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Capitalism and Democracy

Peter Barnes: Capitalism 3.0: Preface (pages ix.-xvi)

I’m also a liberal, in the sense that I’m not averse to a role for government in society. Yet history has convinced me that representative government can’t adequately protect the interests of ordinary citizens. Even less can it protect the interests of future generations, ecosystems, and nonhuman species. The reason is that most — though not all — of the time, government puts the interests of private corporations first. This is a systemic problem of a capitalist democracy, not just a matter of electing new leaders.

If you identify with the preceding sentiments, then you might be confused and demoralized, as I have been lately. If capitalism as we know it is deeply flawed, and government is no savior, where lies hope? This strikes me as one of the great dilemmas of our time. For years the Right has been saying — nay, shouting — that government is flawed and that only privatization, deregulation, and tax cuts can save us. For just as long, the Left has been insisting that markets are flawed and that only government can save us. The trouble is that both sides are half-right and half-wrong. They’re both right that markets and state are flawed, and both wrong that salvation lies in either sphere. But if that’s the case, what are we to do? Is there, perhaps, a missing set of institutions that can help us? ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 3: The Limits of Government (pages 33-48)

The notion that government should protect the commons goes back a long way. Sometimes this duty is considered so basic it’s taken for granted. At other times, it’s given a name: the public trust. Several states actually put this duty in writing. Pennsylvania’s constitution, for example, declares: “Pennsylvania’s public natural resources are the common property of all the people, including generations yet to come. As trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit of all the people.” Note that in this constitutional dictum, serving as trustee of natural resources isn’t an option for the state, it’s an affirmative duty.

Yet here as elsewhere, rhetoric and reality differ. Political institutions don’t function in a vacuum; they function in a world in which power is linked to property. This was true when fifty-five white male property owners wrote our Constitution, and it’s no less true today.

America has been engaged in two experiments simultaneously: one is called democracy, the other, capitalism. It would be nice if these experiments ran separately, but they don’t. They go on in the same bottle, and each affects the other. After two hundred years, we can draw some conclusions about how they interact. One is that capitalism distorts democracy more than the other way around.

The reason capitalism distorts democracy is simple. Democracy is an open system, and economic power can easily infect it. By contrast, capitalism is a gated system; its bastions aren’t easily accessed by the masses. Capital’s primacy thus isn’t an accident, nor the fault of George W. Bush. It’s what happens when capitalism inhabits democracy.

This isn’t to say the United States government can’t, at times, restrain corporations. It has a number of tools at its disposal, and has used them in the past with some success. But the measures it can take are woefully inadequate to the task of safeguarding the planet for our children. Let’s see why. ....

Three points are worth making here.

    • First, ownership isn’t the same thing as trusteeship. Owners of property — even government owners — have wide latitude to do whatever they want with it; a trustee does not. Trustees are bound by the terms of their trust and by centuries-old principles of trusteeship, foremost among which is “undivided loyalty” to beneficiaries.
    • Second, in a capitalist democracy, the state is a dispenser of many valuable prizes. Whoever amasses the most political power wins the most valuable prizes. The rewards include property rights, friendly regulators, subsidies, tax breaks, and free or cheap use of the commons. The notion that the state promotes “the common good” is sadly naive.
    • Third, while free marketers are fond of saying that capitalism is a precondition for democracy, what they neglect to add is that capitalism also distorts democracy. Like gravity, its tug is constant. The bigger the concentrations of capital, the stronger the tug.

We face a disheartening quandary here. Profit-maximizing corporations dominate our economy. Their programming makes them enclose and diminish common wealth. The only obvious counterweight is government, yet government is dominated by these same corporations.

One possible way out of this dilemma is to reprogram corporations — that is, to make them driven by something other than profit. This, however, is like asking elephants to dance — they’re just not built to do it. Corporations are built to make money, and the truth is, as a society we want them to make money. We’ll look at this further in the next chapter.

Another possible way out is to liberate government from corporations, not just momentarily, but long-lastingly. This is easier said than done. Corporations have decimated their old adversary, organized labor, and turned the media into their mouthpiece. Occasionally a breakthrough is made in campaign financing — for example, corporations are now barred from giving so-called soft money to political parties — but corporate money soon finds other channels to flow through. The return on such investments is simply too high to stop them.

Does this mean there’s no hope? I don’t think so. The window of opportunity is small, but not nonexistent. Throughout American history, anticorporate forces have come to power once or twice per century. In the nineteenth century, we had the eras of Jackson and Lincoln; in the twentieth century, those of Theodore and Franklin Roosevelt. Twenty-first century equivalents will, I’m sure, arise. It may take a calamity of some sort — another war, a depression, or an ecological disaster — to trigger the next anticorporate ascendancy, but sooner or later it will come. Our job is to be ready when it comes. ... read the whole chapter



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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper