The history of capitalism and democracy shows that we need to choose one or the other. The problem is that capitalism concentrates power in the hands of a few people who aren’t chosen through democratic means. Capitalism requires those people to pursue unlimited profit, because those who don’t lose their power to those who do.
When they have that power, they then buy government, because government is both the main threat to them, and the force which by which, through use of law and means like central banks bailing them out, they can keep themselves obscenely rich — even when markets would otherwise cause them to lose their money and thus their power.
The history from the Great Depression onwards is instructive. Capitalism caused a huge, nearly worldwide, depression. Government did not bail them out, and so they lost their power. FDR came to power, and more or less following Keynes’s prescriptions, he bailed them out. He and the people working with him put in place multiple protections to make sure that capitalism couldn’t cause such a crisis again.
Capitalists hated him for it. He had rescued them, but with the cost of 90 percent top marginal tax rates, huge estate taxes, regulation and aggressive anti-trust laws. Upon his death (little could be done while he was alive, as he was so popular), they immediately started attacking all the protections he had put in place. It took them decades, but they stuck to it, and after all, even in their reduced state, they were still powerful and could afford to pay people to spend their lives working against the New Deal.
The foremost intellectual servant of these men was Milton Friedman, but many, many labored in this cause. They built a political, economic, and intellectual infrastructure and waited for their opportunity. With the oil crises, inflation, and unemployment of the 70s, they had their chance. They made sure that an egalitarian model for dealing with the crisis wouldn’t work, and they got Thatcher and Reagan elected. Then, they dismantled the New Deal and all the protections against another economic catastrophe like the Great Depression.
This allowed them to vastly consolidate wealth, pushing power into the hands of fewer and fewer people. Antitrust law was gutted, unions cut to ribbons, and regulations which protected against them were destroyed, while new ones were put in place to ensure the concentration of wealth and power.
A small example of this was given to me by an accountant, who in the 70s used to do the taxes for Indian bands. When Reagan took over, the regulations were changed so that only large companies were allowed in the business and he was frozen out. This sort of thing happened everywhere, and, indeed, continues to this day.
But, alas, the capitalists weren’t stupid, and they knew that market concentration and removal of protections against bubbles meant that one day there might be another great crisis.
So they bought up economics lock, stock and barrel and paid economists like Bernanke to figure out how to make sure they’d never lose their wealth (and thus power) in a great market collapse again. Bernanke’s academic ouvre was described to me by Stirling Newberry, back around 2005, as “how to make sure another 1929 doesn’t lead to another FDR.”
They got him into the Federal Reserve, and people like him into other central banks, and when the Financial crisis of 2007/8 happened, the Fed bailed out the rich. Without the Federal Reserve, most of them would have lost everything, but the Fed alone effectively printed and gave them 20 trillion dollars, accepted their worthless securities at near face value for loans, and so on.
Meanwhile, largely under Obama, the crimes they had committed (and there was fraud all the way down, I doubt a single senior executive on Wall Street hadn’t engaged in red-letter fraud), were forgiven in exchange for fines that were less than the amount of money they had individual earned.
Power and money consolidated even further, and the “another-FDR moment” was avoided.
Since then, they have seized further and further control and increased their wealth and power even more. Citizen’s United, which allowed unlimited money into elections was probably the red line moment, but really, once the full-faith and money-printing ability of government was behind the rich, ensuring they could never lose power as a class, it was over.
The important thing to understand is that this structural. If capitalism is hegemonic (that is, dictates how most economic decisions are made and how power is parceled out), then this pattern repeats. FDR made the best effort in the history of capitalism to stop it form happening again, and he failed, buying only a few decades of relative egalitarianism and control of democratically-elected government over business rather than business over government.
There can be no peace between democracy and capitalism. They are in direct opposition to each other. Democracy requires egalitarianism to work, and capitalism requires money and power to be concentrated in a few hands.
We can have democracy, or we can have capitalism and we need to stop pretending that democracy can control capitalism sufficiently to stop it from doing vast damage. Indeed, the terrible timing of having capitalists take over democracy in the core industrial nations just as action on climate change and ecological collapse became necessary will cause billions of lives, and wipe out about half of all known species on Earth.
Because democracy also failed, democracy is now on the firing line. As things get worse (and they will get MUCH worse), every political arrangement and ideology which failed to deal with climate and ecology will be discredited.
