour Party, summed up this worldview when he asked recently what role there would be for Labour in Britain if state coffers are empty. This is social democratic, redistributionist thinking. This is basically Barack Obama in the United States. In the first televised debate on October 3, the president told the nation that he sees a far more important role for government in America’s future than Mitt Romney does.

Romney, on the other hand, is equally clear: he wants lower taxes, less regulation, and more free enterprise. There’s a case to be made for this vision.

Tables have truly been turning in the last couple of decades. China has lifted hundreds of millions out of poverty not because the Chinese Communist Party has finally figured out how to make the centralized, command and control economy work, but rather because officials have been wise enough to back off and start letting things bubble up from bottom to top. A little more freedom has meant a lot more growth and prosperity.

In the West, in Scandinavia, the Swedes and their neighbors were not so long ago widely ridiculed for bloated welfare states and unsustainable levels of social spending. But then they started to reform. They privatized some previously government-run industries. They refrained from spending more than they could afford. They’ve thrived as a result. In the newly published Legatum Institute Prosperity Index Denmark, now a champion in labor market flexibility, is also leading the world today in “entrepreneurship and opportunity,” while the United States trails behind and appears to be falling rapidly.

Romney is promising greater opportunity, increased competition, and a more robust culture of free enterprise. All this is urgently needed. Americans are also happy to hear about values. The nation was built on hard work, sacrifice, savings, and self-reliance. However, proponents of free enterprise in the United States have a credibility problem. The race has ultimately tightened, and Romney may have found his footing in time. But the sixty-five-year-old attorney, businessman, and former governor of Massachusetts, has been wooden, pisive, and gaffe-prone for much of the campaign. He might well have fared better had he been able to speak more cogently to the spirit of entrepreneurial capitalism.

Romney is the only Republican candidate for president in modern history whose unfavorable ratings were consistently higher than his favorable marks. In September the situation worsened when a video was released showing him making off-the-cuff remarks at a fundraiser in the exclusive resort town of Boca Raton in Florida, where he seemed to suggest that America was more or less equally pided between upstanding, hardworking contributors to society and another half who mooch off the rest.

For his opponents, this was perfect fodder; a snapshot of the privileged out-of-touch Romney disparaging half the electorate. Romney would eventually tell Fox News he had been “completely wrong.” But for many the image of Romney as an uncaring, smug, “country club” Republican had been set. Too many voters equate him with the face of corporate capitalism, big business, and the world of offshore accounts. U.S. conservatives will never succeed in broadening the constituency for limited government and free enterprise if they are seen as arrogant, exclusionary, and elitist.

Markets don’t sort everything, of course. Wherever government is to step back, then empowered inpiduals, a responsible private sector, and civil society will have to step forward. How this will happen and what it will look like in practice is neither very theoretical nor abstract. The hurricane that just rocked the east coast of the United States has reignited debate, for example, between Republicans and Democrats about the federal government’s role in disaster relief. Such debates are values driven. Big issues and important decisions are facing Americans and there’s a pressing need for careful research and honest, pragmatic discussion.

“History does not repeat itself, but it does rhyme,” was another quip of writer and humorist Mark Twain. In 1912 Taft failed to provide a vision. Theodore “Teddy” Roosevelt left the Republican Party that year and started the short-lived Progressive Party. The free market camp splintered. Taft lost.

Today’s world is dependent on an America that can rally around a compelling vision, adapt, and prosper again. I have concerns if Barack Obama is reelected. But I also have concerns if he loses and nothing in the U.S. debate is properly settled.

Jeffrey Gedmin is president and CEO of the London-based Legatum Institute.