Democracy is among other things the rule of majority public opinion. Plutocracy is the rule of the wealthy few over and against the popular majority. To understand the different meanings of these two terms, you can consult a dictionary. You can also look at the very different decision-making processes on display regarding major political-economic policies in Greece (the ancient homeland of the Western democratic ideal) and the United States (the self-declared homeland and headquarters of contemporary democracy).
Greece: “The People Must Decide”
Let’s start with Greece. It has been under pressure from international, principally European creditors to slash social and other governmental expenditures in order to qualify for a five-months extension of the “economic rescue program” (bailout) that European authorities have advanced to keep the nation’s financial system solvent. The austerity (“reform”) proposals advanced by the European Commission, the European Central Bank, and the International Monetary Fund (the “Troika”) include deregulation of the Greek labor market, rollbacks in union power, pension cuts, and an increase in taxes on basic food products. The Troika give Greece until yesterday (I am writing on the morning of Wednesday, July 1, 2015) to accept their terms or face default.
The “reforms” demanded by the European financial power elite promise to further the economic humiliation of a nation that has been struggling for years to meet the outrageous debt payment and austerity commands of its northern creditors. As liberal U.S. economist Paul Krugman explained in the New York Times two days ago, austerity has been a dead end for Greece, denied (thanks to its membership in the Eurozone) the ability to reduce its deficits by devaluing its currency:
“most…of what [Americans have] heard about Greek profligacy and irresponsibility is false. Yes, the Greek government was spending beyond its means in the late 2000s. But since then it has repeatedly slashed spending and raised taxes [as required by the Troika]. Government employment has fallen more than 25 percent, and pensions…have been cut sharply. If you add up all the austerity measures, they have been more than enough to eliminate the original deficit and turn it into a large surplus….So why didn’t this happen? Because the Greek economy collapsed, largely as a result of those very austerity measures, dragging revenues down with it….And this collapse, in turn, had a lot to do with the euro, which trapped Greece in an economic straitjacket. Cases of successful austerity, in which countries rein in deficits without bringing on a depression, typically involve large currency devaluations that make their exports more competitive. This is what happened, for example, in Canada in the 1990s, and to an important extent it’s what happened in Iceland more recently. But Greece, without its own currency, didn’t have that option.”
A letter published yesterday by a number of international academics, including former Archibishop of Canterbury Rowan Williams, Slavoj Zizek, and Judith Butler, notes that:
“Over the past five years, the EU and the IMF have imposed unprecedented austerity on Greece. It has failed badly. The economy has shrunk by 26%, unemployment has risen to 27%, youth unemployment to 60% and, the debt-to-GDP ratio jumped from 120% to 180%. The economic catastrophe has led to a humanitarian crisis, with more than 3 million people on or below the poverty line…Against this background, the Greek people elected the Syriza-led government on 25 January  with a clear mandate to put an end to austerity. In the ensuing negotiations, the government made it clear that the future of Greece is in the Eurozone and the EU. The lenders, however, insisted on the continuation of their failed recipe, refused to discuss a write down of the debt – which the IMF is on record as considering unviable – and finally, on 26 June, issued an ultimatum to Greece by means of a non-negotiable package that would entrench austerity. This was followed by a suspension of liquidity to the Greek banks and the imposition of capital controls.”
The Troika’s ultimatum has been rejected by the Syriza government. That government arose on a wave of anti-austerity sentiment fist expressed in years of mass street protests and then organized electorally in the form of the Syriza Party.
Telling the democratically elected Syriza government to sign off on the Troika’s “deal” is directing it to commit political suicide. Anti-
austerity has always been Syriza’s political raison d’etre, as the Troika knows quite well. So the ultimatum amounts to something of an attempted coup by the financial command of neoliberal bureaucrats in Brussels, consistent with the European “democracy deficit” that the left historian Tony Judt characterized several years ago as “a sense that that decisions were being taken ‘there’ with unfortunate consequences ‘here’ and over which ‘we’ have no say.”
In the name of popular and national sovereignty and with an honest understanding that rejecting the “reform” and bailout package offered by the Europeans will entail costs, Greece’s 40-year old Prime Minister Alexis Tsipras Syriza decided (imagine) to take the deal to the Greek citizenry. Hours after meeting with European “leaders” at a summit in Brussels last week, Tsipras announced that his government would put the European creditors’ proposals up to a yay or nay popular referendum on Sunday, July 5th. “The people must decide,” Tsipras said. “We should respond to authoritarianism and harsh austerity with democracy, calmly and decisively,” Mr. Tsipras said. “Greece, the birthplace of democracy, should send a resounding democratic message to the European and global community.”
Here’s the ballot measure that will be posed to the Greek people:
“Should the agreement plan submitted by the European Commission, European Central Bank and the International Monetary Fund to the June 25 eurogroup and consisting of two parts, which form their single proposal, be accepted? The first document is titled ‘Reforms for the completion of the Current Program and Beyond’ and the second ‘Preliminary Debt sustainability Analysis.’”
It’s a very basic act of democracy, taking a policy decision that will impact millions of Greek workers and citizens to…well, to millions of Greek workers and citizens.
