Is capitalism a threat to democracy?
newyorker.com
newyorker.com
More nuanced answer: not exactly. Not Capitalism per-se anyway. But clearly you can see an unhealthy degree of commingling of big government and big business, in a way that is damaging to society at large. But to my mind:
a. that's corruption, not capitalism
b. that's an argument against big government, not an argument against capitalism
It's not immediately obvious to me that either is true in terms of producing viable societies, but as these are the primary axes which determine how a society is going to function, it seems they ought to both be or neither be.
But if you think in terms of multiscale, the difference between systems stops looking so qualitative and looks more quantitative:
Either you have an absolute property law system, and a limited commons forms on top of that through land trusts, etc.
Or you have an absolute communist system, and a limited free market forms on top of that, within a system of exceptions and exemptions.
Technically you could implement identical 50/50 socialized/private systems in both of those schemes.
In practice scale matters so which system runs which scale will affect the outcome.
But the long term outcome will inevitably be “the right things are socialized and the right things are privatized”... the two systems each do experiments and make concessions when they lose. They’ll end up being quite the same, although in the short term they are quite different. And we need both to exist to run all the experiments.
There have been way too many stories alone on HN about people losing e.g. their entire mail archives or Youtube deleting evidence videos of war crimes, to let this situation continue for any longer.
Government needs to finally recognize the importance of social media to modern society... after all, telcos are not allowed to arbitrarily cut you off (especially not for life!). Why should social media be treated differently?
Well, ISPs are replaceable (okay, they will offer different speeds). Get cut off, select another ISP (or mobile data).
A telco is not easily replaceable though, as the phone number is your unique handle that often cannot be changed easily (which is why you have the right to keep your number in Europe across providers)...
Comcast customers would like to have a word with you.
I'd say it's reasonable these days to expect regular people (especially the 18-34 demo) to actually rely on the speeds you get with fiber. ADSL and satellite, by comparison, are slow as molasses.
A number of those folks could probably survive with a mobile data hotspot, but that is really not ideal for a house or apartment.
I'm not opposed to government regulation (I support the GDPR, for example), but I really don't see Gmail bans as a problem needing intervention.
YouTube banning videos is more concerning, but how would you regulate that? And which government decides what rules apply, considering that YouTube is international?
A small / weak government can't do anything to stop them.
Instead, I think technology is the culprit. Technology pushes out the boundary where economies of scale give way to diseconomies of scale. Mom & pops can't compete with Amazon not because Amazon has a few senators in its pocket. They can't do it because Amazon's immense scale (multiple robotic warehouses, in-house shipping and logistics expertise, etc.) makes it impossible to compete on price and quality.
I think you're right that Google and Amazon (and others) leveraged something new - the catalog-sales and cat-video dynamo we call the internet - to get where they are.
And I think I'm right that they will increasingly leverage government to stay big now that they are.
[1] You might say 'Uber' in response; I'd say the company was corrupt and failed to find sufficient exploitable government levers to succeed in those efforts, because someone else got to those levers first.
IMO that's not a convincing argument. Your response to two specific counter-examples is "one day you'll see that those examples actually prove my point instead of yours"
If you want to argue they'll lobby, manipulate and bribe less than average among peer-firms, well, that argument could be made.
But if you want to argue that there's something special about them that means they won't play all the same games, perhaps start with explaining how Amazon's begging-for-handouts HQ tour is different than the sports stadium scam.
You’re begging the question by assuming that this conduct is what keeps “peer firms” big. That’s the point in dispute.
I’d say that there is good reason to believe why that isn’t true. Walmart spent just $7 million on lobbying last year. It’s a company with $500 billion in revenue. Does it make logical sense to infer that the $7 million in lobbying is what keeps the $500 billion spigot flowing? Much smaller competitors could out-lobby Walmart, raising the market price of corruption. Why doesn’t that happen—with hundreds of billions of dollars on the line?
People take as a shibboleth that lobbying is corruption and corruption keeps big companies big. But that flies in the face of the actual data.
You're attempting to treat lobbying as a binary. Does it make logical sense that Walmart would spend $7M if it didn't feel that investment had a return?
Of course large companies are buoyed by other factors. But as congress-critters famously pointed out a while back, Silicon Valley had to learn to lobby. And they did, otherwise Bad Things could happen.
Also,
> People take as a shibboleth
I don't know what tribe you're trying to make me a member of, but, uh, no.
> But that flies in the face of the actual data
If you're talking about the gap between $7m and $.5T, that dataoid demonstrates nothing other than that multinational retailers operate much larger firms than politicians do.
My question stands: how is AZON playing a different game than they various sportball leagues?
Would Walmart spend only $7 million on lobbying if the return was so crazy high as you’re assuming it is?
> If you're talking about the gap between $7m and $.5T, that dataoid demonstrates nothing other than that multinational retailers operate much larger firms than politicians do.
Price doesn’t relate to size of firm or cost, but rather supply and demand. Under your theory, where lobbying is instrumental in keeping a $500 billion business from being out competed, demand should be high. At the same time, with a very limited number of Congress critters, supply is limited. That should push up the price as other firms bid to secure the supposed benefits Walmart now gets.
A small government is perfectly able to regulated what is needed to regulate. It is an absolutle isllusion to believe that only a big government can correctly regulated cooperations.
In fact, I would argue there is little corrulation either way, both big and small govenrment sometimes have effective laws.
The ability to regulated derives from a monopoly on violence, not control of 50% of the economy.
It is a similar thing with the EPA and FDA, if a corporation meets their requirements, you can't sue them, even if they are polluting your town. It actually _enables_ a legal limit that they can pollute rather than strictly reducing pollution. The most effective anti-littering campaign was the Keep America Beautiful, Crying Indian campaign, not really the EPA.
A lot of this has to do with culture, if people aren't okay with big corporations and corruption, then they would do something different. But on a certain level, people don't really care or believe that corporate entities somehow help the economy. Two-hundred years ago, the culture was different and people made things go a bit differently; the culture we have now generally supports corporate and governmental power.
Do you have a citation for that? States, cities, and individuals sue all the time. Saying you met the federal standards may be part of the defense but it’s not immunity.
Can we imagine anything other than the system we live in?
I suppose we can imagine small adjustments like higher or lower taxation, more or less regulation, increasing or decreasing subsidies for different groups.
