Fleeing the Devil’s Grip – The incompatibility of Capitalism and Democracy
Despite their renowned relationship, capitalism and democracy are two very distinct and uniquely paradoxical ideologies; and only by peeling away and getting at their inherent definitions will one unveil their stark differences and contradictions.
The relationship between capitalism and democracy is actually a self-defeating one in which both cannot prosper simultaneously. The best way of understanding this conclusion is by getting at the fundamental definitions of both concepts.
Democracy is a system of rule whereby political power is held by the people and not elite individuals.
The people exercise this power through voting – usually in free and fair elections – because they cannot assemble in their entirety to make every political decision so they have to choose representatives (bear in mind that this is merely one of the many reasons why people have to choose a government).
A democracy’s distinguishing characteristics are majority rule, accountability of its leaders, the right of the people to replace leaders and how the political apparatus (ie the state) should cater for the masses/demos.
No other system of government renders its population greater political power and freedom than a democracy.
Worth noting is that a democracy means much more than just free and fair elections, it’s a system of bringing to fruition what can only be accomplished through citizens coming together to further the common good.
Unfortunately due to capitalism’s propensity to privatise anything and everything, including key institutions and pivotal services, the population and – at times – even its elected leaders, end up having very little control over decisions made concerning the majority.
• What then is
The first person to use the term was French economist Pierre Proudhon in 1861, defining it as “an economic and social regime in which capital, the source of income, does not generally belong to those who bring it forth through their labour, but is rather expropriated from them by select members of the populace for their own benefit”.
In other words Proudhon is saying capitalism is an economic system whereby the people who create the capital aren’t holders of it themselves, for they are stripped of it by a select few that use it to further their own empowerment.
Andrew Heywood highlights that capitalism is not merely a system but an ideology in its own right; one that defends private property, emphasises the virtues of competition and suggests that general prosperity will result from pursuing self-interest.
In outlining the systematic angle of capitalism, Heywood characterises it as a system whereby, “there is a commodity or service produced for exchange, where productive wealth is held predominantly in private hands and material self-interests and profit maximisation provide the motivation for enterprise and hard work”.
Capitalism’s main proponents were the likes of Adam Smith, David Ricardo, Friedrich Hayek and Milton Friedman, who all firmly believed that its central feature was faith in market competition and self-regulation.
Thus capitalism busies itself with ensuring that the state interferes as little as possible in the market and matters pertaining to it, with state involvement or welfare provision only being sought in case things go awry.
Consequently, businesses are aggressively profit and not welfare-driven. Trade unions representing workers' rights are favoured only if they are weak, passive or altogether non-existent.
Furthermore, key institutions pivotal for economic and social growth are privatised due to the belief that private sector institutions are more effective than public sector ones.
But what is most distinct about capitalism is how CEOs are not accountable to the people who create capital but rather to shareholders and profit!
And because in a capitalist system shares, money, stock and property are limited – and so are the avenues to attain them – it stands to reason that not everyone can participate and benefit in the same way.
Hence, capitalism represents a game of winners and losers, with the losers being used as chattel to uphold the affluence of their exploiters.
We can all concur that this is preposterously undemocratic.
As elucidated by Richard H Robbins in his remarkable 2002 book “Global Problems and the Culture of Capitalism”, “In a democracy, people grant the government power to act on their behalf.
“However, in capitalism, there are in addition to elected leaders, capital controllers; individuals or groups who control economic resources that everyone depends on but who are virtually accountable to no one, except perhaps a few investors or stockholders, their goals usually conflicting with the states.”
Jeffrey Winters in 1996 also touched on this saying that the controllers of capital “were unelected, unappointed and unaccountable”.
And it is therefore not surprising that under such a system of private property, “capital controllers are free to do whatever they wish with their capital: they can invest it, they can sit on it or they can destroy it. States are virtually helpless to insist that capital be used for anything other than what capital controllers wish to do with it” (Robbins, 2002).
While the actions of such controllers of capital greatly affect our lives, due to the anonymity and “distanciation” of capitalists from the rest, it is usually political leaders that we seek to hold accountable for a nation’s financial woes.
This juxtaposition falls short once we realise that unlike the fact that we can fire and hire democratic political leaders come election time, the same cannot be done about the boards of influential private companies.
A similar scenario is with labour in a capitalist system: it cannot vote on what policies the company adopts.
Capitalism is, therefore, an economic system whose main (perhaps sole) role is wealth creation and profit maximisation at whatever cost and in this lies its inhumanity and un-tenability with democracy.
