Democracy in a neoliberal free-market capitalist system

See HERE for the provisional contents page of the study,

which gives you a proper chronology of sections.

Note: the content below is all in first draft format. It will change considerably during the time it takes for the study to be completed (especially by way of more academic support, generally). I post now ‘for interest’s sake’.

The central focus of this section of Chapter 4 is on democracy as a system that prioritises and perpetuates the spread and power of neoliberal, free-market agendas, thus minimising the potential for social change to occur. The neoliberal free-market capitalist system (hereafter often referred to as ‘the system’) is one whose raison d’etre is economic growth and expansion (the truth of this point has already been glimpsed in section 3.5), specifically the growth of a fiscal debt-based monetary economy, and via globalisation has been a primary accelerator of the ecological crisis. Note that the aim of this section is not to argue for an alternative to the neoliberal free-market capitalist economic system. This is noted because proponents of ‘the system’ tend to respond to criticism thereof with remarks along the lines of, “So what is the alternative?” This is a technique often employed to distract from the very real pernicious problems and mechanisms of the system under scrutiny.

Noam Chomsky[1] once responded to the question, “Do you vote?” with the following observation, an appropriate starting point for the analysis of this section:

I often do, without much enthusiasm. In the US, there is basically one party – the business party. It has two factions, called Democrats and Republicans, which are somewhat different but carry out variations on the same policies. By and large, I am opposed to those policies. As is most of the population.

Chomsky’s observation may seem wry, but it draws attention to the homogeny of a supposedly heterogeneous democratic political sphere. Chomsky is commenting on the United States of America, but as McChesney points out in the introduction to Chomsky’s book, Profit over People (1999: 10), the USA is “the spawning ground of liberal democracy”, which is to say the American model of democracy is applicable when discussing democracy in general considering the extent to which the model has via globalisation been implemented in almost all countries. Speth (2008: 31), in The Bridge at the end of the World, agrees: “With increasingly few exceptions, modern capitalism… is the operating system of the world economy”. Speth (Ibid) is very specific about the type of ‘operating system’ he is denoting, and it is clearly not exclusive to the USA:

I use “modern capitalism” here in a broad sense as an actual, existing system of political economy, not as an idealized model. Capitalism as we know it today encompasses the core economic concept of private employers hiring workers to produce products and services that the employers own and then sell with the intention of making a profit. But it also includes competitive markets, the price mechanism, the modern corporation as its principal institution, the consumer society and the materialistic values that sustain it, and the administrative state actively promoting economic strength and growth for a variety of reasons.

Chomsky’s singling out of this kind of policy – business policy – in the political sphere draws attention to the USA’s explicit capitalist ideology, and, it follows, a global domination of capitalism (as per Speth’s description above) in the political realm. McChesney makes this clear in the introduction to Chomsky’s Profit over People (1999: 9) when he states that neoliberal capitalism is “the defining political economic paradigm of our time”. ‘Our time’ is also one heralded by state spokespeople in general to be democratic, which is true in the sense that democracy is a political system where, ostensibly at least, leaders are elected via the voting process. However, democracy also has strong connotations of ‘government for the people. In Globalisms: the great ideological struggle of the twenty-first century, Steger (2009: 121), quoting Nadar, points out a serious problem for democracy when a monetary economy is in use: a “‘massive avalanche of corporate money’ has buried the democratic system of the United States”. Keeping in mind the aforementioned point that the United States’ democracy is representative of the globalised neoliberal capitalist political sphere, it is useful to consider more information from Nadar via Steger:

Government has been hijacked to a degree beyond anything we have seen in the last 70 years. It’s been hijacked by corporate power, the multinationals mostly. They have their own people in government. They run [for elections] their own people, they appoint their own people, they get corporate lawyers to become judges. And when that happens you no longer have a countervailing force called government arrayed against excesses of what Jefferson called ‘the moneyed interest’. Instead, you have this convergence, almost a phalanx, of business controlling government and turning it against its own people.

The above quote brings into view the important (and alarming) issue that was focused on in the section outlining Mill’s dangers of democracy, specifically the concern that liberty was in its nascent stages something that was conceived of as opposing  the state, but later became something over which the state took mandate via economic ‘hijacking’, as discussed by Nadar. The state may have at one stage in the history of democracy consisted of some regulatory bodies, but since the free-market economic neoliberal regimes of Reagan and Thatcher, deregulation has been a priority of this form of capitalist ‘democratic’ government. Speth (2008: 218) goes so far as to say that government has been “captured by the very corporations and concentration of wealth it should be seeking to regulate and revamp”. It is worth looking at the entire paragraph (Ibid) from which this sentence has been extracted for the clear relevance the themes raised have to previous sections of this study:

There are many reasons why government in Washington today is more problem than solution. It is hooked on GDP growth – for its revenues, for its constituencies, and for its influence abroad. It has been captured by the very corporations and concentration of wealth it should be seeking to regulate and revamp, a pattern that has now reached alarming proportions. And it is hobbled by an array of dysfunctional institutional arrangements, beginning with the way presidents are elected.