But that's like slightly changing the temperature or salinity of the water we're swimming in. It doesn't help us imagine what walking through air would be like.
As the government has balooned in size, trust busting has become almost non existent. Corruption these days just gets a yawn.
A government that is not large enough to upset an even playing field will also not be large enough to level an uneven playing field.
There is litte correlation between the size of a govenrment and its ability to regulate.
Of course it depends on the size of your population/market, if you are small, a company can just leave the country rather then comply. However that is equally true for a small country with powerful government.
Government regulation is, ultimately, only one item in the civic toolbox of society. If it turns out this is flawed, and will in the long run generate more negative outcomes than positive ones, abandoning the tool does not mean abandoning the final goal. Instead, we must utilize alternate means of achieving the same ends... or accept that corruption as the price of our chosen path.
If you have strong enough coordination, we end up calling it "government".
Yet they do work, and we don't call labor unions "government".
...effectively enforce the system of property rights which is the foundation of capitalism, since the latter is an example of the former.
This is the same logic used by people who argue "That's corruption, not socialism." If everywhere there is capitalism, there is corruption, you can't simply wave it away.
Edit: I originally asked "How is this argument different from 'that's corruption, not socialism'", which some seemed to interpret as a defense of socialism. I'm just pointing out the flawed logic in both arguments.
It’s not at all different. In fact, state socialism and state capitalism are extremely similar systems.
There have been industries that were free of corruption and meddling even though the larger society was rife with corruption. I'm thinking of the Scottish banking system in the late eighteenth century because it was completely unregulated. Its example showed what laissez-faire might look like in that sector.
Silicon Valley in the 80s, 90s, and 00s was similarly left alone. We all saw how it flourished and almost entirely stayed out of politics.
The American constitutional system provides an excellent approach to limiting corruption through checks and balances and enumeration of powers. It has plenty of loopholes and those have been exploited from inception on.
But that's the unfortunate consequence of these systems being built for a perfect world filled with entirely rational beings that only do what's in the interest of the common good. Everything from economics systems like Capitalism and Communism to political ones like Democracy have this very same issue; they work fine in theory then completely collapse in the real world due to human selfishness and irrationality.
But I'm not sure what the answer is that problem.
True, but personally I remain unconvinced by those arguments. It gets complicated though, because a lot of people (implicitly or explicitly) equate "capitalism" and "corporations". But in reality, capitalism doesn't require corporations and corporations require the State. A capitalist economy without corporations (which break the link between actions and liability for the consequences of those actions) would very likely be a much different thing.
So, if the problem is that corporations and governments tend to get too close to each other, what exactly is the nominally-better solution that we're supposed to be comparing against?
What if this is already just about the best we could hope for? It does sometimes seem to me that people have this implicit idea of a world in which, basically, nobody has any power, or everybody has the exact same amount to an arbitrary number of decimal places, but even by the standards of Utopianism, that's Utopian. What, exactly, is the goal of this conversation?
It'll differ for different people, of course, but it's still a valid exercise. There is a lot of "1. Identify problem. 2. Propose solution. 3. Fail to observe that proposed solution couldn't possibly have solved original problem, even if it worked as designed."
(For another example, see the last few mass shootings, and the subsequent proposed "solutions"; without reference to whether or not they would be good idea and whether or not more gun control is good or bad, it was frequently the case that even if the proposed solutions were in place and perfectly, unrealistically functional prior to the incident that the solution still wouldn't have prevented the event, e.g., "more background checks" that the shooter still would have passed, etc.)
If capitalism tends to inevitably lead to corruption of government and the undermining of democracy etc in the long run, then that's an interesting critique, which can't just be swatted away with "yes but the result isn't capitalism".
That's a pretty big if.
Farmer A gives free goats (or his daughter in marriage) to farmer B who is in charge of allocating newly acquired tribal farmland. Farmer A gets a good, fertile pasture with a stream, farmer Z might get a bunch of rocky hillside.
Everything tends to lead to corruption of government, in fact most forms of government are the corruption we see as the problem here. The key point of liberal democracy is to put mechanisms in place to prevent this from happening.
Perhaps you could have a liberal democracy that copes fine in one era with various built-in systems to combat corruption, but if you make the market more competitive/free-er/better then it can no longer cope in subsequent eras? Who knows, but it certainly seems to match my perceptions of certain countries following market liberalisation.
Because the same people who advocated free markets also thought long and hard about the problems of corruption.
Lets remember that scottish enlightment thinkers are not just responsable for many of these ideas but also many of the ideas about how to design parlaments and politics in general.
The reason a govenrment in a mostly capitalist state can be resistant is because it can be keeped relativly small and focused a small number of task. There are a large number of safeguards that can be built into the governemnt as long as the government has a limited scope. I also think that as long as government focus on the essentials, a large part of the population will agree that what the government does is good.
The mechanism however to not scale having a government that needs to fight massive wars and plan the economy.
In his book 'Road to Serfdom' Hayek goes into details about the tention between powerful government action and democratic institutions.
It seems to me that any system of economic organisation that has a goverment will have some level of that problem, its absolutly impossible not to have the problem in concept.
The question is what system would you want where you can effecivly minimise the power of these effects. I would argue that having a small less powerful governmnet that is bound by rules (constiution for example) is the most resistant.
As soon a government gets bigger monitoring gets harder, oppertunity for corruption get larger, negative effects of bad regulation have larger scope and so on.
I suspect that "among the least corrupt" is necessary for "most economically free". Or to put it another way: Corruption destroys economic freedom, because those economically on top at the moment use the corruption to write rules that keep others from being able to challenge them.
Capitalism, like all other systems, can't exist in a vacuum. You must consider the human factor and the likelihoods it will produce.
A might treat B as a market commodity, but that's not a market. What does make a market then, if not having commodities in a market?
When we see that communist regimes have famines and vast imprisonments and corrupt party leaders stealing from the people, we correctly identify that as one of the realities of communism which stems from the impossibility of making communism work within the confines of human nature.
When it's the inevitable effects of capitalism, we deny it. We say, "Oh no, that's not pure capitalism, they aren't practicing real capitalism, they're corrupt." It IS an effect of capitalism in every case. Where else is this coming from? Powerful entities in capitalist societies capture regulatory bodies and political figures and force them to enact policies which are harmful to common people yet benefit their bottom line.