Either democracy blames capitalism and kills capitalism, finding a new way to organize the economy, or democracy is likely to die with capitalism. And it will deserve to do so.
Ché Pasa
Democracy for whom? To do what?
The US right wing without sensible, let alone effective opposition from the “left” is ratcheting down the franchise, making it more and more difficult/impossible for more people to vote, and gerrymandering large swaths of the landscape to ensure that “never again” will a Democrat be elected to office in significant portions of the country, regardless of their votes, assuming they can vote at all.
This is not being effectively countered, in part I’m sure because the Democratic leadership has always been fine with limiting who can vote in elections. They seem to believe that the more the voting numbers are reduced the better it is for their candidates, or is it their ranking class members? We never really know with Dems, all the hooey about the PMC aside.
The Anglo-sphere has never really been about democracy in any case. It took hundreds and hundreds of years to open the franchise to most citizens/subjects of English-speaking countries, and there are still major impediments to voting built in to the systems of most of these countries. And of course what one is allowed to vote for is also highly restricted. It’s obvious that the rulership does not want “everyone” to be able to vote, does not want a universal democracy and in the end, doesn’t really care what the rabble vote for anyway. They do what they want. The democracy of the Anglosphere has long been a fiction.
Democratic capitalism is possible, of course, but only if the franchise and democracy is limited to the capitalists, and eventually only to a solitary boardroom. It would still be a “democracy” though, just a very highly restricted one, and only the few dozen or so people around the table would be labeled the “demos.”
As for the rest? They’re subjects or slaves. Or they don’t exist at all. Nope, not at all.
Think how the ancient Athenians and Romans did democracy, and you’ll see something like where we’re headed (or maybe already are): a very small cadre ( in our case of super-capitalists) democratically deciding among themselves by vote or acclamation how their rule, and only their rule, is to be implemented.
So what we’ve been seeing in the various uprisings over recent years — including the truckers, the Capitol rioters, and even possibly BLM and the OWS and similar occupations going back to 2011 and before — is various groups with more or less power demanding… what?
“Freedom?” From what to do what? “Accountability?” From whom, for what? “Fairness?” By whom? “Rights?” Or is the demand what I think it is: a seat at that eventual table to be heard.
I’ve heard the truckers state over and over again: “Nobody’s gonna tell me what to do!” Sure, right. They’re truckers, remember? And does anybody understand how strictly and closely they are told what to do practically every moment of the live long day? And night? And if they don’t do it down to the very jot and tittle, they’re fired or dead. In other words, their stated demand is bullshit. But they do want to be heard, and they do want respect and consideration and a seat at that eventual table.
So it is with the bourgeois insurrectionists, with most of the BLM folks, and yes, most of those who threw their bodies on the gears of the machine going back to my man Mario Savio in the dim past at Berkeley.
They want to be heard, they want to be respected, they want consideration, and they want to feel that they have some sort of power.
Democracy? Not so much.
rangoon78
“Social Democratic policies [in places like Sweden] aimed to reform and regulate capitalism in order to reduce inequality and prevent market failure…”
“Social Democracy” was supposed to be a shining example of how Socialism and Capitalism could coexist for the benefit of all…
Then 70s, as you pointed out, brought together all the conditions Capitalists used to spoil this wet dream-
[sound of a phonograph needle being pulled violently across a vinyl record]
The Neoliberal era, Sweden:
Marginal tax rates were cut, the central bank was made indeppendent, public pensions were cut and partially privatized, school vouchers were introduced, and private providers were welcomed in health care. Several markets were deregulated, like energy, the post office, transportation, television and, telecom…”
https://www.jstor.org/stable/pdf/j.ctt1wn0s45.6.pdf
someofparts
Well, in school we were taught that saying that half of all the species on earth will become extinct is conservative. The rule is that in mass extinctions so far (there have been five), between 70%-90% of the existing species get wiped out. For bonus points, it is also the case that apex predators never survive, since it takes a fully intact food chain to support them.
Also, related to the topic at hand in a ballpark sort of way, is this piece from Michael Hudson.
https://www.nakedcapitalism.com/2022/02/michael-hudson-americas-real-adversaries-are-its-european-and-other-allies.html
“America’s underlying economic rivalry is aimed at keeping European and its allied Asian countries in its own increasingly protected economic orbit. Germany, Lithuania and other allies are told to impose sanctions directed against their own economic welfare by not trading with countries outside the U.S. dollar-area orbit.
