Capitalism, Can’t Love it, Can’t Leave It, So Why Not Try Democracy?

It seems increasingly fashionable to dump on capitalism, a trend I heartily encourage.  In particular, Michael Moore’s latest film can be expected to accelerate this trend, “Capitalism, A Love Story.”  Check out the trailer here.  While it hasn’t opened yet in theaters, Michael Moore has already started making the rounds, appearing on Amy Goodman’s Democracy Now! and in a more low-key interview with Naomi Klein for The Nation.  At the end of his interview with Amy, she asks him if he’s a socialist…

AMY GOODMAN: In a word, would you describe yourself as a socialist?
MICHAEL MOORE: Well—
AMY GOODMAN: We have ten seconds.
MICHAEL MOORE: I’m a heterosexual. I’m, you know—I’m—I’m—
AMY GOODMAN: Six—
MICHAEL MOORE: I’m overweight.
AMY GOODMAN: —five, four—
MICHAEL MOORE: I’m, uh—
AMY GOODMAN: Michael Moore, here on Democracy Now!

Michael ducks the question the question with a chuckle.  And it’s understandable, because the S-word has been so completely demonized in our society that the wingnuts can get away with pinning the word on anything they don’t like, with most Americans clueless as to what it means (they used to do the same for liberal but that doesn’t have the same punch anymore, perhaps thanks to Obama who, while liberal in rhetoric, remains an avowed “centrist” much to progressives’ disappointment).

So if capitalism=bad and we can’t talk about the S-word, what’s the alternative?  Perhaps it’s time to re-examine these words, each of which seem like leftovers from some previous century, forgotten except in musty old Hollywood movies–until recently.

Certainly there is much confusion about capitalism.  For some, it equals “free markets,” the high holy of conservatism, where greed is magically transformed via the invisible hand into the best of all possible worlds.  And socialism equals its opposite, dictatorship by some creepy Stalinist government bureaucrat.

Both of these are fantasies, of course, but it’s hard to get people to dump them, they’re so deeply embedded in our culture.  Capitalism isn’t just markets in the sense of buying and selling goods and services.  It takes markets to a “higher order,” involving the buying and selling of capital–here is where it gets really confusing.

On the other hand, socialism doesn’t mean the government runs everything.  Socialism can better be understood as a social movement that pushes for expanding democracy so everyone could help run the economy, or at least that’s what socialism was mostly about until it became corrupted by Leninists who foolishly adopted the military model and tried to apply it to a backward country, but that’s a longer story.

Let’s drop the S-word altogether and use a different one we’re more familiar with and feel better about here in America, good old democracy, with a small “d.”  What people need to understand is that capitalism and democracy don’t mix, which is why we don’t really live in a democracy.  Having faith in a system where everyone gets to decide, I see “real democracy” as a solution.  So the question becomes, how do we approach what we usually think of as markets, the capitalist way or the real democratic way?

Now let’s see if we can’t get into the question of what markets are without glazing over.  The wonder of capitalist economics is that it takes something incredibly important, how we produce and distribute valuable resources, and turns it into tedious, technical jargon.  So let’s unpack it.

Real democrats don’t see markets as bad or good, it depends on what we’re talking about.  For example, selling computers may work perfectly well in a marketplace, as long as we have many sellers.  It will probably have to be regulated to prevent monopolization, because this seems like an inevitable trend when the victors drive out the losers.  On the other hand, markets don’t work for health insurance, as real democrats need to hammer home in the current debate.  The social goal is to provide everybody with reasonably priced health coverage.  Yet private health insurers have an incentive to eliminate exactly those people most likely to need their service.  Dumb system.  Single-payer works much more efficiently and effectively, as has been demonstrated in most Western societies.  Another example is roads.  Can you imagine the chaos if we had private ownership of our roads?  Or how about our police departments?  So the trick is to determine where markets work and where they don’t.  And where they do, enforce regulation such as the Sherman antitrust act.  Where they don’t, let the government run them.  At least in theory the government reflects what the people want, which is what democracy is supposed to be about.

Okay, that was the easy part.  Here it gets trickier.  Remember I talked about higher-order markets?  Capitalism is about converting wealth derived from businesses and redirecting it to other businesses based solely on profit.  It’s based on the assumption that profit is always the most important value in our society.  To the extent that these markets actually work, they can be incredibly efficient “machines” for expanding production, at least in the short run.  Yet in the long run, capitalists if left to their own devices will suck up all the wealth and resources from those at the bottom and redistribute it toward themselves at the top, causing the whole system to seize up.  This is why the union movement in a sense actually saved capitalism, because it drew wealth back down toward the bottom.  The same can be said for the New Deal, where big “D” Democrats created a complicated system for redistributing wealth that parallels the market system.  It doesn’t necessarily shift wealth to the bottom, but rather spreads it up and down.  For example, Medicare funds help the poor but go directly to doctors.  The other mechanism that spreads the wealth is the military-industrial complex, the method preferred by Republicans.  Without each of these, capitalism would freeze up as a rich get richer and the poor are no longer able to buy products.  Even so, some of those at the top have found creative ways to create bubbles that siphon off wealth from those below, such as Goldman Sachs, and this is what helped create the Great Recession.  But even if capitalism doesn’t self-destruct, it operates much like a virus, forcing everything to either grow or die.  And the things that do grow aren’t necessarily the things we want, like strip malls and soulless suburbs rather than meaningful community.  I could go on, but hopefully you get the point.  Capitalism sucks, but not necessarily markets.

So what’s the alternative?  What is a real democrat to do?  Michael Moore raises an interesting alternative in his film, employer-owned and operated companies.  These have been around for awhile, and to check out a success story take a look at Mondragon in Spain.  This would solve a related problem, that corporations are basically organized dictatorships or feudal kingdoms, pretty much top-down.  Unions are least organized on democratic principles, but they don’t fundamentally change this arrangement as they become self-perpetuating bureaucracies.  Worker cooperatives would be a tremendous advance, but they still doesn’t get at the “higher order” market problem.  Employer-owned businesses arrangements would still be at the mercy of capitalists, who could starve them for capital.  And how do they compete against corporations fed by wage-slaves making pennies an hour in developing nations?

So we have to look elsewhere, but we can build upon this idea.  What we need is a different kind of organization to replace the Wall Street bank, one that makes a conscious choice about where to put “capital” (we really need another word for this).  What we need is a democratic bank, at least one of these for each industry, with members democratically elected.  Let’s call them “democratists.”  Their task is would basically be to decide which businesses get the wealth.  Like capitalists, democratists could decide that profit as a measure of efficiency is important, but they would also want to inject social values into that marketplace.  For example, one of the biggest challenges today is moving from unsustainable, destructive forms of energy production to alternatives.  So democratists, getting a mandate from the people, would want to discourage dirty coal and encourage solar & wind energy.  Dirty coal is only cheap because we ignore the long-term costs of polluting the air, increasing global warming, and it’s unsustainable nature as we head toward “peak coal.”  So democratists would decide to shift “capital” toward the alternatives while urging the govenment to raise taxes on dirty coal.  Problem solved.  Notice that the market still exists?

Of course creating a real democracy is much harder than imagining an alternative to capitalism.  For that we need powerful social movements, working hard on the ground to promote a democratic vision.  We see potential elements churning as we speak, with a wider range of people than we’ve seen in decades losing faith in capitalism.  Unfortunately in the past the radical right has often managed to channel the fear and anger created by capitalism’s disasters to create a fascist movement, giving corporations and the Wall Street banks even more power.  This makes it all the more pressing that real democrats steer such powerful emotions in a more positive direction.