It's intellectually dishonest to say that all of a sudden it isn't capitalism so capitalist ideology isn't at fault. We have been driven by capitalist ideology every step of the way up to this, but the instant something bad happens then the definitions suddenly change and capitalism is insulated from harm.
Let's not be in denial and say that yes, capitalism per-se is to blame. There comes a point when capitalism is bad for free society and democracy. Does that mean that we have to enact the exact opposite? No. Let's not have a false dichotomy. We need to realize that pure capitalist ideology doesn't work due to human nature in exactly the same way that pure communist ideology doesn't work. We need a strong and effective system to suppress certain parts of the capitalist ideology or we will perish.
I haven't seen any proof that there are any "inevitable" effects of capitalism. Certainly we can't take the existence of these effects that you are referring to as a given.
I feel like once again you're using different standards for evidence for the two systems. We see the awful effects of communism each and every time and we correctly attribute it to communism. But suddenly there's a need for negative proof with capitalism. We can't be sure because we haven't seen every single permutation where it might be possible. But this systemic corruption exist in each real instance so far. But we don't know if it's strictly "inevitable." Do you see how that is bad reasoning? Do you see how that isn't falsifiable?
It also stands to reason that this is inherent in capitalism. If you have complete freedom to purchase anything in the market, can you not see a situation where, without outside control, a successful party will have the opportunity to use capital to seize the system itself and change it to suit their needs above others? It stops being lassis-faire at that point. What about capitalism is meant to prevent that from happening? There's no inherent safeguard to keep it from developing that problem.
If you want a good system, you have to look at it honestly. You can't be in denial and keep giving it a benefit of a doubt just to protect the system instead of the people living within it. The system exists for a purpose, not of its own merit. It needs modification in the same way that all systems need modification. Any creation of humankind can be improved, and one of the advantages of our kind is that we have reason and agency to continually improve. The danger lies in ossifying and exalting a system as flawless the way we do with capitalism.
I would just say that the people who pushed thought about capitlaism, like Adam Smith, David Hume, F.A. Hayek and others, spent a lot of time thinking about how to make the system resistant against that cooruption.
There are whole fields in economics that try to analyse how these cooruptions and problems come about and how we could lessen their impact.
The important thing to note is that this is difficult and having a government with less overall power and scope is easier to manage because their is less insentive to capture it.
This old marxist critique has been disproved over and over. It has been show that it does not even make sense in marxes own theoretical system. That why marx has no credibilty in economcis, his own theoretical system does not make sense.
Marx himself had known this, and that's why he never published the second and third volume of 'Das Kapital'. Engels in a attempted to save Marx bacon made a competition where he asked people if the could find a solution (rather predict what Marxes eventual solution would be) and nobody found on.
That is why Marx was obandend by economist in the first place.
Since then we have also seen complete destruction of Marxist argument because of empirce, there is no inherent invetable centralisation, rather process that goes in different direction depend on many factors.
Honestly, I don't know what the author is talking about when they say "free market" in the present tense. The U.S. economy and the global economy aren't even close to being a free market.
This is why Marx has no credibilty in economics. All his predictions turned out to be false not because 'economists are the hand maidens of capital' as leftist like to claim.
In fact Marx economics was very popular amoung economist at one point, it was then deconstructed theortically and disproven by evidence.
That's an argument for checks on capitalism and corruption. Your way is just unchecked harmful capitalism without any government controls.
"The idea that authoritarianism attracts workers harmed by the free market, which emerged when the Nazis were in power, has been making a comeback."
It's a very simple mechanism. Capitalism produces winners and losers. The losers are eventually an angry majority. An angry majority will vote to maximize change.
Capitalism wound up helping workers - sharing far more of the gains with them than in Marx's day. Why? Out of the goodness of capitalists' hearts? Perhaps to some degree, but I think that part of the reason was the challenge of communism. Capitalists wanted to show that capitalism could give workers a better deal than communism, and in doing so, cut much of the ground out from under communism. Why would I want to try to bring about a "communist workers' paradise", if I see that I'm actually better off as a worker under another system?
But after the collapse of communism, the capitalists have seemed to suck more of the money out, leaving less for the workers. That leaves the majority the losers, and becoming angrier and angrier. As you say, they're going to vote for change... unless the capitalists wise up.
The other problem is, people keep offering them change, and the angry majority votes for them, and the promised change keeps on not showing up. Eventually, the angry majority is going to want to do more than just vote...
However, just because any group in society wants to change the rules of society to their benefit, does not make the existance of those groups a bad thing per se.
Sometimes people act as if that was unique for capitalist. In fact Unions, Activists, Government burocracies and so on have the exact same insentives, they want to change rules to benefit them.
The reason leftists call Imperialism the highest statge of capitalism is because these leftists had a very limited understanding of both history and the reasons behind imperialism. Their theory never made much sense and much modern history has desproved these simplified Leninist notions.
Or to put it differently capitalism was never envisioned as a critique of socialism, but as a critique of nationalist mercantilism, which is the same system international socialism was supposed to tackle a century after Capitalism had failed. Though by then Imperialism had replaced mercantilism as the common name for a system where one large property owners competed with each other for world supremacy with little regard for mere renters/workers.
Once could argue that capitalism was revived after the two wars to end all wars finally managed to wipe out the old feudal order(at least in Europe) but one could also argue that the european disaster merely reset the clock and gave rise to a new (mostly American) aristocracy which is now finally becoming visible as a aristocracy. For a lot of 3rd world the end of European hegemony after world war 2 was perceived more a handover from one set of foreign owners to a new one, then "freedom and democracy", and the us have toppled more democracies then it helped build, giving some credence to the theory of the US as a mercantilist empire rather then capitalist democracy.
In a lot of ways the problem is that few modern politicians(and that economist is in practice often a subclass of politician) dare to leave the confines of circular logic where morality can be a simple matter of good vs evil and history is a consistent narrative going from the bad old times to the brave new world. Which gives rise to an extremely toxic debate culture of fractions yelling general insults of each other, using words that have long since lost any resemblance of coherent meaning.
By no strech of the imagination was did capitlaism fail. In fact the strech from 1870 to 1914 was the largest and strongest period of growth thanks to capitlaism and increasing trend, specialisation and so on.
