Capitalism v Democracy
No sooner Trump took office than the rhetoric of Trump subverting democracy started. Will capitalism and democracy turn on each other? Lets discuss.
As Trump took office in the US, the debate about billionaires taking over democracy and subverting it gained traction. Claims of crony capitalism (politicians beholden to billionaires) and electoral autocracy (some idiotic NGO’s words not mine) are being thrown around casually. The underlying observation is that unbridled capitalism will ensure that the democracy works for the super rich but not for the poor.
Having written a book titled Subverting Capitalism and Democracy, I posit that Capitalism and Democracy do compete. But there is more to unpack.
Servile democracy v servile capitalism
Crony capitalism is a misnomer. A crony means friend - sort of an equal. But this is not a relationship between equals.
The government officers and politicians are eager to serve the capitalist. When chairman or office bearers of NRA speak they listen - not both sides listen but enough people on both sides listen. If Zuckerberg, or Dimon were to say something both parties will listen. I read somewhere that 80% of 2013 US presidential election funding was made by 150 odd individuals. Please tell me their views carry the same weight as mine. This is servile democracy. Yanis Varoufakis once talked about Larry Summers telling him that if he becomes an insider then he will be given magical things. That is servile democracy not crony capitalism. This is a rich man trying to train a dog with dog biscuits.
There is other side to this too. In India businessmen are servile and politicians are the lord-masters. Things have changed - but not too much. It is easy to scuttle a truly new challenger to established business houses. If you take the paper spending on infrastructure - India can have better infrastructure than the very best countries in Europe - may be twice over. This is servile capitalism. There are whole networks that have come up around these politicians to create extortionist "business models".
Where will the fight between capitalism and democracy lead us is anybody's guess! But one thing is clear.
Capitalism and Democracy are competing systems.
Capitalism and democracy are said to be collaborating or complementing systems. But we should start thinking of capitalism (more specifically markets) and democracy (specifically government) as both competing and complementing systems together. They both allow the masses to exercise their opinions. Markets allows the individual to exercise it through buying i.e. through markets, democracy allows him to exercise it by voting in a government.
Now buying is something we do almost every day. Thus, we this part of the system is more evolved, sensitive. This system is also keenly improving itself to make sure the customer preferences are communicated to the top - it is thus more efficient than the political system. But let us remember they can be inefficient too.
The political system works like a broken market system. Here the opinion or choice of majority is forced on everyone. Imagine if markets worked like democracy - everyone may be forced to wear XXL size blue man shirt (coz majority favours it).
The learnings from markets are as much applicable in political domain as vice versa. I believe people have a limited opinion exercising capacity. If you exhaust it, people don’t mind having no options. In other words, so long as people have ample choice in their domestic purchase decisions they do not seek political choice. China understands this. So do some others.
But they operate in different spheres. So why is it a problem?
By now you must think that they operate in different spheres and so it is not a problem. But it is! Notice that there is a higher burden on government to make itself more attentive to all of its citizens not just the majority. It is higher than the burden on market to service all types of demand. That is because there is an alternative when market fails to understand the opinion of minority - some niche player can fill it. In case of government - there is no niche player alternative. Therefore, Government must be held accountable more than the capitalist. And it must uphold the rule of law so as to ensure capitalism is working smoothly.
Just think - Marxism is actually a response to servile politics impairing the demands of working class (the proletariat) by the capitalist (bourgeoisie) who were friends of politicians/rulers. Then the Soviet collapse was actually a response to the politicians exploiting the political system to their economic advantage. In some way, it is the reverse of the first wave.
So the point is...
We need a mechanism to ensure the bargaining power between capitalism and democracy is maintained. Without such a mechanism we may end up in some trap or the other.