Quite apart from the threat of actual war resulting from U.S. bellicosity, the cost to America’s allies of surrendering to U.S. trade and investment demands is becoming so high as to be politically unaffordable.”
…
“The United States cannot simply reverse its de-industrialization and dependence on Chinese and other Asian labor by bringing production back home. It has built too high a rentier overhead into its economy for its labor to be able to compete internationally, given the U.S. wage-earner’s budgetary demands to pay high and rising housing and education costs, debt service and health insurance, and for privatized infrastructure services.”
This helps me understand why the U.S. is so desperate to pretend that hostilities from Russia are imminent, despite sounding like crackpots for pushing this narrative despite all evidence to the contrary.
As to the inherent incompatibility between capitalism and democracy, I think that democracy doesn’t exist in the U.S. anymore and is not coming back. What we are seeing now is U.S. capitalism on the ropes, obliged to take increasingly desperate measures to hang on to power, and doomed to lose anyway.
StewartM
Hear, hear!
The very reason why I’m not thrilled by a return to FDR-style New Dealism is that it tried to cage the capitalist beast with the hope it could stage caged. That hope has been proven false. Yes, you can make capitalism “work” for all if you put in a million seemingly arbitrary restraints and regulations that force people to act counter to what their best interests would be (in terms of capitalist motivations) but wouldn’t it be simpler not to patch a flawed system with a million band-aids, but move to one that was sounder and drove better behaviors by its very nature?
Mary Bennett
Mr. Welsh, could you elaborate on this sentence:
They made sure that an egalitarian model for dealing with the crisis wouldn’t work, …
How, and by whom, was that done?
different clue
The Plutocapitalists have already killed democracy at the national level in America. Vestiges of it survive in some states. Stronger vestiges of it exist in some smaller localities. People might well try working through it for survival initiatives at state and sub-state levels.
At the national level, since democracy already no longer exists, some other way would have to be found to achieve the mass physical extermination of the Plutocapitalists and all their willing assistants and supporters. Without a successful movement to exterminate several million such people in the United States, in order to remove them from physical existence so they can no longer stop us from solving our problems, we will get the mass die-off of several billion people which they are carefully engineering deliberately and on purpose.
Since I don’t expect a successful extermination program which would limit itself to the Plutocapitalists and their allies and supporters, I expect the death of several billion people over the next century instead. The best we few who understand that can achieve is to try helping eachother stealth-survive at lower and smaller levels, and help eachother through the Darwin Filter if we can.
Ian Welsh
By bailing out the rich and by immunizing them for their crimes, they kept the growth of inequality going and avoided the rich losing their power by losing their wealth. If the rich had, they would have lost control of politics, and an FDR becomes possible again.
Reducing the wealth of the rich would also have reduced inequality by itself, of course, but just as important it would have made possible egalitarian policy and politics.
different clue
@someofparts,
If what you say about the extinction of all apex predators in mass extinction events is correct, then the survival of enough breeding groups of humans to give species human a chance of surviving the mass extinction is possible.
Why possible? Because the human is an omnivore, like a rat or a possum or a roach.
If rats and possums and roaches can survive, then people can survive by eating the rats and possums and roaches . . . . and also competing with the rats and possums and roaches for the food that they eat.
Are you prepared to eat rats and roaches to survive? If you are, then the future of humanity may well lie in your strong hands.
Chipper
FDR saved capitalism, and yet the capitalists arranged things such that this crisis won’t lead to another FDR … so no one is going to save capitalism this time around.
I’m sure I’ll be long dead before we have anything but disaster following disaster, but let’s hope that something good emerges.
anon y'mouse
she’s asking how “they” prevented the 70s economic malaise from being resolved favorably to the populace and not the corporatists, not this most recent debacle in 2008.
and the Powell Memorandum was definitely a part of it. hiring key strategic people do go along with all of this “there is no alternative” stuff—how did they pull that off?
other than the econ. shock of the oil crisis, which was artificially created and caused a “inflation spiral” that they could then blame on the workers, i’d love some more details on this era as well.
my own readings lead me to believe that the hippie movement got tired of activism and alternatives (that mostly didn’t work) and just wanted to coast into a nice bourgeoise lifestyle afterwards. or it was lead to.
someofparts
“Are you prepared to eat rats and roaches to survive?”
diff clue –
Did you ever watch Anthony Bourdain’s show? On one of the shows he was sampling food in somewhere in Asia. He and his companions were served a platter of artfully arranged palmetto bugs, i.e. giant roaches, for those of you not from the U.S. South. He was laughing about how his American viewers were just not going to find that dish appealing at all. I guess if being willing to eat roaches is the litmus test for our future survival China wins again!
bruce wilder
The great, seductive myth of the “market economy” is that there are available these magic, benign mechanisms called “markets” that would automatically, impersonally do the right thing, producing good, if only political power did not malignly or foolishly interfere.