Feudalistic order as a system of economics had long stopped in most of western Europe and even in Russia. The feudalistic titles still being around and having some meansing does absoutly not make the economics system feudalistic.
I am not defending imperalism, of course those nations that were under fogin occupation did not really participate in this system and therefore could not get the same benefits. However it is equally false to say that capitlaism only worked because of imperalism.
In fact, as Adam Smith said, it would be better if everybody were equally capitalistic. The raise of nations like Japan, Taiwan and so many others made us all richer. I wish nations in Africa and Latin America would also manage to adopt a better system.
Where the myth of the glorious 19th century comes in is that it's fundamental to america's founding myth that it was a democracy(as defined by the modern UN) prior to or even doing the 1st world war, and did not evolve into one almost as gradually as the Europeans empires.
Dickens and Rasputin is from the late 19th century, as is the term rubber baron and banana republic and America main foreign policy activity is to topple Latin American states and patrol china in defense of American corporations(in colaboration with Britain, germany and Japan an event that's forgotten in the US but definitely not in china).
The traditional agrarian feudal order with serfs and knights are of cause gone, replaced by mercantist national companies like the British east India company targeted by the Boston tea party and the primary subject of Smiths criticism, but the aristocratic system is still in place and it's a low point in terms of economic equality not a high point(for the west equality peaks sometimes between Nixon taking office and Reagan leaving office, where as global equality might actually be increasing).
But of cause if you are one of the many who have bought the myth that Smiths wealth of nations is about socialism(the fact is that smith never writes a single word about socialism), and that the long depression never happened we are of cause not even talking the same language but thats of cause the core problem with our political discourse. And the reason that the old ideals about the good king/dictator/chairman keeps reemerging as the lone alternative to the bad power brookers corrupting the system.
My point is that both sides is essentially working from a historic narrative thats more myth then reality, and that it's really hard to explain the incredible increase in wealth that we have seen since the last war to end all war ended as a result of anything but technological developments and prolonged peace
Modern research agree that there was no 'long depression'. Its an invention of depression era economists who just looked back in history and said 'there was deflation, therefore there was a depression'. There have been multiple books on this but somehow this myth never dies because the left has put it as part of their narrative.
It was a period of sustained growth with recession in between but a strong avg.
I don't really care about inequality and I have never said it was a period of equality, if inequality was high during this period is because it was a new age of globalism and mass production. Of course the first people into that are gone be richer, but if you look at the consumption for everybody its absolutely clear that it was a period of improvement for most people.
Inequality does not automatically mean that the system was unfair or bad.
Secondly, its not wrong the imperialist polices by the US and others gave them some access amount of money and some people profited from that. However, you simply can not explain the amount of growth by point to exploitation of Banana republics, the numbers simply don't add up.
Claiming that companies like the East India were a replacement or somehow economically equal in effect to feudalism is totally wrong. In fact the amount of government granted monopoly was far, far lower during that time. Domestic monopolies were largely removed and trade monopolies were in fact far weaker then most people seem to think. It was possible in the umbrella of the East India company to have basically independent business and trade voyages. This is also how the stock market was invented in the Netherlands (btw without government protection or approval).
I never said a single thing about socialism and I would never claim that Smith was a socialist. I have no idea based on what you made that up.
> My point is that both sides is essentially working from a historic narrative thats more myth then reality, and that it's really hard to explain the incredible increase in wealth that we have seen since the last war to end all war ended as a result of anything but technological developments and prolonged peace
I do not accept this 'balance' view just because its balance. Growth does not magically happen when technology is around and their is peace.
These things have actually been studied by economists and there are tons of country back then and now that live in peace and that have access to those technologies, and you they don't have growth.
Also, technological progress is not automatic, its not a magical thing that just happens. Technological progress comes when people and companies try to improve their position in the market and produce things cheaper or better.
People like the 'evil' Robber Barron were actually some of the most important in that. Standard oil made a lot of innovations in all stages of oil production and so on. However it is not just them but millions of people who lived and worked back then.
Global capitalism and the global gold standard was an unqualified success that produced the largest growth spit in human history up to that point and it was not slowing down before WW1.
Capitalistic democracy tend to distort to an organization influenced by lobbies and corporations, and in the long run governments have to take that and pay back by allowing monopolies and their clients.
In a benevolent dictatorship, corporations can't have a big influence on government. It's clear who is more powerful, and benevolent dictator can actually care more about the actual wellbeing of the people more than some democratically elected government which is just a proxy for big corporates.
Pretty dystopian.
The problem is finding anyone who's truly 'benevolent' or would stay as such once they've got power. It's the same issue we see with a lot of systems; in everyone was a perfectly rational, decent person who only did what was right they'd be a utopia, but that's never the case.
But most of us don't want that kind of equality...
150+ years of “guidance” by experts, stewards of industry, and government making claims of operating roughly along that framework
And this is where we are
Humans are the problem with every social system they have built. Humans bring it down because humans get sick of propping up the dead past
These silly abstractions rely on getting everyone on board and the ones that aren’t are treated as heretics
Capitalism has never been about a free flow of capital and information
It has since its beginning been inherently about benefiting the owners who, due to HUMAN nature, not government which is used as a straw man, an abstraction away from reality (humans are doing this, not “government”)
Our economics, including capitalism are, like Trump, a byproduct of the broader cultural feelings. The words and attitudes flow; might and power bring gains. I will fight to protect them. Capitalism
You can wave the math around and I’ll say ok yes they followed the rules of math. But it’s applied to the wrong context
Humans are corruptable, emotional first animals. Capitalism manipulates that reality to favor conversation and action in support of owners
It’s inherently intended as a framework to control conversation; protect my stuff and way of life
It’s another religion. Belief and support of it are rewarded. Anything else and you starve
In the land of the free. Ha
The nature of Capitalism is always to press for this. Like a liquid, it will find any crack in your Democratic system to permeate.
The answer is not no, or even not exactly, the answer is probably always at least a little. Democracy's job is to make it as little as possible.
In America it seems we have gone the other direction once you start to dig in. See: political ad season and SuperPACs.
> a. that's corruption, not capitalism
I can swear there is a name 19th Century critics came up for the politico-economic system then dominant in the developed West where the State, starting with the system of property rights and extending throughout all of its functions, is organized to serve the interests of and reinforce the power of the owners of the means of production, and it wasn't “corruption” (though that would have been a decent name, too.)