Liberty of ‘the people’ cannot prevail in the conditions described so far in this section, where the state is set up to prioritise business interests. Peter Barnes, quoted by Speth (2008: 218) explains:

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; capitalism’s primacy thus isn’t an accident, nor the fault of George W. Bush. It’s what happens when capitalism inhabits democracy.

Barnes’ explanation goes some way in justifying Speth’s following damning remarks about the state of democracy in America based on his research thereof. He (2008: 217) calls it “weak, shallow, dangerous and corrupted”, stating that it is “the best democracy money can buy”, and that the “ascendency of market fundamentalism and antiregulation, antigovernment ideology makes the current moment particularly frightening”. He later (2008: 219) explains, by way of Barnes again, that the notion of the state promoting “‘the common good’ is sadly naive. …We face a disheartening quandary here. Profit-maximizing corporations dominate our economy. …The only obvious counter-weight is government, yet government is dominated by these same corporations”. How do corporations achieve such influence? Speth (2008: 219) quotes Gar Alperovitz to explain: “the large corporation regularly”:

  1. Influences legislation and agenda setting through lobbying

  2. Influences regulatory behaviour through direct and indirect pressure

  3. Influences elections via large-scale campaign contributions

  4. Influences public attitudes through massive media campaigns

  5. Influences local government choices through all of the above – and adds the implicit or explicit threat of withdrawing its plants, equipment, and jobs from specific locations.

Steger (2009: 7) clearly agrees, specifically with the focus on points 1 and 5 regarding agenda setting and the influence on local government:

I contend that market globalism is a political ideology that has achieved dominance in our time. Espousing a hegemonic system of ideas that make normative claims about a set of social processes called ‘‘globalization,’’ market globalists seek to limit public discussion on the meaning and character of globalization to an agenda of things to discuss that supports a specific political agenda.

These ‘normative claims about a set of social processes’ used by ‘market globalists’ to ‘limit public discussion’ are factors that clearly prevent social change, whether the market globalists know it or not.

A frequently encountered pro-market claim made by market globalists, that “globalisation furthers the spread of democracy in the world” is one that needs to be addressed. Steger (2009: 84) points out that this “market-globalist claim is anchored in the neoliberal assertion that freedom, free markets, free trade, and democracy are synonymous terms.” This is an interesting point to consider in hindsight of something that was discussed when reviewing Mill’s dangers of democracy, namely that liberty (freedom, associated with democracy) was originally conceived of as being in opposition to the state. Clearly, then, freedom is not necessarily synonymous with the ideology of a state, and in fact part of any consideration of the concept of freedom (based on this historical approach) needs to consider limiting the power and extent of the state. ‘Free’ trade, ‘free’ markets, despite their misleading names, are worthy of serious scrutiny due to their state endorsements, never mind the extensive problems (discussed at various stages in previous chapters) associated with these explicitly capitalist systems. Steger (ibid) draws attention to the most common tactic used by neoliberals and neoconservatives to “generate support for the equation of democracy and the market”; note that this tactic is not to justify the sound logic of the equation of democracy and the market, but rather to use a red herring: the “discrediting of traditionalism and socialism”. As mentioned, such a tactic is a red herring, because the real issues and problems of ‘the system’ under scrutiny are overlooked and instead different topics altogether become the central focus.

There are, of course, supporters of the notion that democracy and economic development go hand-in-hand. Here is Steger (2009: 85) quoting Fukuyama:

Francis Fukuyama, for example, asserts that there exists a clear correlation between a country’s level of economic development and successful democracy. While globalization and capital development do not automatically produce democracies, ‘the level of economic development resulting from globalization is conducive to the creation of complex civil societies with a powerful middle class. It is this class and societal structure that facilitates democracy.’

Steger’s response (ibid) is that such a definition is a “’thin’ definition of democracy” in use in the neoliberal free market capitalist globalised world, a definition that “emphasises formal procedures such as voting at the expense of the direct participation of broad majorities in political and economic decision making”:

This focus on the act of voting – in which equality prevails only in the formal sense –helps to obscure the conditions of inequality reflected in existing asymmetrical power relations in society. Formal elections provide the important function of legitimating the rule of dominant elites, thus making it more difficult for popular movements to challenge the rule of elites. The claim that globalization furthers the spread of democracy in the world is based largely on a narrow, formal-procedural understanding of ‘‘democracy.’’

Steger (ibid) continues with some crucial analysis:

Neoliberal economic globalization and the strategic promotion of polyarchic regimes in the Third World are, therefore, two sides of the same ideological coin. They represent the systemic prerequisites for the legitimation of a full-blown world market. The promotion of polyarchy provides market globalists with the ideological opportunity to advance their neoliberal projects of economic restructuring in a language that ostensibly supports the ‘‘democratization’’ of the world.