“Market economy” is a big lie. The actual economy is organized by and around social mechanisms alright, but those are bureaucracy and money finance. Neoliberalism as ideology has our tongues tied, so the simplest plain facts of how the economy works can scarcely be spoken of in terms that encompass the most salient features of political economy.
“Capitalism” is an all-encompassing abstraction. If we mean by “capitalism” the fossil-fuel, growth and unaccounted waste economy where we the human race as eusocial slime mold fouls our sweet petri dish of a planet — well, no, it cannot continue unaltered, but it has been nothing if not adaptable so far, albeit often brutally so.
If we mean by “capitalism” elite establishment corruption that fosters an outlook hostile to raising the minimum wage while friendly to further taxcuts for billionaires, who is ultimately responsible for that persistent state of politics? No, really!? Theoretically, we wage-slaves and petite professionals surely outnumber the billionaires at the ballot box or, if it should come to it, in more strenuous fields of conflict and contest.
Keeping elites in check and accountable to the masses or “general public” for their performance as leaders and managers is an unsolved social and political problem for hierarchical societies. We variously pray for saints or sinners as leaders and bosses, but end up prey ourselves, as the good shepherd is displaced by wolves and foxes.alling that unsolved problem. If that is the “capitalism” of which you complain, hoping for Monty Python socialism seems a trifle fatuous.
Ché Pasa
My parents were devoted to FDR and the New Deal, but I think they were realists, too, and they understood that the New Deal was a good deal less than was needed to overcome the Depression and part of the reason for that was the opposition to various provisions (that could benefit Black and Brown people, forex) in Congress and in many localities.
But then, FDR was never all that keen to buck that opposition, either. It was the context of the times. He was keenest to save capitalism, whatever it took.
Truman was actually able to do more toward desegregation and racial justice than FDR, but at the same time, with FDR’s death, the New Deal and the Second Bill of Rights that FDR advocated began their slow dismantlement. LBJ partially reversed that movement backwards, but he was mired in the Vietnam mess — for reasons that still aren’t entirely clear but we’re seeing echoes in the Middle East, Eastern Europe and soon along China’s eastern flank among current and recently past administrations.
The student rebellion of the 1960s was the catalyst for the dismantlement of the Progressive movement that pre-dated FDR. White and elder backlash at the ungrateful students (most of whom received free or nearly free higher education at the time) and the very ungrateful Negroes (as they were styled then) who were rioting in the streets and burning “entire cities” down brought forth many of the draconian reactionary means and methods and elected officials we’re still saddled with. I suppose when the last of the old line rebels and rioters dies off, we’ll start to change the dynamic, but by then it will be too late. Financial/economic feudalism and the many climate and environmental catastrophes will overwhelm any good that might result from releasing the grip of repression and oppression that has been the reality in the US and most of the rest of the world for generations.
Dealing with those pressing issues — to the extent they are dealt with — will inevitably require even greater levels of authoritarianism, oppression, and repression than we complain about now. Much greater.
And I’m sorry Tony and Ian and others, there is no conceivable way forward under standard model democratic or civic republican or libertarian paradigms. The two former take way too long to address pressing crises, and the latter doesn’t and can’t address them at all.
“There is no such thing as society,” remember? How many of our ruling class actually believe that? Based on their actions, their greed, and their selfishness, nearly all, no?
How many of the rabble believe it? Whatever the percentage, it’s too many.
Astrid
Living through the 2020s is making me think that perhaps Stalinist and Maoist purges weren’t as senseless as I was leaving to believe. There’s a reason why 19th century revolutionaries favored rather unsavory methods.
But with hard physical constraints soon to bear down on us, we’re all just rearranging deckchairs on the Titanic, 30 minutes after it’s already struck the iceberg. Coulda woulda shoulda nadda.
