Plutocracy vs. Democracy
us consider democracy first. In the United States we hear that
capitalism is wedded to democracy, hence the phrase, "capitalist
democracies." In fact, throughout our history there has been a largely
antagonistic relationship between democracy and capital concentration.
Some eighty years ago Supreme Court Justice Louis Brandeis commented, "We
can have democracy in this country, or we can have great wealth
concentrated in the hands of a few, but we can't have both." Moneyed
interests have been opponents not proponents of democracy.
Constitution itself was fashioned by affluent gentlemen who gathered in
Philadelphia in 1787 to repeatedly warn of the baneful and dangerous
leveling effects of democracy. The document they cobbled together was
far from democratic, being shackled with checks, vetoes, and
requirements for artificial super majorities, a system designed to blunt
the impact of popular demands.
the early days of the Republic the rich and well-born imposed property
qualifications for voting and officeholding. They opposed the direct
election of candidates (note, their Electoral College is still with us).
And for decades they resisted extending the franchise to less favored
groups such as propertyless working men, immigrants, racial minorities,
Today conservative forces continue to reject more equitable electoral
features such as proportional representation, instant runoff, and
publicly funded campaigns. They continue to create barriers to voting,
be it through overly severe registration requirements, voter roll purges,
inadequate polling accommodations, and electronic voting machines that
consistently "malfunction" to the benefit of the more conservative
times ruling interests have suppressed radical publications and public
protests, resorting to police raids, arrests, and jailings-applied most
recently with full force against demonstrators in St. Paul, Minnesota,
during the 2008 Republican National Convention.
conservative plutocracy also seeks to rollback democracy's social gains,
such as public education, affordable housing, health care, collective
bargaining, a living wage, safe work conditions, a non-toxic sustainable
environment; the right to privacy, the separation of church and state,
freedom from compulsory pregnancy, and the right to marry any consenting
adult of one's own choosing.
About a century ago, US labor leader Eugene Victor Debs was thrown into
jail during a strike. Sitting in his cell he could not escape the
conclusion that in disputes between two private interests, capital and
labor, the state was not a neutral arbiter. The force of the state--with
its police, militia, courts, and laws-was unequivocally on the side of
the company bosses. From this, Debs concluded that capitalism was not
just an economic system but an entire social order, one that rigged the
rules of democracy to favor the moneybags.
Capitalist rulers continue to pose as the progenitors of democracy even
as they subvert it, not only at home but throughout Latin America,
Africa, Asia, and the Middle East. Any nation that is not "investor
friendly," that attempts to use its land, labor, capital, natural
resources, and markets in a self-developing manner, outside the
dominion of transnational corporate hegemony, runs the risk of being
demonized and targeted as "a threat to U.S. national security."
Democracy becomes a problem for corporate America not when it fails to
work but when it works too well, helping the populace move toward a more
equitable and livable social order, narrowing the gap, however modestly,
between the superrich and the rest of us. So democracy must be diluted
and subverted, smothered with disinformation, media puffery, and
mountains of campaign costs; with rigged electoral contests and
partially disfranchised publics, bringing faux victories to more or less
politically safe major-party candidates.
Capitalism vs. Prosperity
corporate capitalists no more encourage prosperity than do they
propagate democracy. Most of the world is capitalist, and most of the
world is neither prosperous nor particularly democratic. One need only
think of capitalist Nigeria, capitalist Indonesia, capitalist Thailand,
capitalist Haiti, capitalist Colombia, capitalist Pakistan, capitalist
South Africa, capitalist Latvia, and various other members of the Free
World--more accurately, the Free Market World.
prosperous, politically literate populace with high expectations about
its standard of living and a keen sense of entitlement, pushing for
continually better social conditions, is not the plutocracy's notion of
an ideal workforce and a properly pliant polity. Corporate investors
prefer poor populations. The poorer you are, the harder you will work-for
less. The poorer you are, the less equipped you are to defend yourself
against the abuses of wealth.
the corporate world of "free-trade," the number of billionaires is
increasing faster than ever while the number of people living in poverty
is growing at a faster rate than the world's population. Poverty spreads
as wealth accumulates.
Consider the United States. In the last eight years alone, while vast
fortunes accrued at record rates, an additional six million Americans
sank below the poverty level; median family income declined by over
$2,000; consumer debt more than doubled; over seven million Americans
lost their health insurance, and more than four million lost their
pensions; meanwhile homelessness increased and housing foreclosures
reached pandemic levels.
is only in countries where capitalism has been reined in to some degree
by social democracy that the populace has been able to secure a measure
of prosperity; northern European nations such as Sweden, Norway, Finland,
and Denmark come to mind. But even in these social democracies popular
gains are always at risk of being rolled back.
is ironic to credit capitalism with the genius of economic prosperity
when most attempts at material betterment have been vehemently and
sometimes violently resisted by the capitalist class. The history of
labor struggle provides endless illustration of this.
the extent that life is bearable under the present U.S. economic order,
it is because millions of people have waged bitter class struggles to
advance their living standards and their rights as citizens, bringing
some measure of humanity to an otherwise heartless politico-economic
A Self-devouring Beast
capitalist state has two roles long recognized by political thinkers.
First, like any state it must provide services that cannot be reliably
developed through private means, such as public safety and orderly
traffic. Second, the capitalist state protects the haves from the have-nots,
securing the process of capital accumulation to benefit the moneyed
interests, while heavily circumscribing the demands of the working
populace, as Debs observed from his jail cell.