For the love of all that is holy, please don't comment unless you've read the article and want to discuss what it is trying to say.
(╯°□°）╯︵ ┻━┻
Maybe democracy is a fragile construction at its core or maybe all political systems have an inherent fragility to them.
Is freedom a threat to democracy? Yes, it can be. Freedom to go around killing your political rivals and their supporters is definitely a threat to democracy. Absolute freedom is anarchy, and it's horrible for anyone who is not the most powerful. It's great for them, though.
That's a hyperbolic example. But the freedom of corporations to completely capture political parties and wrest the nation's tiller away from the people and hog it all to themselves is definitely an existential threat for democracy and our well-being. To allow their absolute freedom is a threat to our basic freedoms.
Therefore if you want a properly functioning democracy you will need campaign finance laws which are inherently restrictions on speech. And even campaign finance reform might not be enough now that we are in an era of constant propaganda that is able to lay the ground work of influencing people outside of election cycles.
If Polanyi had considered the above he wouldn't have come to the conclusion that the two possibilities are either socialism or fascism.
The prescriptions - social welfare, etc - at the end of the article are known. The question is why they haven't been implemented in the US (they have in most other Western counties to various degrees).
I address other points in another comment below.
The core idea of capitalism is that ownership of companies is based on invested capital not people.
Also see https://en.wikipedia.org/wiki/East_India_Company
I think it's better to discuss individual things like private property, capital ownership of companies, monopolies, free markets, consumerism, imperialism (along the lines of Standard Fruit Company) etc. on their own merit, not throwing everything on one pile - even if things interact, influence and lead to each other.
IE capitalism with some elements of socialism to preserve individual liberties and dignities when economies slow down. Which sounds reasonable to me as a capitalist but also as a human being.
Well, then the answer is "yes". The whole issue being debated here is whether capitalism inevitably leads to a concentration of wealth which can then be leveraged into political power to create more concentration of wealth in a positive feedback cycle. The theory goes that after a couple iterations of that cycle, the wealthy will dismantle the social safety net entirely so they can cut their taxes.
Which is exactly what we're seeing right now.
2) The wealthy cutting their taxes does not necessarily mean the social safety net has to be dismantled. You can have lower taxes and a high safety net. It all depends on what your tax revenue is and where you spend it. The US has trillions in tax revenue coming in every year, and yet we had something like 60 billion dollars of medicare fraud in a single year, exorbitant spending on useless military ventures, etc. If we slashed wasteful spending and fraudulent activities at the governmental level, we could afford a lot more safety net with less tax revenue.
The issue is that cronyism in government results in government only ever being satisfied with getting by with more funding and more budget, and never less.
No, that's a highly theoretical model that doesn't exist in the real world.
> When concentrations of wealth are leveraged into political power, you have cronyism in the government. That's not a fault of capitalism itself.
No True Capitalism eh? Why would a capitalist not use their capital in whichever fashion would lead to gaining even more wealth? Whether that be monopoly, collusion, or political power?
Using capital as leverage for political influence is not a central tenet of capitalism. You can be a capitalist and remain entirely outside the political realm. Some capitalists are known to use their capital for expensive philanthropic ventures or to support candidates who want to raise taxes.
Why did you ignore my comment about tax revenue and spending, by the way? That was the meat of the post.
If capitalism is based around rational self-interest, why would anyone exclude political power as a means of increasing their wealth? It would be deeply irrational to avoid such an avenue.
> It does exist in the real world, although it can sometimes become obfuscated by government regulation and intervention. Example: Entering the pharmaceutical space to produce cost-effective generic medicines in order to steal market share from the big pharmaceuticals is hard because of government red-tape.
Yes, regulations will interfere with the unfettered pursuit of profit, but that's by intent.
> Why did you ignore my comment about tax revenue and spending, by the way? That was the meat of the post.
Because it didn't really seem to make much of a point. Yes government spending priorities could be different and I'm sure there's wastage that could be lessened - although I'd guess less than you think. Cronyism exists in any organisation of more than one person.
Not true. It is in our best and most rational self-interest to participate in philanthropy and in building a nice society that we can live in, enjoy, and make a profit in. Capitalism and philanthropy and a social safety net are not mutually exclusive, which is why (like I already said) there are capitalists who vote for candidates who want to increase taxes and increase spending on social goods and services.
In fact I'd argue that it's only capitalists who can properly invest and sustain a strong safety net. That's why countries like Switzerland and Denmark are capitalist countries.
> Yes, regulations will interfere with the unfettered pursuit of profit, but that's by intent.
The example of it being hard to enter the pharmaceutical space to produce cost-effective generics is an example of government regulations prohibiting cost-reducing competition.
You can pursue profit while offering a good or a service that is less expensive and higher quality than the alternatives.
> Because it didn't really seem to make much of a point. Yes government spending priorities could be different and I'm sure there's wastage that could be lessened - although I'd guess less than you think. Cronyism exists in any organisation of more than one person.
But the point was that it isn't capitalism that is responsible for that cronyism. And that the wealthy wanting tax cuts does NOT mean that the wealthy need to dismantle the safety net in order to get their tax cuts. We can afford both tax cuts and a safety net if we eliminate cronyism in the government.
If by “capitalism” you mean the real-world economic system for which that name was coined by it's critical you are wrong.
If by “capitalism” you mean the abstract theory created to provide propaganda to justify that system after it already existed, you are, well, still wrong, because that propaganda tool serves to protect the actual source of the problem.
> And that the wealthy wanting tax cuts does NOT mean that the wealthy need to dismantle the safety net in order to get their tax cuts. We can afford both tax cuts and a safety net if we eliminate cronyism in the government.
The wealthy don't want tax cuts independent of cronyism and social safety net, they want cronyism in their favor, including particular forms of tax and social safety net cuts.
Capitalism does not appear to have a stable mode with a low Gini coefficient. Power that derives from wealth becomes concentrated, which is clearly anti-democratic.
Democracy is only viable as a decision-making process in societies where everyone is more or less equal. When people gain power at the expense of others, the result is that the system may remain nominally democratic, but becomes more and more of a plutocracy.
In Marx's view, the abuse of the 99% by the 1% would inevitably lead to revolution, violent or otherwise. He then tried to come up with a method of economic organization that could be fair and stable after that revolution. It's not clear that this method has ever worked on a scale larger than a kibbutz or cooperative, but it's also clear that most families are run as communes, though this is rarely discussed.
