There are two main reasons why many observers are beginning to question the assumption — previously taken for granted — that capitalism and democracy are firm allies. First, modern capitalism is global, while democracy is mainly rooted at national and more local levels. Second, modern capitalism is driven by finance, which leads to increasing inequality. Yet, high levels of inequality threaten the operation of democracy.
That globalization presents a problem for democracy is clear. Much of the global economy is unregulated, and where it is regulated, it is done so by international organizations only very indirectly answerable to democratic bodies, or by informal and usually confidential arrangements among corporations themselves.
Furthermore, transnational firms can compromise the authority of national democracy by choosing to invest only in countries that pursue policies they like. The most visible manifestation of this is the decline in taxes on corporate earnings that has taken place across the world, as governments compete to offer the most generous fiscal regimes. The result has been a shift in the burden of taxation to individual citizens and a decline in the resources available to public services.
Governments could, of course, counter these developments by joining forces to confront the corporate challenge and protect space for autonomous political decision-making, but the temptation of trying to become the country that offers corporations the most generous terms usually prevents them from doing this. The European Union is a partial exception, and its parliament is the world’s only example of transnational democracy. Its impact, however, is weak, with European democracy facing two hostile forces: corporations lobbying the European Commission and individual governments at levels European Parliament cannot reach; and xenophobic populists trying to pull power away from the EU and back to the nation states. And because most populists are from the political right, they are not bothered by nations losing out to corporate power.
Corporate lobbying is so powerful at both the European and national levels because growing inequality has generally strengthened the political might of the wealthy. This is the second threat posed by contemporary capitalism to democracy.
Democracy operates in two different theatres: the formal roles played by elections and parliaments; and the informal actions of lobbying and other forms of political pressure that take place across civil society. For the former, we are careful to ensure considerable equality: one person-one vote, irrespective of wealth. Informal politics, by contrast, does not have many rules, and that is basic to its vitality and to our freedom. We can at any time use many different kinds of pressure to try to persuade governments to pursue various policies, provided we do not resort to corruption or violence. But our ability to exercise pressure depends on the resources we can command, so informal politics favors the rich, even though we all benefit from it. The equality rule that is fundamental to democracy is breached. This does not matter too much if inequality is limited, or if power exercised in one policy area cannot easily be transferred to another. This was broadly the case for the first three decades after World War II. Since then, however, inequality has been growing — not so much in the form of inequality within the broader population, but inequality between tiny groups of the super-rich and everyone else. One needs a lot of wealth to able to wield political power, and this small group, perhaps 0.1 percent of the population, is in such a position. This degree of inequality is most prominent in the U.S., but it is spreading to Europe.
Capitalism is creating problems for the effectiveness of democracy
The main motor of this inequality is the financialization of the global economy. The ownership and manipulation of financial resources produce earnings like no other form of human activity. Having acquired vast wealth, an individual or corporation can use some of it for political lobbying purposes, and this can mean securing government actions – tax policies, regulatory changes, government contracts – that enable the wealth holder to secure even more income in the future. There is a vicious spiral linking increasing inequality to the weakening of democracy.
There is however another spiral that works in the opposite direction. Modern capitalism depends on mass consumption for its profits, and mass consumption depends on the masses having growing income. In 2014, an OECD Social, Employment and Migration Working Paper (no. 159) indicated that in the U.S., the top 1 percent of earners had captured nearly 50 percent of national income growth between 1975 and 2007 (the year before the financial crash). The great majority of wage earners had experienced static or declining incomes, and yet they continued to consume. This was possible because they took on heavy debt loads, risky behavior accepted by a financial system that had been deregulated thanks to heavy lobbying by the banks. Eventually, the burden of high-risk debt became too much for the financial markets to bear, and the crash, from which we have not yet fully recovered, took place.
Does a form of capitalism that generates increasing inequality but depends on mass consumption have any other way out of its dilemma than to encourage households to take on unsustainable levels of debt? At present, democracy seems unable to find an answer to that question. Global capitalism can only be reined in at a transnational level, while our political parties seem divided between those that have succumbed to corporate lobbying and do not believe in regulation, and those that want to retreat back to the limited reach of nationalism.