There is a third function of the capitalist state seldom mentioned. It
consists of preventing the capitalist system from devouring itself.
Consider the core contradiction Karl Marx pointed to: the tendency
toward overproduction and market crisis. An economy dedicated to
speedups and wage cuts, to making workers produce more and more for less
and less, is always in danger of a crash. To maximize profits, wages
must be kept down. But someone has to buy the goods and services being
produced. For that, wages must be kept up. There is a chronic tendency-as
we are seeing today-toward overproduction of private sector goods and
services and underconsumption of necessities by the working populace.
addition, there is the frequently overlooked self-destruction created by
the moneyed players themselves. If left completely unsupervised, the
more active command component of the financial system begins to devour
less organized sources of wealth.
Instead of trying to make money by the arduous task of producing and
marketing goods and services, the marauders tap directly into the money
streams of the economy itself. During the 1990s we witnessed the
collapse of an entire economy in Argentina when unchecked free
marketeers stripped enterprises, pocketed vast sums, and left the
country's productive capacity in shambles. The Argentine state, gorged
on a heavy diet of free-market ideology, faltered in its function of
saving capitalism from the capitalists.
Some years later, in the United States, came the multi-billion-dollar
plunder perpetrated by corporate conspirators at Enron, WorldCom, Harkin,
Adelphia, and a dozen other major companies. Inside players like Ken Lay
turned successful corporate enterprises into sheer wreckage, wiping out
the jobs and life savings of thousands of employees in order to pocket
These thieves were caught and convicted. Does that not show capitalism's
self-correcting capacity? Not really. The prosecution of such
malfeasance- in any case coming too late-was a product of democracy's
accountability and transparency, not capitalism's. Of itself the free
market is an amoral system, with no strictures save caveat emptor.
the meltdown of 2008-09 the mounting financial surplus created a problem
for the moneyed class: there were not enough opportunities to invest.
With more money than they knew what to do with, big investors poured
immense sums into nonexistent housing markets and other dodgy ventures,
a legerdemain of hedge funds, derivatives, high leveraging, credit
default swaps, predatory lending, and whatever else.
Among the victims were other capitalists, small investors, and the many
workers who lost billions of dollars in savings and pensions. Perhaps
the premiere brigand was Bernard Madoff. Described as "a longstanding
leader in the financial services industry," Madoff ran a fraudulent fund
that raked in $50 billion from wealthy investors, paying them back "with
money that wasn't there," as he himself put it. The plutocracy devours
its own children.
the midst of the meltdown, at an October 2008 congressional hearing,
former chair of the Federal Reserve and orthodox free-market devotee
Alan Greenspan confessed that he had been mistaken to expect moneyed
interests--groaning under an immense accumulation of capital that needs
to be invested somewhere--to suddenly exercise self-restraint.
classic laissez-faire theory is even more preposterous than Greenspan
made it. In fact, the theory claims that everyone should pursue their
own selfish interests without restraint. This unbridled competition
supposedly will produce maximum benefits for all because the free market
is governed by a miraculously benign "invisible hand" that optimizes
collective outputs. ("Greed is good.")
the crisis of 2008-09 caused by a chronic tendency toward overproduction
and hyper-financial accumulation, as Marx would have it? Or is it the
outcome of the personal avarice of people like Bernard Madoff? In other
words, is the problem systemic or individual? In fact, the two are not
mutually exclusive. Capitalism breeds the venal perpetrators, and
rewards the most unscrupulous among them. The crimes and crises are not
irrational departures from a rational system, but the converse: they are
the rational outcomes of a basically irrational and amoral system.
Worse still, the ensuing multi-billion dollar government bailouts are
themselves being turned into an opportunity for pillage. Not only does
the state fail to regulate, it becomes itself a source of plunder,
pulling vast sums from the federal money machine, leaving the taxpayers
Those who scold us for "running to the government for a handout" are
themselves running to the government for a handout. Corporate America
has always enjoyed grants-in-aid, loan guarantees, and other state and
federal subventions. But the 2008-09 "rescue operation" offered a record
feed at the public trough. More than $350 billion was dished out by a
right-wing lame-duck Secretary of the Treasury to the biggest banks and
financial houses without oversight--not to mention the more than $4
trillion that has come from the Federal Reserve. Most of the banks,
including JPMorgan Chase and Bank of New York Mellon, stated that they
had no intention of letting anyone know where the money was going.
big bankers used some of the bailout, we do know, to buy up smaller
banks and prop up banks overseas. CEOs and other top banking executives
are spending bailout funds on fabulous bonuses and lavish corporate spa
retreats. Meanwhile, big bailout beneficiaries like Citigroup and Bank
of America laid off tens of thousands of employees, inviting the
question: why were they given all that money in the first place?
While hundreds of billions were being doled out to the very people who
had caused the catastrophe, the housing market continued to wilt, credit
remained paralyzed, unemployment worsened, and consumer spending sank to
sum, free-market corporate capitalism is by its nature a disaster
waiting to happen. Its essence is the transformation of living nature
into mountains of commodities and commodities into heaps of dead
capital. When left entirely to its own devices, capitalism foists its
diseconomies and toxicity upon the general public and upon the natural
environment--and eventually begins to devour itself.
immense inequality in economic power that exists in our capitalist
society translates into a formidable inequality of political power,
which makes it all the more difficult to impose democratic regulations.
If the paladins of Corporate America want
to know what really threatens "our way of life," it is their way of life,
their boundless way of pilfering their own system, destroying the very
foundation on which they stand, the very community on which they so