Adsactly Education: The Marriage of Democracy and Capitalism
“I am not the first to point out that capitalism, having defeated Communism, now seems to be about to do the same to democracy. The market is doing splendidly, yet we are not, somehow.”—Ian Frazier, On The Rez, 2000
The Marriage of Capitalism and Democracy
For the last 150 years Capitalism and Democracy have been married. For better or worse, richer or poorer, in sickness and in health. At times it has been a torrid romance that is exciting and somehow dangerous, at times it has been staid old folks, home raising the children.
What is the state of that marriage in 2018?
Are the partners happy in their union? Do unicorns and roses follow them wherever they go?
Are they putting in time? Is all the excitement gone? Is there a lover on the side?
Is this a toxic relationship? Is that hatred in their eyes? Is one partner slowly poisoning the other?
Two Systems Destined for One Another
Almost from the very start Capitalism has seemed destined for Democracy. The rise of Capitalism as we know it has also been the rise of Democracy as we know it. Merchants and traders have always needed a certain amount of freedom and liberty in their business dealings. Democracy has always needed people that yearn to be free and long for self determination. Capitalism has always required a free and willing workforce that only Democracy can legitimately provide.
Is Business Getting Too Big For Democracy?
As businesses get larger and larger they take a bigger bite of every election that is held. Candidates can not successfully run for office without some form of corporate support and money. The days when they could are simply gone.
Businesses are not going to support a candidate that is specifically opposed to their interests. The bottom line and shareholders simply will not allow it. Influence buying and selling is a toxic poison to Democracy. Is this going on? Is there sufficient poison in the system today to make Democracy ill? Is it a fatal condition?
Is Business Running Democracy?
We know for a fact that business influences Democracy. Whether by direct money involvement or the pressure put on the workforce to vote a specific way business certainly influences the democratic process. That certainly puts a strain on the process and the product of Democracy.
What percentage of the laws and regulations that are passed by any legislature are related to business and how they conduct their business? Taxes most certainly have affect how companies conduct business. Building regulations are also part of the mix with fees and permits that have an effect on how and where business can operate. Health benefits? Of course those regulations affect the bottom line. I would submit that a huge fraction of all legislation is directly involved with business.
Banks, Capitalism and Democracy
Banks not only are businesses, they are vital to the conduct of all business. Just handling the huge flow of money into and out of business every day is an enormous factor. Credit and the ability of businesses to react quickly and decisively to changes in the market are incredibly important from the Mom and Pop Hardware store to Elon Musk and Tesla.
Capitalism runs on banking. Banking runs on Capitalism. Is one or the other of these two partners dominating the other? Are banks and the issuance of currency unfairly hindering business and the way it conducts business? Are the interest rates gouging business and their shareholders? Are the banks taking on too much risk in funding business? Is there an answer?
Democracy requires three things by definition: Free and fair elections, equal representation under the law, and self determination of the electorate. Are banks and banking making these three requirements easier or harder for the general population?
Is money speculation threatening Capitalism or Democracy?
During the financial crisis of 2008 many mortgages in the US had been sold multiple times. That meant that as much as 90% of the money involved in the mortgage industry was NOT backed by property as originally sold. It was speculation, pure and simple. It almost brought the system completely down. Is speculation and money manipulation killing Capitalism and/or Democracy?
Does One System Exist For The Other?
Is Capitalism subservient to Democracy? Is Democracy subservient to Capitalism?
One of the absolute keys to a successful Democracy is personal freedom. One of the absolute keys to Capitalism is corporate security for business. How much do these two overlap and compete with each other?
Obviously, business needs to have a certain amount of loyalty from their employees. Company secrets and processes simply can not be given to competitors in the marketplace. Individuals have every right to visit with their brother-in-law over a few beers. When and where do these two things come into conflict with one another?
McDonalds doesn’t care if you stand there with a stopwatch to see just how long they cook their fries, but McDonald Douglass doesn’t want you to casually discuss the effectiveness of their latest Radar transponder with your brother-in-law. Some personal freedom is lost in every single job situation.
How IS the Work Force Doing?
One of the tenements of Democracy and Capitalism is a readily available skilled workforce that produces goods and services for the capital holders. How the electorate and/or workforce is doing in general is a mark of both systems.
Automation in manufacturing has eliminated a great many good paying jobs in the manufacturing sector. Robots get better every day, never take a vacation or sick day, and have a fixed cost relative to the business. Humans are less dependable and more likely to cause slowdowns or stoppages. Automation is here to stay and many of the jobs that everyman aspired to no longer exist.
Unions no longer hold the power and trust they once did. They are still trying to defend a shrinking position and are generally ineffective and unproductive. The negotiation power of a Union has been sapped by automation and pressure from the business owners to improve the bottom line.
