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Capitalism is a lot more important than democracy. I’m not even a big believer in democracy.
– Stephen Moore, a potential future member of the Federal Reserve Board
The dominant American ideology has long claimed that capitalism is about democracy. It isn’t – and one need not be an anti-capitalist “radical” to know better. My old copy of Webster’s New Twentieth Century Dictionary defines capitalism as “the economic system in which all or most of the means of production and distribution … are privately owned and operated for profit, originally under fully competitive conditions: it has been generally characterized by a tendency toward concentration of wealth and, [in] its latter phase, by the growth of great corporations, increased government controls, etc.”
There’s nothing—nada, zero, zip—about popular self-rule (democracy) in that definition. And there shouldn’t be. “Democracy and capitalism have very different beliefs about the proper distribution of power,” liberal economist Lester Thurow noted in the mid-1990s: “One [democracy] believes in a completely equal distribution of political power, ‘one man, one vote,’ while the other [capitalism] believes that it is the duty of the economically fit to drive the unfit out of business and into extinction. … To put it in its starkest form, capitalism is perfectly compatible with slavery. Democracy is not.”
Thurow might have added that capitalism is perfectly compatible with fascism, racism, nativism, sexism, militarism, and imperialism among other authoritarian and anti-democratic forces and formations. More than being merely compatible with slavery, moreover, U.S.-American capitalism arose largely on the basis of the Black cotton slave system in the nation’s pre-Civil War South. This is demonstrated at length in historian Edward Baptist’s prize-winning study The Half Has Never Been Told: Slavery and the Making of American Capitalism.
“We must make our choice,” onetime Supreme Court Justice Louis Brandeis is reputed to have said or written: “We may have democracy in this country, or we may have wealth concentrated in the hands of a few, but we cannot have both.” This statement (whoever made it) was perhaps unintentionally anti-capitalist. Consistent with Webster’s(above), the historically astute French economist Thomas Piketty has shown that capitalism has always been inexorably pulled toward the concentration of wealth into ever fewer hands.
Anyone who thinks capitalism is about democracy ought to take a working-class job and report back on how much they and their fellow workers’ opinions matter in the design and execution of their work, the compensation they receive, and the overall management and conduct of their employers’ firms. As Alexandria Ocasio-Cortez has remarked, people living under the “irredeemable” (her word) system of capitalism “check [their] rights at the door when they cross the threshold into the workplace.” Karl Marx wrote brilliantly about the “hidden abode” and veiled “despotism” of the capitalist workplace, where employees perform typically narrow and alienating, life-shortening tasks conceived and devised with no higher purpose in mind than the upward transfer of wealth to the investor class. There’s no democracy on an Iowa Beef Processors killing floor or a Wal-Mart check-out line.
The tyranny continues beyond the workplace. Workers who do or say anything their employers don’t like off as well as on the job put their employment and the benefits associated with their hire – commonly including their health insurance and that of their families (no small matter) – at risk.
Public opinion on numerous key issues is largely irrelevant under American capitalism. Most U.S.-Americans have long wanted the progressive and social-democratic agenda advanced by Bernie Sanders and Alexandria Ocasio-Cortez: guaranteed free and quality health care for all; a drastically increased minimum wage; a significant reduction of the nation’s extreme economic inequalities; free college tuition; the removal of private money from public elections; large-scale green jobs programs to provide decent employment and help avert environmental catastrophe; massive investment in public schools and housing, and more. Most U.S.-Americans would go beyond Sanders and agree to drastic reductions in the U.S. Pentagon budget to help (along with increased taxes on the preposterously wealthy and under-taxed Few) pay for these and other good things. Most U.S.-Americans think public opinion ought to influence policy every day, not just on those occasional and brief, savagely time-staggered moments when “we the people” supposedly get meaningful egalitarian “input” by marking ballots filled with the names of major party candidates who have generally been pre-approved by the nation’s unelected dictatorship of money.
But so what? Who cares? The commoners don’t call the shots under capitalism. They never have and they never will. Universal suffrage was granted in the West only with the understanding that commoners’ participation in “democratic” politics would not challenge the underlying persistence of bourgeois class rule. That rule is guaranteed through elite corporate and financial sector control and manipulation of various power levers (please see Chapter 5, titled “How They Rule: The Many Modes of Moneyed Class Power” in my 2014 book They Rule: The 1% v. Democracy) including but hardly limited to campaign contributions, lobbying, media ownership, and the investment and “job creation” function.
How curious it is, then, to behold corporate cable news talking heads seem stunned to report that the openly authoritarian real estate mogul and creeping fascist U.S. president Donald Trump has nominated someone for the Federal Reserve Board who believes that “capitalism is more important than democracy.” The nominee, Stephen Moore, was recently featured as follows in a disapproving CNN report:
“Moore, who President Donald Trump announced last month as his nominee for the Federal Reserve Board of Governors, has a history of advocating self-described ‘radical’ views on the economy and government….In speeches and radio interviews reviewed by CNN’s KFile, Moore advocated for eliminating the corporate and federal income taxes entirely, calling the 16th Amendment that created the income tax the ‘most evil’ law passed in the 20th century.”