Capitalism is creating problems for the effectiveness of democracy, but capitalists have no reason to be dissatisfied with that form of government. Democracy guarantees the rule of law and clear procedures for changing the law, including lobbying for or against those proposed changes. These features are attractive to capitalists. On the other hand, though, democracy can produce a mass of regulations to protect non-market, non-corporate interests. Capitalists’ preferred regime is really post-democracy, in which crucial features of democracy continue operating, including, importantly, the rule of law, but where the electorate has become passive, responding to parties’ carefully managed election campaigns, but not engaging in disturbing activism, and not generating a civil society vibrant enough to produce awkward counter-lobbies that try to rival the quiet work of business interests in the corridors of government. The resurgence of nationalism creates some problems for this placid scene, but by concentrating on the nation-state, these movements do not disrupt the global level, which remains beyond their reach.
We have not yet arrived at a situation where the corporate dominance of our politics is complete; otherwise, all consumer protection and labor laws would already have been abolished. But that is where we are headed, boosted by continuing growth in inequality and the mutual reinforcement of political and economic power. Democracy in some form probably continues to be the best available shell for capitalism; but the reverse may no longer be true.
by Stephan Schulmeister
FROM THE ENLIGHTENMENT TO THE COUNTER-ENLIGHTENMENT
Brilliant minds elevated “the market” into a “higher being” of
[This article published on August 31, 2016, is translated from the German on the Internet, http://diepresse.com. Stephan Schulmeister is an Austrian economic researcher and author of many articles and books critical of mainstream economics. His latest book is “The Road to Prosperity” (2019) that alludes to Hayek’s “The Road to Bondage.”]
“Enlightenment is the exodus of people from
Struggling for basic rights through the middle-class revolutions and for the social state through the workers’ movement are the most important examples of the emancipation process. A comparison of the workers’ situation in the 1970s and the 1870s shows what people can do when they understand themselves as enlightened and solidarity subjects of history.
Today, four decades later, we all must adjust to the new “higher being,” “the markets” (mostly the financial markets). “They” demand “structural reforms”; “they” act as judges, punish Greece and reward Germany. “They” live out their feelings on stock exchanges – today friendly, tomorrow euphoric and depressed the day after tomorrow.
Subjects to which we have to submit came out of markets as our (useful) instruments. The “primacy of the market” arose out of the “primacy of politics.” How does this unique counter-enlightenment manifest?
The US under President Trump: Gravedigger of International Lawby Stefan Talmon, 3/27/2019
Prof. Stefan Talmon is the director of the Institute for International Law at the University of Bonn
The US collaboratively built international law and its institutions and had an authoritative influence for more than 100 years. Today, the US is (1) turning away from rule-based international law, (2) violating individual norms of international law, and (3) openly undermining the legal order under international law.
The US under President Trump shows an unparalleled contempt for international law with its recognition of Israeli sovereignty over the Syrian Golan Heights.
New 44-page report “International Regulatory Cooperation and the Public Good,” 5/21/2019 https://corporateeurope.org/en/2019/05/international-regulatory-cooperation-and-public-good
“Corporate trade as usual” – Corporate Europe Observatory 5/22/2019
Marc’s note: Eliminating Monday – until the con man is gone – makes sense on myriad levels. Reducing working hours is a socio-economic investment!
Germans produced 30% more in the last 40 years with 30% fewer workers! A 4-day work week would be so sensible – for better long-term health, more time sovereignty, less stress on the environment and less gridlock. Did wealth concentration and
academia.edu has 3 million papers and moves research into a new world!
In 1930, John Maynard Keynes, the famous economist, thought a 15-hour work week would be enough – and he never saw the Internet!
Visit Vancouver B.C. with its 26 community centers and a computer-operated Sky Train light rail and you become radicalized in what our slow, backward-oriented, hyper-materialistic society could become!
The 4-day week would be a social revolution! The state is not a business or a Swabian housewife but can become indebted to help present and future generations. The zero deficit is a myth as “finance drives the real economy” is a myth.
Unlike a chair, an idea can be shared by a whole people! Reducing working hours is a socio-economic investment – giving better long term health and more time sovereignty!
We the Scattered in the insult SocietyHans-Peter Martin, Sept 24, 2018
Hans-Peter Martin is the author of “Game Over. Prosperity for a Few, Democracy for No One, and Nationalism for Everyone” (2018). Now it is Game over for the West, for our civilization model. Capitalism functions even without democracy and without observing liberal human rights.