Many of those lost jobs have been transferred to the service sector where minimum wage dead end jobs abound. The original idea behind minimum wage was to protect new workers and force business to start employees at a fair hourly rate. In the service sector today, minimum wage is the standard pay level for all employees.
Is Capitalism Affecting Elections To The Point Of Affecting Democracy?
There is no question that elections are becoming more and more corporate. In the US a corporation now has the same rights as an individual which means money simply flows into political campaigns.
Many, if not most, elections feature two ‘corporate’ candidates. At the presidential level this is often ‘sector’ driven, with Banking backing one candidate and Manufacturing backing another. At the state level we see individual industries backing candidates like a mining candidate vs an aircraft manufacturing candidate. Locally it is often specific businesses that back individual candidates.
Are these truly ‘free and fair elections’ as needed by Democracy to survive?
Options
So far, this article has, by design, asked a great number of questions and provided very few answers. The point of this has been to get you, the reader, to consider the state of Capitalism and Democracy in your own situation.
There are options, and there are opinions. We will deal with these in depth in a subsequent post. In the meantime, I would be very interested in your answers to the questions below. I hope that the comments here will provide more answers than the post did.
Are there options in the current situation? Is the trend line heading for disaster, or is it heading in a logical and ethical direction? Is there anything that can be done?
Authored by: @bigtom13
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Just a few things that came to mind:
I have the, addmittedly unproven, feeling capitalism is at odds with democracy, not because it necessarily has to be, but because money speaks louder than voters and because corporations' interests are often mistaken for the interests of everybody.
Very nice comment. I would bring only a couple of very minor things to discussion.
Your other 3 points are simply spot on. Said much better than I could have.
So. I agree that capitalism can be at odds with democracy, and is at the current time. I've had at least two marriages where I was at odds with my partner. Is it 'irreconcilable' ?
Thank you for a terrific comment.
Writing this quickly, must be off in a few minutes, sorry:
Re 1: Full democracy is a 20th century development; universal male suffrage didn't happen until the 19th century. Only partial democracies, where only a minority of the population had a vote, based on social class and gender, existed before. I don't consider those democracies, but that's a matter of definition, I suppose.
Re 2: Be that as it may, and it probably is: slavery existed for quite a long time in capitalist countries, and some (parts) of these countries functioned mainly on slave labour, which rather proves the point that a "free and willing workforce" isn't a necessary precondition for capitalism.
This post has touched the many aspects of modern democracy and its system. As this post has already state that democracy and capitalism are the complementary of each other. The engine of democracy cannot run without the fuel provided by businesses. Elections are becoming costly day by day. A poor person cannot even thing about taking part in elections. Voters prefer only those candidates whose photos and visuals they see and watch on newspapers and televisions. Of course no one can feature in newspapers and television without spending money. Media is also run by corporate; hence it doesn’t go against the rich people. In fact it endorses the rich candidates only because only a rich candidate can provide them money for the canvassing. Hence, without money democracy cannot survive or we can say that only rich persons are capable to be the political leaders in modern democratic system.
Banks are also the part of this system. They provide loans to rich persons only. For ordinary persons it is not an easy task to get loan from banks. What I witnessed in India that corporate loans are easily waivered by the governments as companies easily declare themselves bankrupt. Banks easily sanctions loans to these companies which run away with banks’ money with siphoning the hard earned money of ordinary investors and taxpayers. These companies become bankrupt but their promoters and directors never get poor. In fact their wealth always increases. On the other hand bank charge more interest from ordinary man and if he fails to pay only one or two EMIs, bank behaves harshly with him. So, in modern democratic system rich people getting richer and poor are getting poorer day by day.
During recession big corporate were given bailout packages by all the governments but what they do with this money? They didn’t hesitate to fire their employees in the name of cost cutting. However, they didn’t hesitate to provide bonuses to their CEOs. What a shameful thing!
Even modern law and justice system only favors rich people. A petty criminal cannot afford to hire a good lawyers and in many under developed countries many persons are in jails for petty crimes for which they could be easily freed if they had provide bail but these poor are not in the position to arrange bail for them. Hence, they had to remain in jails for more than the maximum sentenced period of such crimes.
Automation is also decreasing jobs. Poor are being forced to give up the claim on their lands so that a big company may establish there. This is being done in the name of development. Environment is being destroyed in the name of development. Governments all over the world are behaving tyrannically. Crony capitalism is pervasive. This is not a true democracy. In fact it is despotic rule in the disguise of democracy.
So, the future doesn’t seem promising. A very bad time is coming for this world. This cannot be changed. This is why people all over the world are getting frustrate. They are losing their peace of mind. Cases of suicide and crimes are rising. Our world is on the verge of a great catastrophe.
