Capitalism Is the Enemy of Democracy
The most significant accomplishment for Occupy Wall Street (OWS) to date is that the Occupiers have managed to poke a hole in the legitimacy of neoliberal capitalism and its central claim that unregulated markets provide opportunity and freedom.
The Occupiers have accomplished this feat in a surprising way, peacefully, with home-made signs,signs that say things like, “If I had a lobbyist, I wouldn’t need this sign.”
OWS has punctured the neoliberal façade simply by having the audacity to gather in public, in bold defiance of the police and to bear witness, by their solidarity and cooperation, to the idea that the Washington Consensus has long denied – that a different world is possible.
Phil Rockstroh puts it this way: “the walls of the neoliberal prison are cracking … We are no longer isolated, enclosed in our alienation, imprisoned by a concretized sense of powerlessness; daylight is beginning to pierce the darkness of our desolate cells.”
At the core of this neoliberal ideology is a simple assertion – economic exchanges promote freedom because they are voluntary and, thus, they only occur if both parties believe they will benefit. Unregulated market exchanges thus allow individuals to engage with others in complex social arrangements without coercion, without impinging on individual liberty. Government is needed, but only to define and enforce property rights and to create and regulate the currency individuals need to undertake market exchanges.
Liberal Keynesians, who argue for expanding government in order to regulate or oversee individual exchange, are denigrated because they seek to interrupt these free and voluntary agreements and they, therefore, undermine individual liberty. Reagan, who ushered in the neoliberal era, said it this way: “Government is not the solution to the problem; Government is the problem.” In this extreme libertarian view, capitalism is the champion of democracy, the champion of freedom.
The flaw in this neoliberal reasoning is not hard to see. Ownership of wealth obviously confers power; it gives some individuals an upper hand in the “voluntary” exchanges they make with others. Lacking the means otherwise to support ourselves, most of us must hire out our ability to do work in exchange for wages. We might do quite well if we are educated and talented, lucky or white, but even so, we ultimately produce more value than we are paid – that is, after all, the reason we are hired.
Wealth ownership, thus, gives an upper hand to employers in these voluntary exchanges with working people. The extra value we create flows steadily into the hands of wealth holders and we don’t have a say over what it is used for.
This upper hand in these so-called voluntary exchanges provides an ongoing and increasing source of wealth accumulation that is self-reinforcing. Money begets money. That is after all what capital is, money advanced for the purpose of making more money.
Excluding people from having a say over what happens to the wealth we create is the first and the most fundamental way that any capitalist system undermines democracy. We are fundamentally disenfranchised in the places we work. Wealth owners control the levers of investment and, thus, the “needs” of capital trump those of workers when it comes to making decisions about what gets produced, how and for whom.
Beyond this, neoliberal capitalism goes further – it uses the value you and I create to enforce a virtual dictatorship by wealth in the political sphere. The most obvious manifestation of this dictatorship by wealth is the unlimited corporate financing of our elected representatives.
But this financing is only the tip of the iceberg. Not only must candidates pander to corporate interests to successfully raise the funds needed to run for office, once they are in office, they are plied and courted with unrelenting advances designed to ensure that they do not lose their focus and begin to think about something other that promoting a favorable business climate.
Even deeper in the subsoil of this treasonous takeover of our democracy is the ownership and influence over the main vehicle of public discourse, the news media. The manufacture of consentis accomplished by narrowing the acceptable range of debate to the question of how best to support economic growth (read profits) and American imperialism (read war).
Where do the millions, or billions, that candidates raise end up? Primarily, this money ends up in the coffers of the corporate media – campaign advertising is the single most important source of revenue for the corporate media.
So, it is an odd fact of American life that capitalism is equated with democracy while, at the same time, acting as democracy’s most corrosive force. But think about it, if capitalism really supported democracy, if it really welcomed open, honest, wide-ranging debate about the values and practices of corporations and their elected representatives, why would they be sending their police in with bats and pepper spray to prevent the free, open exchange of ideas? Why would they not be handing out microphones, providing open access to the airwaves, organizing televised debates?