Somewhere in the trek from startup partnership to corporation there is a shift from commune-like organization to dictatorial/plutocratic organization. I don't know if anyone has done an organized study.
Interesting observation. I'm not saying I disagree but growing up in an Evangelical religious culture (which describes much of America), this was definitely not the case. Men, specifically husbands/fathers were considered superior than other members of the family.
It's still pretty early days but right now you can create your democracy based DAO in a couple of minutes with no programming. You can issue tokens, vote and and tie in any action of a dapp to another action (like transfer of tokens to the result of a vote).
I think it's an interesting vision of a future where you can very easily create programmatic cross-border organisations that can have economic value creation attached to them, and operate based on how the token holders vote.
Hunter-gatherer groups also operate on a cooperative basis where food sharing is an integral part of their social organisation. The trouble is whether this sort of model scales beyond Dunbar's number, something that few political models seem to take into account IMHO.
There is also little evidence that economiclly freeer country are more unequal or that have a lower share of wealth amoung the poor.
> It's not clear that this method has ever worked on a scale larger than a kibbutz or cooperative, but it's also clear that most families are run as communes, though this is rarely discussed.
This is actually not rarly discussed. Capitalist thinkers like F.A. Hayek and Adam Smith did actually think about these problems quite carefully. Sadly people like him are simply ignored by much of the leftist marxist crowd becuase they are just evil capitalist handmaidens.
If you read Adam Smith two books 'Wealth of Nation' and 'Theory of Moral Sentiment' it is quite clear how he fought about this. Hayek made this into a more coherent theory.
As you abserve amoung familiy and friends (evne in tribes) we do not engadge in property rights and trade. The problem is that humans devloped in these communities and to attemed to scale the same way of thinking and organisation to a macro society is impossible because of information and insentive problems.
Hayek makes distinction between micro cosmos and macro cosmos where in the small you would not want to run it like a market, but it would be equally damaging to attemped to apply the micro cosmos rules to macro cosmos.
In fact psycology has made it perfectly clear that humans simply do not have the intellectual capacity to relate to millions of human that they don't know in anywhere close to the same way the do to the humans they know.
uh, how would this not be propaganda against the middle and upper classes?
No.
In fact, you cannot have the one without the other.
I swear, an-caps just don't consider the actual consequences of their ideology. Just once I wish y'all would think something through all the way to the end and consider the possibility of non-ideal situations.
If enough people get that change of rules, democracy is pointless.
As the saying go, democracy is the worst kind of system besides all the other systems.
No system is perfect but a democracy based on capitalism is as good as we know how to make a system because it handles "irrational agents" fairly well.
The right way to approach this is to look at how is capitalism a threat to democracy and then make sure we have the proper mechanisms to deal with that.
Imperialism has feudals,communism has party members, totalitarianism has oligarchs (and friends of the leadership) where as democracy has the 1% and their cronies.
Corruption is not an ideology but a moral and ethical failure. One can maintain an uncorrupt conscious a character of integrity (when it comes to politics at least) regardless of the system of government.
Money,power and a sense of security are all deceptively corrupting vices. Corruption is prevalent in any government that tolerates people who have failed to overcome those vices as politicians and public officials.
It's not capitalism or lack of it that is corrupting but rather a society that tolerates what it knows to be vile and filth in exchange for a bigger picture or in pessimistic complacency towards the ruling class.
You can't have political freedom without economic freedom.
And if a good can be owned and inherited it can be used restrict other peoples access to said good, And if economic freedom can be used to restrict freedom it can be a tool of oppression.
When Marx talked about how property was the inevitable bane of Smiths ideals he was not just hallucinating but basing his critique on the failed attempt to create equality and freedom through capitalism he was living in.
The problem is of cause that while Marx got the criticism right Engels failed to get the solution right.
I would argue the article is very nice example of what is sometimes called history as popular myth. Many historical periods or events have many different interpretations and one is favored depending on politics. This piece nicely collects all of these and makes a nice overall story out of it that then perfectly leads into the politcal system favored by all non-communist modern leftist, scandinavian capitalism. How could anybody disagree with this logical chain?
On thing that bugs me is that recessions are only blamed at those in power during the recession, while ignoring structural problems that existed before. It all only went bad in 1973, before that it was awesome, nothing happened before is responsable for the problems.
Also calling the economy of the 60s 'Keynsian' is just a slightly strange leftists phrase that is not really used by econnomists. Keynsianism has perticular technical defnition, it does not mean big government with regulation. Many this about this version of the 60s and how the left loves to call it 'Golden Age Capitalism' and then follows it up with 'but it was actually Socialism, look at the marginal tax rate'. This is a highly stylised version of events works thanks to selective selection of metrics.
Most economist agree that the Great Depression was caused by central bank mismangment. We know know this quite well, and people like R. G. Hawtrey (worlds most well known economsit back then) prediced the Great Deflation pretty exactly, with the correct explaition that we still use today. It had nothing to do with free markets, or the evil small government polices of the 20s. Much the same argument could be made about 2008.
Again, one can not take account of the whole article in single comment, but I would just point out that there are many different interpretations of these events. One could easly turn it around and tell a equally convincing story with the opposite point.
https://www.amazon.com/dp/B000FC0ZB2/ref=dp-kindle-redirect?...
Basically, it explores how democracy and rule of law are fundamentally not reconcilable, especially when ethnic/religious tensions are inflamed. If an ethnic immigrant minority somehow gets influence (economic or political) people get rapidly irritated. Look at Jews and Chinese. The tyranny of the majority is not compatible with the rule of existing laws, when the existing laws can be changed with the majority.
[1] https://www.weeklystandard.com/adam-keiper/in-suicide-of-the...
In a democracy, people are in theory given a level playing field through voting that means that Bill Gates's vote is just as valuable as anyone else's.
In capitalism, people are given the ability to create value to their fullest extent. A single individual could find him or herself creating value outstripping that of thousands of people. Even on small teams, there are great deviations in contributed value. Capitalism is highly volatile, and I would argue the stronger and more natural system as compared to democracy.
Both democracy and capitalism are capable of generating evil and tyranny. The intent of democracy is to create a foundation for a stable society in situ. I think it's very possible to create a democracy that does not progress. On the other hand, capitalism is innately progressive via market competition and trade.
