Capitalism and Democracy

Introduction In his lecture Capitalism and Democracy, Gabriel Almond (1991) outlines the various ways in which democracy and capitalism interact with one another both positively and negatively, deciding that the modern welfare state is a good compromise of their conflicts. However the premise of the lecture becomes undone when wildly diverse ideas of both capitalism and democracy are used from point to point, making it impossible to draw any useful conclusions. For example Schumpeter sees that capitalism largely supports a democracy where people competitively campaign for the votes of the public in order to gain political power, where Marx states that capitalism subverts a democracy where economic decisions are made representatively within a commonly owned workplace and society. Perhaps Schumpeter might have changed his mind if the rejection of private ownership of the means of production was intrinsic to the definition of democracy. It is impossible to state that democracy and capitalism are both positively and negatively related if their definitions keep on changing, let alone come to the conclusion that democratic welfare capitalism produces [a] reconciliation of opposing and complementary elements of the two. The evidence will be re-presented in a manner taking the different definitions of both capitalism and democracy into account. First is capitalism: on one hand there is todays state capitalism, meaning the state intervenes heavily to protect the capitalist order; on the other is the free market, an idealistic conception of a completely unregulated market. Second is democracy: theres political democracy, the current system of Schumpeters elective competition; then theres workplace democracy, which is Marxs economic representation.

State capitalism and political democracy The first thing is to consider the positive effect of state capitalism on political democracy. Dahl observes that the only countries to achieve democracy are those which had predominately marketoriented economies, a hypothesis which is backed up with various statistical studies finding strong positive links between income and democratic institutions. It is very hard to deny the evidence that modern democracy has evolved with capitalism. However, with quotes such as Schumpeter stating that the bourgeoisie reshapedthe social and political structure that preceded its ascendency, it is clear that those who argue that capitalism supports democracy are providing a very neutral analysis using general definitions, simply measuring the impact of one on the other without delving into more normative explorations. Whether or not it is a good thing that state capitalism has led to political democracy is left unresolved. State capitalism and workplace democracy On the other hand, those who are looked at as holding the view that capitalism subverts democracy provide a much more philosophical view on how the two systems interact. Few would deny the causation between state capitalism and the modern democratic order, but many would see that this democracy is extremely deficient and deny that currently-existing capitalism has or would cause anything representing true democracy: that of worker control of their workplaces, having total say in their own economic affairs and receiving full product for their labor. Marx argued that a democracy within capitalism is merely a bourgeois democracy, which will result in continuing exploitation of the working classes despite any efforts to reform the state in a socialist direction, and Dahl saw modern democracy in the United States as defective due to the inequality produced by state capitalism. It can therefore be seen from the evidence in the lecture that democracy has been negatively affected by state capitalism in a normative sense, turning it into a less-than-ideal version compared to what it should be.

The free market and political democracy Here it is turned to how modern political democracy affects a truly free market. Considering the poor influence of a statist market on effective democracy, it would be unsurprising to see statist democracy result in a market that negatively affects the people within it. Friedman considers a set of basic rules that a government should abide by, beyond which both freedom and productivity would decline. An efficient allocation of resources is necessary for a prosperous society. Perhaps more important than the raw drive for liberty is the opportunities a political democracy provides to special interest groups to gain power. As time goes on, Olson argues, successful lobby groups gain more and more influence as policy is determined less by the people and more by governing elites. This concentration of power reduces the competitiveness of the market and regulates in favor of those special interests, leading to a state capitalism protecting the capitalist class far more than the free market would. As such the reverse hypothesis is supported: state forms of both capitalism and democracy hurt the decentralized versions of the other. The free market and workplace democracy Looked at last is what could take place of the current system; naturally the place to look is opposite to the state solution, namely workplace democracy and the free market. Dahls solution to what he sees as a democracy extraordinarily compromised by the current system of capitalism is to hand control of corporate industries to the employers who work within them. This would sharply reduce inequality as resources are now in the hands of the majority rather than controlled by the wealthy few. However unlike other collectivist solutions the market dynamic is still kept intact, providing a dynamic and efficient economy. In fact as power is less concentrated, the previous corrupt regulation and lack of competition will diminish and allow the truly free market to flourish. Thus it can be seen that the anti-state versions of both democracy and the market positively affect each other and also provide for a better society.

Conclusion The evidence presented within this lecture provides a compelling case for rejecting the current system of state capitalism and political democracy; oddly Almond pushes all the varying definitions into single arbitrary words and then uses this conflation to argue the exact opposite. His tongue only halfway up his cheek when pointing out that the fact that the state in Adam Smiths time was riddled with special privileges and monopolies might have traumatised the study of economics from conception, it is perhaps significant that it is inferred that all of that is past us. Certainly there is a positive connection between the concentrated corporatism of state capitalism and the lobby-racket of political democracy, but it is unlikely that is a good thing. Bibliography
Almond, GA 1991, Capitalism and Democracy, Political Science and Politics, vol. 24, no. 3, pp. 467-474.