If capitalism really were the champion of democracy, the Occupiers and their many allies would be celebrated. Instead we are disdained. The corporate elites fear and resist any questioning of their core beliefs because their ideas do not hold up to scrutiny and reasoned debate. That’s how we all know – capitalism is the enemy of democracy.
But is there any alternative? It is tempting to think that if we can only regulate capitalism effectively, we can harness its virtues and contain its vices. In fact, there is some evidence to support this view.
The 99 percent were much better served in the post-war era in the United States, and they continue to benefit from efforts to rein in capitalism’s excesses in Scandinavia and Northern Europe. But these efforts to regulate are under constant attack and a return to regulations is ultimately a brief inconvenience to the corporate elites.
As Richard D. Wolff and others have noted, as long as the value you and I create is credited to the owners of capital, these owners have both the means and, given their distorted values, the incentive to undermine and neutralize any effective regulation and oversight we attempt to impose.
Capital will continue to corrode democracy, as certainly as oxygen corrodes iron, as long as a few hold sway over investment and jobs and are committed to using the wealth that we generate to undermine the will of the people. In the words of Supreme Court Justice Louis Brandeis, “You can have wealth concentrated in the hands of a few, or you can have democracy; you cannot have both.”
Fortunately, a proven alternative to corporate capitalism already exists. For over 50 years, it has provided a practical example of how we can extend democracy to the workplace as a means of preserving democracy in our political lives. The basic idea of this experiment is to address the root of the problem, to uncover the means by which capitalism undermines democracy and to provide new institutional rules governing how we organize our economic lives.
Over 50 years ago, the Mondragon Cooperatives in northern Spain developed their poverty-stricken regional economy by developing worker-owned and managed cooperatives. Co-ops place the ownership of wealth and the decisions concerning how wealth is invested in the hands of the people who produce the wealth.
These institutions recognize that the wealth generated by an enterprise is the result of the collective efforts of all, and that those most affected by the decisions of the enterprise, workers and community members, ought to have the principal say in what happens to the wealth, how it is distributed and the purposes to which it is put.
Many people argue that co-ops are impractical, but this simple, democratic principle rests at the heart of this highly successful, internationally competitive, stable and flourishing regional economy. It is an economy based on democratic management, worker ownership and democratic oversight and it faces its own challenges, yes, but has certainly proven the lie that there is no alternative to corporate capitalism. It shows that people, acting together, can use democratic principles to imbue their economic lives and their political lives with agency and meaning.
And this effort is spreading to America’s heartland. TheEvergreen Cooperatives in Cleveland have successfully applied the principles of the Mondragon experiment to develop a thriving urban development project. As Gar Alperovitz argues, the linking of large anchor institutions with worker-owned enterprises offers a practical economic development strategy that is politically feasible in the context of our current economic crisis.
Many people are uncomfortable with the idea that working people can do without their corporate bosses. Quite a bit of time and energy has been spent trying to convince us that the idea that workers can manage themselves is preposterous. OWS has provided the opening for us to consider, debate and discuss what has previously been off the table.
Economic democracy is not only possible; it is essential. As Bill McKibben and others have shown us, we cannot afford to continue on the trajectory of neoliberal capitalism. By democratizing the economy, we are taking the first necessary step toward a sustainable future. We are also taking a step toward reclaiming that peculiar American Dream of a government of, by and for the people.
So, let’s grasp the significance of what OWS is doing. We need to step boldly through the hole they have opened in the shiny façade of our glad-handled, Madison Avenue, faux democracy. We need to take up the challenge of creating a real, substantive democracy, right here and now, in the very heart of America. We need to create an economic and a political democracy as a means of reclaiming our own dignity as working people, our own liberty as citizens and to ensure a livable world for those who come next.
David Kristjanson-Gural is associate professor of economics and senior fellow of the Social Justice College at Bucknell University. His writing appears in theLA Progressive, Commondreams.org, the Williamsport Guardian and the Daily Item. He is a member of the Spilling Ink Writers’ Collective.