I agree that the future looks bleak. Except for one thing. I really believe that crypto might be the great equalizer here. Not that crypto doesn't produce big time capitalists that will bull what ever market they can, but I think that normal, every day people can have a MUCH larger impact on the capitalist side of the equation than ever before.
I do not know, or even have a very good guess on the Democracy side. Will we see elections (free and fair) run off the blockchain? That could have a very positive impact. Will some countries slide into oligarchy or even worse? I think that possibility exists.
Interesting times we live in. Thanks for a thoughtful comment.
Thank you sir your for these nice words. Cryptocurrencies have potential to free people from the clutches of wealthy maggots but this feat is not easy to achieve. Wealthy people won't let cryptos to flourish. Many rules, regulations and laws will be formed to control or even destroy this enemy.
As far as democracy is concerned, over population and automation is rendering people jobless. These jobless population is becoming burden on this earth (in their view). So, they won't allow democracy to run as it should run. Definitely, we are not living in democratic countries. This is oligarchy in disguise of democracy.
Great post, in fact this is something that i have discussed with friends before as well.
To me capitalism by its very nature isnt democratic. Capitalism means that corporations need to work for the provider of capital, that is shareholder i.e. the rich. Every decision that the firm takes has to create more shareholder wealth. So whether it be to influence political decisions or kill the environment, shareholder wealth needs to be created by all means. And that is the problem. Decision making at companies isnt democratic. Its hierarchical and autocratic. There is no ethical decision making at companies and what is missing out from the performance assessment of ceos is how ethical were their decisions. There needs to additional rows in the appraisal documents that add the cost of ruining the environment, the cost of mass layoffs and the cost to society of running that business to truly assess profitability of a company and to make capitalism accountable.
Democracy unfortunately has also become the same. Political parties should be looking after the people who are voting for them, but they are also looking after the interests of those providing capital. Govt isnt a for profit organisation. It isnt answerable to wealthy corporations. If it continues to head this way, it will be a disaster. We are looking at a more automized world. That means more job losses and if the govt cant generate enough cash to support those that will lose jobs, worstcase, we are moving towards a civil war. Unfortunately out economists are thinking or acknowledging this. Most economic theory is ex post facto. Its never proactive. Our outdated economic theories arent accounting for new factors of production or automation.
I think the most important step to restore democracy or to keep this marriage of democracy and capitalism alive is to first break the corporate political nexus. Corporate funding has to be abolished and personal funding caps need to be put in place. Democracy needs to made honest. The election process needs to be simplified. X number of debates, media ban on election coverage. Both parties will run youtube channels to discuss what they intend to do with proper appraisals. Ban on lobbying. A lot needs to be done to end this nonsense.
Capitalism really needs to be ethical and accout of social costs into their profit model. Else they are making money and the world is losing out.
Yes. That is incredibly well stated, and I really don't have much that I can add.
Thanks for a really well thought comment. Exactly what I was hoping for with all the questions.
Thank you for the kind words. This is such a relevant topic these days. Specially with all the election outcomes we are seeing and the kind of political discourse we hear. In fact, i was recently at a bookstore and was amazed to see the amount of books coming out about capitalism and the current state of affairs.
It works quite well in the Nordic countries, where capitalism is harnessed by the people for the public good. Capitalism doesn’t have to corrupt democratic governments; the people simply have to decide who shall be the master: them or corporations. The power of capitalism to corrupt governments can be significantly reduced by a number of simple steps:
It DOES work well in the Nordic countries, though some in the US would call that creeping Socialism.
I love your list. Make me Emperor for a day and it shall be so! I'd only add one item. Term limits for elected representatives.
I am not the most political knowledgeable person so take what I have to say with a grain of salt.
American politics and elections to me have always been about the money in some way or form. Politics use economy as a way to draw in the masses. They promise that things will be better for them in their day to day lives, especially on a financial level. I can't say that I have seen this come to life.
On the contrary, it actually got worse because the last election was won by someone who actually used a project that would cost ridiculous amounts of money to realize as one of his strong points. Talking about Trumps Wall here of course.
Looking at things here in Germany, people are as unhappy about the political situation as people are probably everywhere on the world. Let's face it, being a politician most of the time comes with you giving away any chance of winning a popularity contest. Aside from the popularity contest called elections anyway.
With that being said, German presidents and representatives do not earn nearly as much as, say, the presidents of america do. Their lives are also not as extravagant and to my knowledge there have hardly if ever been any serious cases of corruption.
It is probably still a topic, the politicians want to keep businesses strong and growing for the sake of the population being able to work in useless jobs. But the band between democracy and capitalism isn't as bad as it could be.
