Tag Archives: Ed Herman

Capitalism vs. Democracy

Capitalism vs. Democracy

A book came out in France a few months ago that sent shock waves through economics and political science circles: Capital in the Twenty-First Century. Author Thomas Piketty makes the seemingly outlandish claim that capitalism is inherently incompatible with democracy. Can this be?

Most Westerners have been indoctrinated their entire lives into believing that capitalism and democracy work hand in hand (for me it was only the last 24 years since I was born in a Communist state). Putting the indoctrination aside for now, let’s take a fresh look at the two notions of Democracy and Capitalism from the “think for yourself” perspective.

Democracy literally means “the rule of the people” or “power of the people.” So in a “real” democracy, the people have the power, that’s pretty simple. When looking at historic examples though, it immediately becomes clear that all of the people can never be included. Depending on the socio-economical and historical circumstances of the day, various democratic systems have excluded children, women, slaves, foreigners, mentally challenged individuals, criminals, etc… from having a say.

Athens during the Golden Age, for example, is sometimes presented as a near-utopian democracy. Well, if you consider a state that excludes nearly 80% of its population from the political process as an example of a vibrant democracy, the bar is set pretty low. A historical survey of democracies will show that the main concern of those in charge of setting up the system is who to exclude and who to include. While the concept of democracy as “power to the people” is a useful tool for indoctrinating the population and getting it to rally behind the regime, shrewd politicians have always been careful not to allow too much power to trickle down to too many independent-thinking people.

Since a utopian democracy is not to be found anywhere in History, we need to look at the level of meaningful political participation as the measure for how efficient a particular democracy is. What do I mean by “meaningful” political participation? I don’t mean simply giving a high percentage of the population the right to vote, or even the percentage of those who do vote. For example for U.S. presidential elections, the average turnout over the last century hovers in the high 50s%. On the face of it, this seems much better than the Athenians’ numbers and it would support, on the surface, the argument that the U.S. has a much higher level of political participation and is therefore a better democracy. But is this participation, as seen in presidential elections, really meaningful?

For example, here in California where I live, my vote has absolutely no bearing on the election result. Whether or not I vote, a Democrat will take the state. If I lived in Alabama, it would be the opposite result, regardless of my vote. In addition, I don’t feel represented by neither party. To push it even further, having lived in a number of democratic systems in Europe with much broader political spectrums, both the Democrats and Republicans look very similar. In many European countries they could safely sit in the Center and even merge, no one would find it strange, as their ideological differences are unremarkable. So, sure, I am allowed to vote in Presidential elections for one of two candidates, neither of whom I support, but my vote doesn’t matter anyway because of the electoral college system. Is this “meaningful” participation? I don’t think so.

If I disagree with the policies of the Government, I have to rely on my representatives and senator to carry my views. But most likely my vote in the elections that put them in power had no bearing either, as gerrymandering has made the majority of districts “safe” in the U.S. It is just another method of insulating those in power from popular pressures.

So under the U.S. democratic system, most of the population has the right to vote (let’s not forget that 1/3 of the people living in the US don’t vote: children, undocumented immigrants, and felons are excluded), but it is only a token right, since the political system has insulated itself from the popular vote.

This is exactly why I use the term “meaningful” participation. I define it as the percentage of the population who has an actual say in policy making. Simply being given the right to vote is not enough.

So let’s go back to the Athens example and compare it to the US version of democracy. Certainly the US compares favorably to it when looking at raw participation numbers. But when digging under the surface, we begin to see why Athenian democracy is still held in such high esteem. For starters the Athenian model was based on direct democracy, not a representative one like here in the U.S. Out of the 30,000 to 60,000 of citizens who were actually allowed to vote, every single one of them was allowed to walk into the Assembly (their version of Congress) and participate in decision making. Every one of them was allowed to have his voice heard. Looked at it from this perspective, the 20% figure of citizen participation in direct decision-making is absolutely bewildering. To compare, in the U.S. today this percentage would be 0.002% if we took into account only elected officials, high-level executive officers and life-time appointed judges, who can all influence policy (I tallied all U.S. representatives [435], senators [100], state senators [about 1,000] and representatives [2510], federal judges [3,294], cabinet members including pres [24]=7,363).