Technological progress and social progress seem to have an odd dance. The goal of technological progress is to create more fit capitalist entities which compete better in markets, but individual consumers are the end route fitness function. The goal of social progress is to elevate the standard of living for individuals, but it might not be easy to prove that democracy is the best known system for raising that standard of living, because so much of one's standard of living is defined by technological progress.
I would argue that capitalism is a more natural system than democracy, and thus more durable. A healthy democracy is an artificial system of good, and a perfect democracy cannot exist in the real world. Again and again, democracy has shown itself flimsy during difficult times.
In capitalism people have the ability to create value to the extent they have the capital to do so, a requirement which excludes most people from achieving what they could.
For me, learning how to operate a business required a lot of reading, failure, and bad decisions. For someone who has easy access to the knowledge that I had to work hard to attain, becoming successful has a much shorter path. For someone who doesn't even have a map (many people in poor or socially disadvantaged communities), it requires a level of tenacity and drive that is very rare.
So while I agree with you that most people are excluded from maximizing their potential, I think the root cause is not a lack of capital, but a lack of knowledge about how to interact with capital.
And do you not think that this is a function of how much capital one has access to in the first place? Leaving aside the research showing how poverty affects development, those born to families with wealth will have both more knowledge of how to interact with capital and more access to capital in general.
You seem to be both acknowledging that there is a stacked deck and claiming that there is a level playing field where everyone can achieve their true potential.
And mercantilism which is what most economist is promoting as capitalism is basically feudalism by economic means and as such pretty much inconsistent with democracy the second you have a zero sum economy(which the west will for the foreseeable future be facing), especially when you remember that feudalism rose out of the concept of hereditary property not divine right(that came much later) as most textbooks state.
Weather capitalism is compatible with the real world is a much bigger question that few economist dare to ask because the last one to do so ended up founding communism as a response to the complete failure of Smiths actual ideals to survive in the real world.
The premises of the article is that the free market is to cruel for a democracy and that when it demands a sacrifice to greate people will tend to vote for populists
There is nothing in the article concerning corruption or propoganda.
The Chinese Communist Party certainly was worried that capitalism would pose a threat. Turns out the Party is doing just fine.
"capitalism", i.e., a market-based economy is flexible and can be harnessed to serve whatever purposes a society desires.
So, no capitalism is not a threat to democracy, or communism for that matter.
Let's not forgot that capitalism is a recent invention. Kings and emperors were imposing their rule on their poor subjects without the help of free market economies for most of human history.
Right wing resurgence is back because the parties of the left forgot who gave birth to them - the working class. "Working class" is anachronistic now. The children of the working class became middle class. The new working class is now the middle class, increasingly being hollowed out.
What's to stop authoritarianism:
1. remove proportional voting. Coaltions allow parties to divide up the electorate. On the other hand, forcing parties to win 50%+1 of the vote forces parties to take broad-based policies that appeal to wide swathes of the electorate.
2. Invest in a social safety net. Education, healthcare and affordable housing promote social mobility, and more importantly, give peace of mind to those in the middle class who are afraid of losing the gains made by their parents.
3. Campaign finance reform. Its easier to turn out the vote and raise funding when parties turn to identity politics because nothing is more personal - and fires one up more - than appeal to one's identity.
Identity politics is cancer on democracy. Both left and right play the game and identity politics should be banned in a liberal (the John Stuart Mill kind) democracy.
4. Ban targeted political advertising. A liberal democracy needs a shared public space, and a discussion among all voters. Targeted political advertising breaks up that public space into millions of shards. Another option could be to force parties to post publicly all political adverts for everyone to see.
I ought, indeed, need to know what a party's policies are regarding pensioners or education even though I am neither a pensioner nor have children. Why? Because my taxes will be funding such items.
5. The left needs to be remember its origins. Sounds simple eh?
6. Finally, we need to drop the left-right way of identifying policies. It reduces policies which impact people and society into a basic for/against divisive manner. There is a better way.
Enough for today :)
It's about whaat I'd expect if you'd asked a diverse group of 1550s Europeans to civilly diiscuss Catholocism vs. Reformation.
(I've spent a fair bit of time researching the history of the notion of free speech. Among northern Europeans, there's generally been a specific carve-out against free speech to Papists, as they were frequently referred to....)
There are only four references to the key individual within the article, Karl Polanyi. Three of those reference the lack of reference to him. (I've just added a fifth reference, though also of a nonproductive meta-commentary.)
There are several likely reasons for this. One is that "capitalism" and "democracy" are themselves both poorly defined, and cultural shibboleths: signifiers of group affinity far more than semantically functional terms. I'd read economics myself ay uni and would have been pressed to give aa coherent definition until relatively recently. Even now, that's more by calling up a definition, or set of definitions, than something that comes readily to mind.
E.J. Mishan was a Chicago-trained, though very much not a Chicago-scool, economist of the 2nd half of the 20th century. He examined, and questioned, many fundamental precepts of economics, including the meaning and definitions of "free market". (Close to though not identical with "capitalism".)
Mishan notes that "free market" may refer to one or more of the following:
1. The private ownership of capital, or productiive (nonhuman) assets
2. The private management of economic enterprise
3. The decentralization of economic enterprise
4. Competitive enterprise
5. A price system
6. A market system
He also notes that these definitions my either rely on, or oppose, one another. E.g., pricate ownership (1) tends to centralisation, opposing decentralisation (3).
http://booksc.org/ireader/28521331
https://doi.org/10.1080/00213624.1975.11503319
Other authors, of late Naomi Wolf in Shock Doctrine, have pointed out the affinity of free-market advocates, Milton Friedman in particular, with authoritarian and genocidal dictators. Similar parallels were drawn in the 1930s with fascist Italy and Germany, and you can find similar sentiments in the works of J.S. Mill and Adam Smith.
But for discussion, HN can and should do far better.
* You may recall Peter Thiel's argument that democracy and "freedom" (i.e., his freedom to act as a capitalist) are incompatible, and therefore we should limit the former. Thiel is close to the U.S. president, and his people are advisors in the White House and other branches.
https://www.cato-unbound.org/2009/04/13/peter-thiel/educatio...