Common folk are fairly powerless in capitalism, having no real freedom or real prospects of socio-economic equality. Democracy on the other hand assures these things but cannot deliver them in capitalist system.
As Robert Reich stated in 2007, “Although free markets have brought unprecedented prosperity to many, they have been accompanied by widening inequalities of income and wealth, heightened job insecurity and environmental hazards such as global warming.
“Democracy is designed to allow citizens to address these very issues, yet a sense of powerlessness is on the rise”, especially when one takes into consideration how these corporations don’t have to answer to the citizens.
Hence many – if not all – democratic nations are struggling to deal with capitalism's effects.
It should be noted though that this fact does not implicate capitalism, for it is just staying true to its nature. Capitalism is an economic and not political system; ergo its role is to increase economic gains, nothing more!
And while capitalism has remarkably succeeded in doing just that, democracy has staggered and faltered in its attempts to adhere to its duties: to engage citizens in debate to see how best to guarantee and bolster the common good, and to promote and reach growth and equity.
Nowadays these duties are being assigned and carried out by the market, which is completely unacceptable, for one would assume that “if the purpose of capitalism is to allow corporations to play the market as aggressively as possible, the challenge for citizens is to stop these economic entities from being the authors of the rules by which we live” (Robert Reich), yet we find that governments are taking a back seat to big businesses.
Then why are these two ideologies supposedly so appealing as a pair? To this Robert Dahl states rather comically that, “democracy and capitalism are like two persons bound in a tempestuous marriage that is riven by conflict and yet endures because neither partner wishes to separate from the other”.
Dahl outlines how the hesitation to bring an end to this wedlock is due to the fact that the people benefitting from this union are in such a position of comfort to overlook the negative effects of their union.
In “Legitimation Crisis” (1973) Jürgen Habermas spoke of these conflicted relations, calling them “crisis tendencies”.
He identified a series of crisis tendencies within capitalist societies that make it difficult for them to maintain political stability through consent alone.
At the heart of these tensions lie contradictions and conflicts between the logic of capitalist accumulation on the one hand, and popular pressures that democratic politics unleashes on the other.
Forced either to resist popular pressures or to risk economic collapse, such societies would find it increasingly difficult and eventually impossible to maintain legitimacy (Heywood, 2007).
Very seldom do the elitist owners of capital give in to popular demands whilst risking economic collapse; no, they work the goose that lays the golden egg until it cracks. Then they move on to the next goose. How else would we explain the economic crisis of 1929 popularly known as the Great Depression or the more recent 2007-2008 crises?
Capitalist corporations and ideals are slowly eating away at the very fabric of democracy in their attempt to maintain their exorbitant expropriations of capital from the populace.
• Freeing Ourselves
So how do we unhinge from this Devil's grip?
The answer is socialism.
In essence, socialism is a system in which the means of production are controlled by the workers themselves and not any hierarchy, CEO or capitalist bureaucrat.
How things run in a socialist system is by popular consensus and not the rule of elites.
Socialism, in its earliest forms, “tended to have a fundamentalist, utopian and revolutionary character. Its goal was to abolish a capitalist economy based on market exchange, and replace it with a qualitatively different socialist society constructed on the principles of common ownership” (Heywood, 2007).
The most influential proponent of such a system was Karl Marx.
Modern socialists slightly reform this notion by making way for capitalism, for they acknowledge that is the only reliable means of generating wealth, they therefore seek not to completely abolish capitalism but rather “reform” or “humanize” it.
In theory, socialism posits the best democratic political and social system.
Unfortunately Marx did not live long enough to leave a blueprint for the economic organisation of the future socialist society, committing the lion’s share of his work to the critique of capitalism.
By thorough analysis of his work though one can see that “certainly he envisaged that private property would be abolished and replaced by a system of collective or social ownership which would allow the economy to serve the material needs of society rather than the dictates of an all-powerful market” (Heywood, 2007).
Elements of socialism worth noting are: community, the vision of human beings as social creatures linked by a common humanity. Secondly, socialism is characterised by fraternity, which is a sense of comradeship and concern for another. Thirdly, it emphasises social equality, prizing this above all other values. Fourthly, there is the issue of “need”, which is the socialist belief that material benefits should be distributed on the basis of need rather than greed. And finally, socialism is distinct for its notion of common ownership.
• Samuel D Pascoal writes on politics, development issues and international relations from Windhoek, Namibia. He can be contacted on email@example.com