European financial elites have reacted with shock and horror. The Eurozone finance ministers’ Dutch leader Jeroen Dijsselbloem said he was “very negatively surprised” by the Greek referendum decision. “That is a sad decision for Greece because it has closed the door for further talks where the door was still open in my mind,” Dijsselbloem added.
Germany’s hardline pro-austerity finance minister Wolfgang Schaeuble said the Greek government had “ended the negotiations unilaterally.” The European Commission chief, Jean-Claude Juncker, said he felt “betrayed” by the “egotism” shown by Greece in failed debt talks. He accused Tsipras of playing “liar’s poker.”
“Stunned,” New York Times correspondent James Yardley reported yesterday, “[Tsipras’] fellow European leaders shut down negotiations, capped the lifeline they had been providing Greece’s banks, angrily denounced him as irresponsible and dishonest with his own people, and not so subtly suggested that Greece needed a new government if it wanted to continue drawing economic help.”
Jacob Funk Kierkegaard, a Senior Fellow at the arch-neoliberal Peterson Institute for International Economics, responded to Tsipras’ referendum call by saying that Greece was “joining countries we would normally regards as failed states” (NYT, July 1, 2015).
The Troika has refused to extend the deadline for its latest bailout out offer until the day of the historic Greek referendum. The vote will be held nonetheless, with it being understood that a “No” victory very possibly spells Greece’s exit from the Eurozone, that is, from the European Economic Union. Without the European bailout, Greece will have no choice but to pay pensioners and government employees and others in scrip, creating a parallel national currency.
A “yes” victory would signal national submission to yet more creditor-imposed Greek austerity, the very policy that has failed for five years running. It would also likely lead to the departure of Tsipras. Anti-austerity has always been his political raison d’etre. With Western (European and US) elites scrambling to prevent a “Grexit,” it seems possible that a deal of some sort will still be possible despite European elite’s chagrin at the horror of a democratic vote.
The key point for the purposes of this essay, however, is that decision-making power is largely in the hands of the Greek populace.
The United States: a Different Kind of Failed State
Things could hardly be different in the United States. Look now at the Trans-Pacific Partnership, a sweeping corporatist measure that U.S.President Barack Obama, big business, and top Republicans have been slowly but surely advancing in Washington. It’s a sweeping measure that would cover 40 percent of the world’s economy and negatively impact the lives of millions of Americans, their jobs, their quality of life.
Lawyers and lobbyists for giant multinational corporations have been working it up and promoting it for nearly a decade. Beneath standard propagandistic boilerplate about trade and jobs, the real thrust and significance of the TPP is about strengthening global corporations’ ability to protect and extend their intellectual property rights (drug patents, movie rights, and the like) and to guarantee that they will be compensated by governments for any profits they might lose from having to meet decent public labor and environmental (and other) standards, something certain to discourage the enactment and enforce of such standards. It’s all about what the Times calls “investor protection.”
No wonder Obama has done everything he can to keep the TPP’s details under wraps. The secrecy has been remarkable: U.S. Congresspersons and some of their staff can see the TPP’s text only if they agree not to take notes or discuss the details in public. No wonder Obama wanted Congress to give him “fast-track” authority to force a yay or nay Congressional vote on the TPP, with no time for careful consideration and no chance for revisions. (Under fast-track rules, there’s no chance for delays or alterations: the pact must be voted up or down in a very short time-frame.) And no wonder most of the U.S. population is (all too irrelevantly) opposed to the TPP and fast track.
How about a national citizens’ referendum on these key political-economic measures of great significance for “We the [American] People”? The very notion of such a popular vote is absurd in the U.S. as currently constituted. No such basic act of popular and national sovereignty is remotely conceivable under America’s reigning model of corporate oligarchy.
Meanwhile the unpopular TPP is marching its way through the halls of American so-called popular governance. After some momentary difficulties in the U.S. House, fast-track just sailed quietly through the U.S. Congress while the nation was focused on the gay marriage issue along with terrible racist and gun violence and the Confederate Flag issue in the U.S. South. All indications are that Obama and his Republican allies will succeed in passing the TPP.
Sadly enough, there’s nothing particularly unusual about a global-corporatist measure moving its way through the U.S. government over and against popular opposition. Over the past three plus decades, the mainstream political scientists Martin Gilens (Princeton) and Benjamin Page (Northwestern) calmly reported last Fall, the U.S. political system has become “an oligarchy,” where wealthy elites and their corporations “rule.” Examining data from more than 1,800 different policy initiatives in the late 20th and early 21st centuries, Gilens and Page found that wealthy and well-connected elites consistently steer the direction of the country, regardless of or even against the will of the U.S. majority and regardless of which party holds the White House or Congress. “The central point that emerges from our research is that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy,” Gilens and Page wrote, “while mass-based interest groups and average citizens have little or no independent influence.” As Gilens explained to the liberal online journal Talking Points Memo (TPM) last year, “ordinary citizens have virtually no influence over what their government does in the United States.” And that is no small part of why the United States has entered a savagely unequal New Gilded Age in which the top 1 percent owns more wealth than the bottom 90 percent, along with a likely comparable percentage of the nation’s “democratically elected” officials.
Such is the harsh reality of “really existing capitalist democracy” in the U.S. —what Noam Chomsky calls “RECD, pronounced as ‘wrecked.’” Does this perhaps qualify the United States as a “failed state”?