* Also, the recent U.S. Secretary of State, as well as other members of the administration, openly said the U.S.'s foreign policy should prioritize "economic interests" over democracy and human rights.
https://abcnews.go.com/Politics/tillerson-pushing-human-righ...
* Finally, as much as HN doesn't like to discuss this issue, we also can't bury our heads in the sand: The nationalist and racist politics in the U.S. are also anti-democracy,[0] and by devaluing democracy they open the door to capitalism-over-democracy. Probably not coincidentally, the nationalists and the capitalism-over-democracy people (like Thiel and Tillerson; let's call them oligarchs) ally in the coalition that supports Trump and the GOP. For example, the GOP actively works the limit voting, the foundation of democracy, by people they don't like.
That coalition, of the nationalists/racists and the oligarchs, are a threat to democracy in the U.S. (and probably elsewhere). It's only an anecdote, but a wealthy person whom I had respected intellectually told me, 'I voted for Trump and I'd vote for him again - I'm a businessperson and business is good'. Their argument is implicitly framed around the idea that capitalism is all that matters.
And I'll add that it's very short-sighted: You only need to look around the world and see that democracy breeds economic prosperity like nothing else in the history of humanity. The democracies are all the wealthiest countries in the world; the corrupt oligarchies are all poorer, and had been for millennia before democracy. In fact, the wealth of corrupt oligarchies today comes from selling to wealthy democrats and profiting on the peaceful international order and world trade established by the democrats. The world of corrupt oligarchies (and monarchies, etc.), before democracy, was poorer by orders of magnitude.
...
[0] Why are nationalism and racism anti-democracy? The necessary foundation of democracy is universal human rights; for example the founders of the United States made it the basis of the Declaration of Independence: "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights ... That to secure these rights, Governments are instituted among Men". On a practical basis, if the other person doesn't have rights then neither do you; if it's ok for someone to take away their vote then why shouldn't they take away yours? Nationalism and racism say that rights are not universal at all, but that they depend on nationality and race.
It may not provide much security for individuals, but it is very effective at self-perpetuating the scheme.
> The idea that authoritarianism attracts workers harmed by the free market, which emerged when the Nazis were in power, has been making a comeback.
Makes me disappointed for the state of discourse that occurs today. The article itself is better than the subtitle made me infer - ending essentially with a nuanced 'No'.
But these transparent attempts to make you form an emotional response to an issue by eliciting images of Nazi Germany I find borderline disrespectful.
Today we have a system where gains are privatized, losses are socialized, and market-participants can coerce their elected officials to tilt the market in their favor. This is not capitalism.
Edit: Downvotes but no answer to the question?
(This is similar to the way some people use “socialism” to mean something like the Cultural Revolution and completely ignore the existence of e.g. European and especially Scandinavian examples)
No, search engines are the solution to massive amounts of content.
Greed isn't the biggest threat to democracy. Democracy (or any other form of government) is the solution to whatever set of behaviors are undesirable in the ungoverned.
It just needs to be limited. You can't have lassis-faire capitalism forever because the people who are most successful will change the initial conditions and it will no longer be lassis-faire. So you need some kind of control outside the free market. The free market alone is not corruption-proof in any way.
Greed is a correctly pejorative term for pursuing power and wealth beyond what people actually need to live well enough. Self-interest prior to reaching that point is not greed.
Capitalism is defined as private ownership of means of production and core resources. It doesn't inherently require greed.
I agree with your second paragraph, btw.
This article is predicated on using democracy as a synonym for constitutional representation, which it isn't.
Democracy literally means rule by the people: majority rule. If you can't get married because you're gay, that is democracy at work: the majority doesn't like some aspect of your life, and that's that.
Democracy can be de facto a form of fascism.
* liberal here meaning political liberal (JS Mill liberalism), and not what is understood by "liberal" in US politics.
There is an overlap between democratic republics (or, to use the less common phrasing, “republican democracies”) and limited representative democracies, but they aren't the same.
The US Founding Fathers copied England, and Rome's model but replaced the sovereign with a President.
Representative democracies are necessarily republics - although some, like my country, skip the upper house. Rome introduced consuls / republican model because the population was too large, unlike the Greek polis, to be politically manageable. Rome of course was not a democracy.
*or monarchic. I am away from my books so cannot confirm exactly the term. Sorry.
Republican Rome was distinguished from both preceding and succeeding Roman governments by not having a sovereign head.
It's a constitutional monarchy based on a parliamentary system.
The article might more properly ask the question “is capitalism with fig-leaf democracy inherently unstable”?
But there are systems in place where voting is mandatory. Wouldn't studying the political knowledge of these countries in comparison to countries with similar socioeconomic demographics allow you to determine if mandatory voting leads to more effective democracies?
No. Human beings who put money and control of land and resources over and above the welfare of other human beings are a threat to us all and always have been.
I wish sociopathic hypergreedy control freaks were viewed the same way we perceive pedophiles instead of being rewarded.
Do we claim that capitalism cannot produce hyper-greedy sociopaths? Because I would argue that it distills those people better than most systems. We need some form of modified capitalism which has some checks and balances. We did have that system for a long while, but the controlling agencies got captured by private interests and we can all plainly see the risk involved there.
But it's pure capitalism. People who say pure capitalism would have an even playing field discount the possibility that the winners on that level playing field would change the playing field to benefit them forever. What is keeping the playing field level? Not the market. The market doesn't limit systemic drift.
I'm not ok with intervencions, like the banks bailout of 2008, the the goverment just save banks that should have break. This kindo f intervention isn't fair form most of the market, and should be avoided.
Even if it means a global market collapse and depression?
While there are workarounds, I don't want to spend more than 2 seconds opening an article (most the time it isn't worth going to google cache, some archive, or doing the fb redirect). I dislike that it is effectively a dead link for many people and that it is being shared on the front page of a major aggregator. It is poor user experience to be opening dead links and really trains me against visiting certain sites.
I would absolutely pay 5 cents to read an article. There is no feasible way to do this small of a transaction with our current payment systems. I will absolutely not subscribe for 5 dollars a month.
And yet you wasted more time that that writing this comment, so we could waste more time that that reading it.
If your time is so valuable that you can't be bothered to put in even the few seconds of minimal effort needed to engage with the topic at hand, perhaps your time is better spent elsewhere.
>so we could waste more time that that reading it
No need to be nasty about it.