The 0.002% figure though does not take into account the people whose interests the politicians cater to: the business community. And this is where democracy and capitalism interact:  under the U.S. representative model of democracy, the officials in power don’t represent the interest of the “people,” they represent the interests of those who control capital flows.

You probably heard before that the wealthiest 1%  of Americans control over 30% of the wealth in this country. But did you know that the top 10% control over 75% of the wealth? The official ideological line in the U.S. is that it doesn’t matter who controls the wealth for two reasons: because everyone’s vote counts the same (US egalitarian myth) and because everyone who works hard enough can make it big (the American Dream myth).

As far as voting, by now you should seriously question whether your individual vote has any weight at all in the political process. And as far as the rags-to-riches myth, it is simply not feasible for the vast majority of people. Sure there are your Mark Cubans and other wildly successful entrepreneurs who were not born in wealth. But the vast majority of the top 10%, and virtually the unanimity of the top 1%, was born into wealth. And this only makes sense: under a capitalist system, the more capital you control, the more capital you can acquire. Regardless of what the feel good/ self-help literature is telling you, it takes money to make REAL money. Of course a hard-working individual with 0 resources can make enough money for him and his family to live at ease, even luxuriously. But that is not the kind of money that matters when it comes to having a say in decision making at the societal level.

The role of ANY political system is to divest resources from the general population towards the elite group. The only difference between various systems is in how the elite group is defined, who is allowed in, and its permeability.

What I am getting at is that the undemocratic nature of the U.S. political system is not “natural,” it is not the only alternative possible. However, it is a natural outgrowth of the political organization of this country in the 18th century. Remember the Founding Fathers: they were not ordinary citizens, they were part of the socio-economic elite of their time: “Almost all of them were well-educated men of means who were dominant in their communities and states.”

They were the ones controlling capital in 18th century America. Therefore, it only makes sense that they set up the country in the way that best served their interests. That is what every political elite has always done, throughout History. And one of their main interests was not to allow the general population a say in politics, which could potentially lead to a divestment of important resources allocated to their group.

Of course, because of the huge imbalance in sheer numbers between the elite group and the rest of the population, the average people need to be kept in line, or all hell could break loose. Under authoritarian regimes, this is done mainly by force and somewhat through ideology (while ideological indoctrination is heavily handed in authoritarian states, the level of internalization by the population is never very high; in other words people understand they have to act in certain accepted ways and speak in certain accepted terms, but most of them only pay lip-service to ideology, they don’t actually believe it). In a democracy, this is done mainly through ideology, while the use of force is more covert (by the way, if you don’t think that the U.S. has used force against its own people, I would recommend you read up on the FBI’s Operation COINTELPRO from the FBI’s own website!!!!!). As long as they can lead you to believe that your vote counts, that the U.S. is a beacon of light among the nations of the world who supports Human Rights around the globe and who fights for individual freedoms worldwide, you are way more indoctrinated than any citizen of the former-USSR ever was.

In conclusion, under a capitalist economic system, “real” democracy cannot be achieved. By definition, the economic model favors those who can accumulate vast quantities of capital. Because the supply of capital is not infinite, by concentrating it, fewer and fewer people have access to it. Those who are able to successfully accumulate it over time become the elite. They will then fight tooth and nail in order to create and/or maintain ideal conditions for their continuing accumulation of capital. And the number one condition is to keep power concentrated in their hands, in order to be able to influence all other factors in the equation. Since in the long term “soft” control has proved much more adequate than control by force, democracy is the political system of choice for capitalists. It has nothing to do with the “rule of the people” and everything to do with the rule of money.

In the final analysis I don’t believe that simply because we call our system “democratic” we live in a Democracy in the true sense of the word, just like no one would argue that the Socialist Democratic People’s Republic of Korea (also known as North Korea) is a democracy or a people’s republic. Rather we live in a “capitalocracy” and that is a scary thought.

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