No surprise then that in the previously encountered sentiment from Speth (2008: 218) he commented that neoliberal free-market government “is hobbled by an array of dysfunctional institutional arrangements, beginning with the way presidents are elected”. Steger has provided some strong grounds for scepticism about the electoral process. This concern is implicit in the quote from Chomsky that started the analysis of this section, where he comments that there is really only one party in the USA, the Business party. McChesney (1999: 11), in the introduction to Profit over People, puts it quite bluntly: “Democracy is permissible as long as the control of business is off-limits to popular deliberation or change, i.e. so long as it isn’t democracy”. Such ineffectiveness of the vote is one of the reasons identified by McChesney (ibid) for neoliberalism being “the immediate and foremost enemy of genuine participatory democracy, not just in the United States but across the planet”.

Another reason identified by McChesney (1999: 10) for neoliberal democracy being the ‘enemy’ of participatory democracy is to do with the pernicious social (and as will be seen, ecological) impact of the former ‘thin’ version of democracy. He explains that to be effective,

democracy requires that people feel a connection to their fellow citizens, and that this connection manifests itself through a variety of nonmarket organisations and institution groups, libraries, public schools, neighbourhood organisations, cooperatives, public meeting places, voluntary associations, and trade unions to provide ways for citizens to meet, communicate, and interact with their fellow citizens. Neoliberal democracy, with its notion of the market uber alles, takes dead aim at this sector. Instead of citizens, it produces consumers. Instead of communities, it produces shopping malls. The net result is an atomised society of disengaged individuals who feel demoralised and socially powerless.

It is clear from the above explanation from McChesney that he views people as socially and politically malleable: put them in an environment suited to encourage participation between people, and such interaction will likely occur. On the other hand, the latter neoliberal environment is one where the corporate free market motive of profit-making turns physical environments into ones where individuals are forced to perpetuate corporate profit-making. McChesney draws clear attention to the social consequences of the prioritisation of the market in a neoliberal democracy, but the ecological implications should be clear: consumers and shopping malls are symbols of the kinds of issues focused on in Chapters 1 and 2, and to an extent in Chapter 3 as well. This issue can be restated as the issue of ‘profit over people’, a concept that can be broadened to include ‘profit over the environment’ considering the ecological focus of this study. This happens to be the title of Chomsky’s 1999 book – Profit of People. In it, he writes (1999: 132) that the “the most effective way to restrict democracy is to transfer decision making from the public arena to unaccountable institutions: kings and princes, priestly castes, military juntas, party dictatorships, or modern corporations. The decisions made by GE affect the general society substantially, but citizens play no role in them, as a matter of principle”. It is fitting that Chomsky uses as an example GE, one of the world’s most influential and powerful players in the fossil fuel industry. The fossil fuel industry featured prominently in Chapter 2, with serious ecological consequences highlighted in Chapter 1. GE is one of a large number of corporations with more economic (and therefore political) power than most countries in the world, which can be seen in the following from Speger (2009: 120), who is again highlighting information offered by Nadar:

of the top one hundred economic entities in the world, fifty-two are corporations and only forty-eight are countries. Moreover, the gross annual sales of such huge TNCs as General Motors exceed the gross domestic product of countries such as Norway, South Africa, and Saudi Arabia. Shaping the globalization of commerce and finance in an authoritarian fashion, these transnational companies contribute to a widening ‘‘democracy gap’’ between ordinary people and their political institutions.

Steger (ibid) turns to Nadar’s explanation of how the widening of the ‘democracy gap’ occurs:

The global corporatists preach a model of economic growth that rests on the flows of trade and finance between nations dominated by giant multinationals – drugs, tobacco, oil, banking, and other services. The global corporate model is premised on the concentration of power over markets, governments, mass media, patent monopolies over critical drugs and seeds, the workplace, and corporate culture. All these and other power concentrates homogenize the globe and undermine democratic processes and their benefits.

‘Homogenisation of the globe’ is a useful term to use when considering not only the social and political impact of the domination of the free market neoliberal capitalist economic system, but also the ecological impact thereof. Democracy is undermined, as has been shown at length in this section , but so is the ecology of the planet, as seen in previous Chapters. So when Chomsky (1999: 132) says that the “‘corporation of America’ during the past century has been an attack on democracy”, one can legitimately add that it has been an attack on the ecologies of the planet as well. Remember here that the ‘democratic’ system of the USA as a symbol for the kind of ‘democracy’ that has swept the planet has already been discussed at the start of the section; what is said about the USA is relevant the world over. Chomsky (ibid) continues with relevant information regarding the issue of what prevents social change: the “so-called ‘free-trade agreements’ are one such device of undermining democracy. They are designed to transfer decision making about people’s lives and aspirations into the hands of private tyrannies that operate in secret and without public supervision and control”. It follows that secret operations (whether in the corporate or political worlds, worlds that, based on the analysis of this section, are really indistinguishable), in which decisions are made that affect the lives of millions, cannot be accessed by masses of people who would otherwise participate in a deep (as opposed to ‘thin’) democracy, and social change is thus prevented.

[1]     accessed 27 February 2015