“Moore’s economic worldview envisions a slimmed down government and a rolled back social safety net. He has called for eliminating the Departments of Labor, Energy and Commerce, along with the IRS and the Consumer Finance Protection Bureau. He has questioned the need for both the Department of Housing and Urban Development and the Department of Education. He has said there’s no need for a federal minimum wage, called for privatizing the ‘Ponzi scheme’ of Social Security and said those on government assistance lost their dignity and meaning.”
“…Moore has repeatedly said he believes capitalism is more important than democracy. In an interview for Michael Moore’s 2009 film Capitalism: A Love Story, Moore said hewasn’t a big believer in democracy. ‘Capitalism is a lot more important than democracy,’ Moore said. ‘I’m not even a big believer in democracy. I always say that democracy can be two wolves and a sheep deciding on what to have for dinner. Look, I’m in favor of people having the right to vote and things like that…Speaking on the Thom Hartmann Show in 2010…Moore … [said] …Saudi Arabia wouldn’t be better off as a democracy.
“‘I think [that without] capitalism, without free market capitalism, countries don’t get rich,’ Moore said, when asked if capitalism was more important than democracy. ‘And so I would rather have a country that’s based on, you know, a free enterprise system of property rights and free exchange of free trade of low tax rates’…Moore told CNN’s KFile, ‘I believe in free market capitalism and representative government. It is what has made America the greatest nation…on earth’” (emphasis added).
Many U.S.-Americans would feel painful cognitive dissonance after reading this news item. “What,” these indoctrinated citizens could exclaim: “he says he prefers capitalism to democracy? What’s that’s about? Capitalismisdemocracy.”
No, it is not. Not at all. And, to repeat, you don’t have to be a radical critic of capitalism (like the present writer) to acknowledge this. You can get it and be a prominent liberal academic like the late Lester Thurow (who wasn’t too critical of wealth-concentrating capitalism to charge $30,000 per speaking engagementin his heyday) or a right-wing political hacklike Stephen Moore.
(Many American capitalist “elites” and propagandists who routinely conflate the profits system with democracy probably know it’s a false equation but have learned to pretend otherwise. Some have likely learned so well that they’ve have crossed over into actually believing in the bogus conflation.)
Whether out of clumsiness or out of heartfelt candor, the clownish Moore publicly drops the doctrinal pretense that capitalism and democracy are the same thing. (Note that he supports “people having the right to vote” even as he states his preference for capitalism over democracy. That is an acknowledgement that universal suffrage and periodic elections don’t necessarily translate into any real popular threat to his beloved regime of class rule. This goes back to the birth of so-called bourgeois democracy: widespread voting is fine as long as the electoral partaking of the common people doesn’t threaten real capitalist authority.)
Moore drops the ball, however, when he identifies the profits system with the “free market.” Capitalism has never been about the “free market.” It has always involved the owners and managers of capital exercising control over the state, using it to make themselves richer and to thereby (since wealthis power, as Louis Brandeis or someone pretending to be him knew) deepen their grip on politics and policy. The profits system is so dependent on and enmeshed with governmental protection, subsidy, and giveaways that one might half-reasonably question the accuracy of calling it capitalism: it is state-capitalismat the very least. Big Business today relies on a sweeping array of oligarchic government protectionsthat are ubiquitous across governments: patent, trademark and copyright laws that monopolize profitable knowledge; multiple and many-sided direct and indirect subsidies; ubiquitous regressive tax breaks, credit shelters and loopholes; regressive austerity measures; multiple and often complex debt mechanisms; economic, environmental and social deregulation, and ubiquitous privatization; control of central government banks.
One key part of the U.S.-American capitalist state is the Federal Reserve, on whose board Moore may soon sit. As the left economist Michael Hudson has explained, the Fed influences interest rates by “creating bank reserves at low give-away charges” and thereby “enables banks to make easy gains simply by borrowing from it and leaving the money on deposit to earn interest (which has been paid since the 2008 crisis to help subsidize the banks, mainly the largest ones). The effect is to fund the asset markets – bonds, stocks and real estate – not the economy at large”
Stephen “free market” Moore isn’t against government per se. He’s against any and all parts of government that serve the working-class majority, the poor, and the common good over the holy profits of the wealthy Few. He’s all for those parts of government that expand those profits.
As anyone with political knowledge and common sense knows, moreover, Moore’s mission on the Fed board – the reason that Trump has nominated him – would be to advance Trump’s political re-election agenda by pushing the president’s absurd claim that the Fed is pursuing a “tight money” (high interest rate) policy. The Fed is doing no such thing, but Trump says it is in what The Washington Post’s editorial board has rightly called “an anticipatory blame game for any economic slowdown that may develop.”
Still, give Stephen Moore some credit: he doesn’t mind going public with an elementary if sadly scandalous fact of social and political life past and present: capitalism and democracy work at cross purposes with each other. Imagine that!