Capitalism and Democracy - Are they Compatible?
In the Western world, particularly America, the notions of capitalism and democracy seem to go hand in hand. Even when America established a democracy in Iraq, one of its first acts was to give it the economic shock treatment and privatise almost everything in sight. In retrospect that was arguably one of many very, very bad moves for the country.
But whatever the rights and wrongs of THAT, to what extent are capitalism and democracy actually meant to go together?
Let's define our terms first of all. Capitalism, of course, is the belief in a free market society. A person's role in society is determined entirely (so the theory goes) by their own individual ability and by the needs of the market. As such, government interference should be as little as possible, so that the market is as free as possible. As one American conservative recently said, "I don't want to abolish government, I just want to make it small enough to drown it in the bath."
Democracy on the other hand, to break the word up literally into its Greek components, requires the arche (rule) of the demos (citizen body). In modern terms this is often equated just with voting every few years for your leaders, but in essence democracy is based on the concept of the people of a certain society choosing its direction on the basis of majority will. In fact, if you go all the way back to the first recorded European democracy, Athens, the democracy pervaded many or most aspects of life - religion, property, public service, and so on. In order to deal with the inherent inequality between rich and poor, the rich were compelled by the state (and they seem to have been willing to cooperate, as it was a source of honour to do so) to perform public services such as paying for festivals, ships, soldiers and so on.
That there is a tension between the two basic concepts of democracy and capitalism should become clear - the government is in essence the representative of the people as a whole, and yet in the capitalist system the government's influence is, ideally, reduced to its minimum, while individual interest is bolstered to its maximum.
In fact, this tension has been borne out by recent examples. Well, this example comes from 1999, a few years ago now, but the principles involved are just the same as today. You may have heard of something called the 'Multilateral Agreement on Investment', which was pushed in the WTO but fell through, largely because the public found out about it (the negotiations had of course been kept secret, but someone leaked). Well people in power tried time and again, rather inexplicably, to resurrect it. In an 1999 article by George Monbiot on the European Round Table of Industrialists (the ERT), this was discussed:
Now, we should just be considering the principles here. In such an international agreement, any barrier to profit that exists in one country but not another must be removed. So, to take an extreme example, say that the (democratically elected) government of Country A passes a law that says that slavery is illegal, but the government of Country B legalises slavery. Companies from Country B argue that Country A's law impedes their ability to earn profit, because they must pay their workforces. Hence an international tribunal, meeting in secret, overturns a law passed democratically by Country A. Now you see the tension....Since 1995, the European Commission, pressed by the ERT and other trade bodies, has quietly been preparing for a single market with the United States.
The Transatlantic Economic Partnership is a slower and subtler creature than the World Trade Organisation or the MAI. One by one it aims to pull down the “regulatory barriers” impeding the free exchange of goods and services between Europe and America. What this will mean in practice is that once a product has been approved in one part of the new trading bloc, it must be accepted everywhere. If the US government, for example, decides that injecting cattle with growth hormones is safe, Europe will have to adopt that as its regulatory standard.
The masterplan is now falling into place. A greatly expanded Europe will form part of a single trading bloc with the US, Canada and Mexico, whose markets have already been integrated by means of the North American Free Trade Agreement, or Nafta. Nafta will grow to engulf all the Americas and the Caribbean. The senate has already passed a bill (the Africa Growth and Opportunity Act) forcing African countries to accept Nafta terms of trade. Russia and most of Asia are being dragged into line by the International Monetary Fund.
Before long, in other words, only a minority of nations will lie outside a legally harmonised neoliberal world order, and they will swiftly find themselves obliged to join. By the time the world trade agreement is ready to be re-negotiated, it will be irrelevant, for the WTO’s job will already have been done. The world will consist of a single deregulated market, controlled by multinational companies, in which no robust law intended to protect the environment or human rights will be allowed to survive.
As the previous failures to impose such plans have shown, schemes like this can survive only in the dark: exposure makes them shrivel and die. If this new global masterplan is to be thwarted, we must drag it into the light.
That tension is reflected in other areas as well. At the moment the British public services are gripped by the PFI - the Private Finance Initiative. Secrecy has become its hallmark, since any requests for information are met with the chilly response: "It's commercially confidential." The PFI involves public services, i.e. services that are owned by and run for the democratic electorate. So how is secrecy conducive to democracy?
Of course, not even ancient Athens lacked capitalism. There was a lot of it about back then. But where should we draw the line between capitalism and democracy?
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Originally Posted by Daovonnaex