How our Republic Could Die in the Age of Trump – in a Stunning Parallel to the Fall of Rome
by Thom Hartman, May 21, 2019 – Thanks, Thom!
“Economics as a Religion” by Arnold Wentzel, Johannesburg
Happy reading and happy research! Thanks, academia.edu for 3 million papers!
AMERICA’S CALIGULA CULTUREby
by Walter Otto Otsch and Styephan Puhringer, 5/2/2019
What is a Crisis? Retrospect on the 2008 Economic and Financial Crisisby Walter Otto Otsch and Stephan Puhringer, May 2, 2019
The economic guild interprets crisis through an ideological lens. The financial crisis was redefined as a state debt crisis. Illuminating the systemic causes of
Trump Refuses to Confer with Democrats
The David Packman Show, May 23, 2019
Audio: Ayn Rand and the Culture of Greed, 3 hr 19 min, Jun 3, 2019
Lisa Duggan, Mean Girl, UC Press, 2019
Ayn Rand’s novels The Fountainhead and Atlas Shrugged have been called gateway drugs to rightwing ideas for so many Americans. And while the works of the writer and philosopher have seen a resurgence since the global economic crisis, her influence has been undeniably huge and sustained since those books were originally published in mid-century. Historian Lisa Duggan examines what is at the heart of Rand’s enduring appeal.
Lisa Duggan, Mean Girl: Ayn Rand and the Culture of Greed UC Press, 2019
Bernie Sanders, Elizabeth Warren, and the Wealth Tax
by Roman Berger and Thomas Piketty, March 2019
Warren’s proposal earmarks a 2% tax on wealth between $50 million and a billion and a 3% tax on wealth over a billion. Between 1930 and 1980, top incomes were taxed at 81% and top inherited wealth at 74%. Obviously, this did not destroy American capitalism. Rather, it was more egalitarian and more productive.
Young Americans sympathize with socialism and emphasize the radical reforms under Franklin D. Roosevelt (New Deal) that rescued America from the worst economic crisis of the 1930s. The multipolar world requires new policies and new attitudes. The digital world similarly represents a gigantic change from the horse-and-buggy days!
Ralph Nader: Donald Trump is the most impeachable President in American History
A comedian won the Presidency in Ukraine besting Poroshenko. Why not also in the US?
How to fix capitalism.
Please Disrupt Capitalism! and The Return of Hope
by Andreya Schneider-Dorr and Horst Eberlein
The old quotation from Gramsci describes our plight: “The old dies and
The Good News is that the time of no alternatives is over. The Bad News is that the wrong alternatives are discussed. How can we be heroes of the new story-line? A social security net does not suddenly become worthless. We become heroes of the story-line through enlightenment and data protection.
30% off on the eBook “Alternative Economics: Reversing Stagnation” with the coupon LY56W until May 31
We The People Cannot Fail December 1, 2017Review by Celia
Marc Batko is
Here, Batko not only shows that it is
What is rational in
Neoliberal myths and fairy-tales like efficient financial markets, “finance
The state can become indebted for future and present generations since it isn’t a business or a Swabian housewife. As crisis is represented by the same Chinese letter as opportunity, investments leading to a more human future can be positive. Don’t be caught by the Trumpian inversion of consciousness where sharing and cooperation are decried as weaknesses!
Radical change and alternative economics are imperative when cynicism replaces trust and scapegoating and fear-mongering on the federal level replace domestic and foreign policy!
The mainstream parties have imploded because they serve the trickle-down profiteers and the corporate media subverts the will of the majority. A Sanders/Warren or Sanders/Colbert ticket would turn away from profit-extremism. The state should serve the public interest and not be an errand boy of the banks (Bill Moyers) coddling private or special interests.
more at www.academia.edu, www.openculture.com, www.therealnews.com, www.onthecommons.org, and www.steadystate.org
Freedom of the Press is Dead Worldwide When Unpleasant Journalists Can Be Simply Redefined as a “Hostile Secret Service
CIA Director Pompeo claims Wikileaks is a “hostile secret service” and Julian Assange is not a journalist. Wikileaks embodies what a free press should do as the fourth branch – control power. Democracy cannot function without watchdogs. Watchdogs and whistle-blowers must be under special protection.