The Bishop and the Butterfly: Murder, Politics, and the End of the Jazz Age
    David Seaton's picture

    Is democratic capitalism in danger?

    “In the quest for growth, many countries have neglected to build a reliable system of social security that will help citizens buffer the market's volatility.(...) Democratic capitalism’s greatest problem is not that it will destroy itself economically, as Marx would have it — but that it may lose its political support.” Raghuram Rajan 

     

    Professor Rajan's idea that capitalism might lose its "democratic support" unless it protected its citizens with a reliable social net just wont leave me alone, I keep coming back to it over and over again... especially when the entire system's trend at this moment seems to be going in exactly the opposite direction: leaning toward reducing not enlarging "entitlements" and the worse things get, the more cuts are being put on the table and the more entitlements are being taken off.

    What exactly would "democratic capitalism, may lose its political support” mean?

    I take it to mean that under extreme pressure, a large number of citizens would be giving a serious look to other economic systems, specifically "democratic socialism", and they might be tempted to organize democratically to achieve that.

    If that were the case: what tools would the corporate system need to protect its version of capitalism from democracy?

    If you take that that question to form a paradigm, many disparate things in our political system begin to cluster together in interesting patterns.

    Look at the following snippets for a sample of what I mean:

    The Supreme Court on Monday blocked a massive sex discrimination lawsuit against Wal-Mart on behalf of female employees in a decision that makes it harder to mount large-scale bias claims against the nation's biggest companies. AP

     And of course we already had this:

    Overruling two important precedents about the First Amendment rights of corporations, a bitterly divided Supreme Court on Thursday ruled that the government may not ban political spending by corporations in candidate elections.(...) The ruling represented a sharp doctrinal shift, and it will have major political and practical consequences. Specialists in campaign finance law said they expected the decision to reshape the way elections were conducted. NYT - January 21, 2010

     You might say we are looking at a concerted plan of action:

    The Supreme Court, which winds up its term Monday, has once again shown itself to be highly skeptical of large lawsuits against big business, regardless of whether the suits are intended to protect workers, consumers or the environment. This year, a 5-4 conservative majority gave companies a stronger shield against class-action claims from consumers who said they were cheated and from employees who said they were victims of discrimination. The same five justices also blocked lawsuits against the makers of generic drugs for failing to warn patients of new dangers. And in a unanimous decision, the high court killed a broad lawsuit that sought to force the major power producers to limit the carbon pollution linked to global warming. LAT

     Now stir this into the mix:

    The Obama administration has long been bumbling along in the footsteps of its predecessor when it comes to sacrificing Americans’ basic rights and liberties under the false flag of fighting terrorism. Now the Obama team seems ready to lurch even farther down that dismal road than George W. Bush did. Instead of tightening the relaxed rules for F.B.I. investigations — not just of terrorism suspects but of pretty much anyone — that were put in place in the Bush years, President Obama’s Justice Department is getting ready to push the proper bounds of privacy even further. Editorial - New York Times

    Reading the above as if were one text, it would seem to me that the great and the good are expecting things to not only stay rough for a long time, but to get a lot rougher and the war on terrorism, like the war on drugs, and all the other endless wars that America finds itself engaged in have been a vary practical workbench for developing some extremely useful tools, if and when "democratic capitalism" ever lost its "political support".

    Crossposted from:http://seaton-newslinks.blogspot.com/

    Comments

    Democratic Capitalism is a contradiction in terms. Like military intelligence and business ethics.


    Democratic Capitalism has to be implemented in the order the name implies.  If the capitalism part isn't subordinated to the will of the people, it can't survive.  Unfortunately, I think it's the Democratic" part that dies first.


    I am not sure I follow.  It seems to me that democratic capitalism doesn't require a strong social net, I am mean look at the banana republics.  Why won't we got that route? Alternating between strong populists who have little regard for the rules, and do-gooders who keep trying to patch the system up?  This sort of half-ass muddling through is much more likely to me then a reversion to an fully autocratic regime ala China or the ME, or a social democratic capitalism like W. Europe (which itself is slowly becoming less socialist--and as the ill-considered Euro and debt crises have made abundently clear--rapidly less democratic). 

    I would argue that history seems to show that the Banana Republic IS the democratic capitalist model, with various capitalists competing amongst themselves for control of the central government (which itself osiclates between periods of strength and weakness).  The post WW2 historical blip of stable regime with a large middle class was just a passing phase, a result of international crisis due to breakdown of the capitalist model.  But the system has regrouped and is rapidly reverting to the norm.

    I don't see any reason why it won't stay this way, and lacking a shared cultural consensus we won't see any large scale attempts to move to socialsim. Instead anger will be channeled in various populist reactions that lack coherence or stratgy. People just know everything is fucked, and they are angry about it (i.e. the Tea party we love to mock is made up of a lot of smart folks with different--and often conflicting--poorly thought out ideas, but they often have some germ of insight to them).  

    I don't really know why this bothers me so much, I guess I really was indoctrinated with ideas of fairness and a cultural preference for middle class life.  Much of the rest of the world sees these things much clearer, they lack these cultural blinders. 


    Saladin,

    I think you are hitting the nail on the head. What Rajan is saying is that capitalism isn't going to collapse, but without a social net it may not be able to co-exist with democracy... I think that the system is preparing itself for such an eventuality.


    Interesting, if anonymous, comment on this post from my home blog:

    The coup already happened and I doubt Americans know or even care about the details. The mythology, however, has been in place for a few decades. It goes something like this: once there was a beautiful country but liberals came along and ruined it. How? Let us count the ways.

    They taxed us to death and gave our money to welfare queens so they could pop out babies and buy crack cocaine for their strapping young bucks! And they took Jesus out of schools so they could teach kids about homosexuality being okay! And they spend billions on the environment because left-wing scientists invented a hoax called global warming! And they make Christians feel like second-class citizens because of the ACLU! And they want to take our guns away and make us obey UN troops from Muslim countries!

    And so on.

    The crisis of democratic capitalism is actually the crisis of an economic system that can no longer deliver the goods. So, it made up lurid stories to tell the masses so they wouldn't blame them. And it worked. There is no left in America but easily 35% of the nation is hard-right. They could starve to death and blame socialists at the same time.

    Liberals balk at mythology, and they pay the price with a citizenry that holds them in contempt. It's delicious.


    The crisis of democratic capitalism is actually the crisis of an economic system that can no longer deliver the goods. So, it made up lurid stories to tell the masses so they wouldn't blame them. And it worked. There is no left in America but easily 35% of the nation is hard-right. They could starve to death and blame socialists at the same time.

    Let them eat yellow cake.


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