Capitalism and DemocracyMay 17th, 2006 by nick
Words are powerful magic. Words that have to do with things that profoundly affect our lives, have even more power. There are images and connotations that pop into our minds unbidden whenever we hear one of these words. Democracy is an almost holy word that brings up images of people fighting for their freedom against odious tyrants, voters, debates, and the freedom to live as you choose in peace. The word capitalism, on the other hand, conjures up pictures of pigs in top hats, homeless people on the street, and union-busting goons. Even if you are a fan of capitalism, as I am, you cannot ban these images from your mind, but must defend against them.
And yet, capitalism is just democracy in the economic sphere, as democracy is capitalism in the political sphere. Does money equal free speech? There have been Supreme Court rulings, and there is an ongoing debate about this question in the political sphere. What is capitalism? Anybody can sell anything at whatever price they want. Anybody can buy anything at whatever price they’re willing to pay if the seller is willing to sell. The same freedom of buyer and seller is true of buying and selling labor and expertise. If you can do or make something that other people will pay for, you will prosper. Otherwise not. This is freedom and democracy. A system that fixes prices by government decree, determines what products will be sold, picks and chooses among industries by providing subsidies or imposing onerous regulations and taxes, decides how much wealth accumulation should be allowed, such a system is totalitarian. Not coincidentally, capitalism has proven to be a system that creates more wealth for more people than any other that’s been tried so far.
There are problems with capitalism of course. If a business becomes large enough and accumulates enough wealth it can easily put its competitors out of business and create a monopoly. Even in this case, however, the consumer can still refuse to buy. And, especially with the advent of the internet, but even before, there are and have been ways to, over time, undermine and bring down a monopoly and transform the market. The other way to create or enhance a monopoly is to use some of the wealth to bribe politicians into passing legislation, disguised as beneficient regulation, but designed to shore up and cement somebody’s monopoly. There are many examples of this, such as the ever-expanding copyright time period that Congress periodically renews so that Disney can keep making money from Mickey Mouse. There are equally egregious examples in the music and movie industries, like the DMCA legislation. But this occurs in the political sphere, the realm of democracy. And the voters can stop it if it gets too out of hand.
The real problem with capitalism, the one that gives it such a bad name, is that there are winners and losers. And although merit plays a significant role in separating the sheep from the goats, luck and accidents of birth also play a large part. This doesn’t seem fair, and it isn’t of course. But there are winners and losers in the democratic political sphere too. If you want the public schools to drop Darwin and teach creationism, and the vote goes against you, you’re out of luck. However, you can step into the capitalist economic sphere, and start your own school, which may or may not succeed. Depends on whether or not enough people are willing to pay a price that will make a profit. The two spheres are intertwined. They make each other possible. They are a check and balance on each other.
People, most people anyway, don’t want there to be losers. We want all winners, partly out of altruism, mostly for fear of being one of the losers. George W. Bush believes that all people yearn to be free. I believe that too. But I also believe that within every human heart there is a burning desire for security. Human society has experimented with a myriad different political and economic systems to find the philosopher’s stone of unlimited freedom and unlimited security. Not gonna happen of course. To some extent, freedom can be traded for security, and vice-versa. But it is also true that freedom requires a certain amount of security, a structure of enforced law. And the grand experiment of communism has shown that minimizing freedom and maximizing security creates a situation where there is very little of either. China is trying another idea, totalitarianism in the political sphere, and democracy in the economic sphere. I suppose the jury is still out, but I can’t see it. There really aren’t two different spheres. There is only one. Economics and politics are just two different ways of thinking about it. You can’t censor the internet, and give the banking and legal systems as rewards to party apparatchiks, and expect to prosper in the long run.
The utopias have been largely discredited. The argument now is really where to draw the line. Should schools pass out condoms? Should excess profits be taxed? Homosexual marriage? Regulate the internet? Conservatives and liberals fall on both sides of the freedom versus security argument, depending on the particular issue. The fringes, libertarian freedom purists, and communist security fanatics, dream of all one and none of the other. How to draw the line? For example, we can’t have both universal health insurance and all the benefits of a free market. In fact, those countries that do have universal health insurance, depend on the relatively free market in the U.S. to produce virtually all of the advances in medicine and medical technology. And uninsured Americans pay the price of insecurity. The NSA performs warrantless wiretaps of suspicious international telephone calls trying to catch terrorists with disposable cell phones. Is this too high a price to pay in loss of personal liberty, in order to afford some unknowable protection against attack? I don’t think so, but others disagree.
And then we vote, in the booth, with our pocketbooks, and with our feet.