Scotlyn
To Che Pasa.
I’ve always thought it unfortunate the way that the words “democracy” and “elections” seem to be interchangeable for people. If all you think of when you think of “democracy” is elections, then you will miss the point that democracy is not about a method or a technique, but about the spirit in which that method or technique is instigated.
When you say
“But they do want to be heard, and they do want respect and consideration and a seat at that eventual table…
“…They want to be heard, they want to be respected, they want consideration, and they want to feel that they have some sort of power.”
What I hear you saying is “they want democracy.”
Because your listing there –
“a seat at the table”
“respect”
“to be heard”
“consideration”
“to have some sort of power”
– are ALL significant elements of democracy, from where I sit.
Elections not necessary. But a seat at the table where important decisions, relevant to how you will live?
Essential!
Without being able to seat everyone, and every different interest, right down to the most awkward and scary “13th fairy” (the one who, in the fairy tales, always turns up with a curse, when you neglect to invite her), for honest negotiations, you do not have democracy.
Scotlyn
In relation to this post, which I am grateful to have had recommended to me, yes, absolutely. Edward Bernays, I think it was, helped engineer a set of marketing campaigns aimed at persuading Americans that democracy and capitalism just “fit” together like hand in glove, or like apple pie and ice cream.
But it stands to reason that you cannot BOTH widely distribute power into many hands, AND closely concentrate power into few hands. This is like trying to walk south and north at the same time.
Thank you for putting this into eloquent words!
John
Biological overshoot. See Overshoot by Bruce Catton. Think wine bottle or algae pond.
At the beginning of the pandemic, Iowa corporate pig farmers, being unable to get their piggies to market decided to “depopulate” them. They crammed as many as possible into sheds where they introduced heat and steam to cook them to
death.
That’s not a metaphor, it’s called a trial run for the planet.
Multiple tipping points have been passed. More to go. Gaia has a lot of time for multiple reboots.
It’s probably a good time to choose kindness, as Ian would say, for those near you in the slaughter shed.
Alan Coovert
Corporate capitalism’s most important product is the privately owned automobile (POV). The POV has been the lifeblood of corporate capitalism since Henry Ford perfected the assembly line and started building the Ford Model T in 1908. Billions of POVs have been built since then, every one spewing about 44 tons of Co2 into the atmosphere during it’s lifetime. The whole cars-first transportation system, including the automobile industry, the fossil fuel industry, the real estate industry and the banks, is a giant grift that has enslaved billions of people around the planet. Every day millions of people drive to work in order to work to drive. I believe that like the TV, the POV was invented to wean me off my humanity.
Feral Finster
All systems eventually become oligarchies, and all oligarchies must be by nature sociopathic, because otherwise they will lose power to more sociopathic competitors.
At the same time, states ruled by sociopaths themselves break down as the sociopaths on top fight it out for the power and loot. This is the mechanism underlying the Alexander Tytler quote :
“These nations have progressed through this sequence: From bondage to spiritual faith; From spiritual faith to great courage; From courage to liberty; From liberty to abundance; From abundance to selfishness; From selfishness to apathy; From apathy to dependence; From dependence back into bondage.”
Sociopaths are not real good at the “spiritual faith” and “Great courage” part in a cause other than themselves and their self-aggrandizement.
Fact is, just about any system can be made to work tolerably well, as long as that system is not run by sociopaths. The problem is that sociopaths will inevitably corrupt any system, as they are the ones who want power the most and will do anything to get it.
Trinity
One of your very best, Ian.
“Keeping elites in check and accountable to the masses or “general public” for their performance as leaders and managers is an unsolved social and political problem for hierarchical societies.”
Actually, this is a feature, not a bug, of hierarchical societies. Hierarchies by definition concentrate power at the top. What started as a way to organize flora and fauna for understanding became a convenient way to organize society that always ensures power over the many, by the few.
And I agree with Che, any of the usual Western ideas for organizing society need to be left in the trash, forever. We’ve seen that social democracy also has flaws that allow it to be subsumed and converted. We also need to ensure the dark triad types are identified and disappeared (ice floes, if you recall an earlier post of mine).
Ian Welsh
Yes, I’ve used bacteria in a petri dish often as a metaphor for our situation: biological overshoot indeed.
To the sociopath point, Machiavelli: “Good men can make bad laws work, bad men cannot make good laws work” (or something close to that, running on memory.