America has a rich history of corruption at the federal level. Of that there is no doubt.
The really scary part today is that representatives and Presidents make huge piles of 'legal' money the way the laws are currently structured. Instead of being a life of service and dedication as elected office once was it is a pathway to certain riches. Sad, almost beyond all comprehension.
In a movie I watched a while ago, a queen once said that she is a servant to her people.
That's the mentality that we need.
In Venezuela we can say that capitalism has been divorced from democracy, all thanks to the fact that the new socialist system has not wanted to allow capitalist development, there is a power struggle, all the great capitalists of the world know that Venzuela has randes riches, there is a struggle of powers in search of an administrator of the large economic reserves represented not only by the oil but also by the large minerals it has. Its current governors are struggling to keep control, and the opponents want to conquer that power. There are many riches that could transform this country into an international model, without lack of anything. We are living a new one where the people are the only ones affected.
I feel for the people of Venezuela. I suspect it will get some worse there before it gets better. I also agree that it can be a paradise on earth. I think it will soon be in the hands of the Venezuelan people.
It's an interesting dynamic when you go places such as Vietnam, strictly speaking still communist yet with free market economics and capitalism mixed in ...
Great work. Followed you for more!
Interesting, although I don't necessarily agree entirely.
What do you think about a futarchy society?
I'm certainly glad you do not agree with me entirely. The entire purpose of this post was to ask questions and get answers.
In all honesty, the 'future' doesn't have much consideration from me. If I have another 15 usable years I will have had a really long life. The future is in the hands of you younger people.
Great job with this post @adsactly. Interesting reading. Following you.
Thank you!
Actually you could have one without the other. Society has been constantly evolving throughout time, so does these concepts. A good example would be Southeast Asian countries.
The economic system and the political system would always have an influence on the other. It would just depend on the situation and how the power struggle plays out inside the society.
SE Asia is an interesting area in re: Democracy and Capitalism. Vietnam in particular is considered by some to be State Capitalism, but worker's councils give it at least some aspects of democracy. I think it is too early to tell in China and Vietnam whether one can exist long term with out the other. It will be very interesting to see how this plays out.
Yes exactly. Like how China is considered as a socialist country but they're more capitalist in actuality. It's not black or white when it comes to the region, its more complex which makes it really interesting. This is one of my favorite courses(SEA politics) during my undergrad years.
Thank you. I agree that capitalism has crossed the line and is twiddiling with the democracy side of the marriage. Will it change? We will see.
Those two have been married for so long but it seems like they're not too concern about making a baby that would be more considerate and loving. Democracy seems like not what it meant to be now.
I seriously tend to agree with you, democracy is running off the rails.
I hadn't thought of the children of that union. Interesting idea...
"One of the absolute keys to Capitalism is corporate security for business." I take issue with this statement. One of the keys to the current system? Absolutely. Key to capitalism? Not necessarily. Corporations aren't even a byproduct of capitalism, they're a byproduct of the state. By law, they must be chartered for the primary purpose of earning profits for shareholders (taught in freshman year financial accounting in business school). Also by law, they must limit the liability of the shareholders, often extending this limited liability to corporate officers and lower level employees. The point I'm making is that I believe that a large part of the sickness within our current system is due to the legal framework surrounding limited liability, collectively owned, for profit entities. In essence it's a socialization of the costs (limited liability) and a privatization of the profits (profits go to shareholders and corporate officers mostly).
You and I are in full agreement. Will the US pull it's head out and make corporations be just business? A lot of our representatives have been duly bought and paid for...
Though some points there need more study to understand, one point noted..
With the development of technology its now creating such options at workplace. Robots/Machines are taking the place of human labour.
Good to hear, unused lobour work of human transfers to service sector and minimum standard wage is payed.
Right now, the service sector is in huge flux. I'm sure it will change, but right now it is really unorganized and capital is having it's way.
In reality, human labor has been being displaced since the first steam engine. How the systems react to one another is the dynamic that I try to follow.
Hello, I miss capitalism, because here in Venezuela since the era of socialism was implemented, we are suffering a lot, because there is no democracy.
Venezuela is a serious test case for capitalism and democracy both. What happens there, and how painful it is for the citizenry will go a long way towards answering these questions.
eso fue lo que arruinó a Venezuela,no el capitalismo,lo arruino fue el famoso socialismo mal interpretado
All things considered you could have one without the other. Society has been always developing all through time, so does these ideas. A decent case would be Southeast Asian nations.The financial framework and the political framework would dependably have an impact on the other. It would simply rely upon the circumstance and how the power battle plays out inside the general public.
You copy/pasted this from an earlier comment. Not good. Flag time.