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Capitalism and Democracy

by Frank Deppe and Thorsten Hild Friday, Mar. 26, 2010 at 3:54 AM

Citizens are protected from incursions of the state and on the other side must accept the sovereignty of the state and the general law as prerequisites of property and security. Whoever has visions should be the physician. A good physician will urge changing one's way of life.


By Frank Deppe

[This article published in the journal Luxemburg January 28, 2010 is translated from the German on the Internet, http://www.zeitschrift-luxemburg.de/?p=452.]

In the early 1990s, the market economy (and the system of individual freedom) of the West triumphed over the system of state economy (and collectivism) of the East. Francis Fukuyama wrote, the “century that began full of trust in western liberal democracies is at its end and returns to its beginnings: not to an `end of ideologies’ or a convergence of capitalism and socialism but to a clear triumph of economic and political liberalism” (1990). With the worldwide economic crisis, the poverty and insecurity in the world increasing in the course of the crisis and the shameless enrichment of the rich and powerful, people started talking again about capitalism in politics and the social sciences.


A “crisis of democracy” was identified by different sides. The British sociologist Colin Crouch speaks of “post-democracy” (2008) [1]. The former Secretary of Labor under Bill Clinton, Robert Reich, writes about “super-capitalism” that undermines “our democracy” (2008). In Germany the debate about the “emergency of democracy” began cautiously although the incursions in the basic rights of citizens clearly increased on one side and the signs of decay of democratic culture on the other side. On the other hand, the renaissance of an authoritarian state thinking appears in the tradition of Carl Schmidt. Given the supposed “threat by terrorism,” he urged the “state of emergency” must become a “paradigm of governing” and pleaded for the independence or expanded authority of the executive bodies responsible for “state security.”

The economy and politics function according to their own codes (money/profit; power/majority) but depend on each other. The connection is unmistakable. Representative democracy as a form of state organization developed where early forms of the capitalist economic system formed and gained acceptance (in the wake of the so-called “Glorious Revolution” of 1688). C.B. Macpherson showed how the formation of an owner-market society in the 17th century was reflected on the plane of political thought. Thomas Hobbes built the strong “Leviathan,” the state created through the contract of free and rational individuals as a prerequisite for the security of citizens and their property, i.e. for the functioning of a legal system.

For John Locke, how the middle class whose private property was declared a pre-state natural law could influence state activity and limit the power of state central authority was a central question. “Society becomes a number of free and equal individuals who relate to one another as owners of their own abilities and proficiencies. Society consists of exchange relations between owners. The state becomes a calculated means for protecting property and maintaining orderly exchange relations (Macpherson 1973). The contradiction is already implicit here – that citizens on one side are protected from incursions of the state and on the other side must accept the sovereignty of the state and the “general law” as indispensable prerequisites of property and security. Franz Neumann demonstrated this in his 1936 study on the “Rule of the Law.” Marx (MEW 1) paraphrased this with the dual role of the middle class individual as bourgeois (economic) and citizen (political). In the liberal version [2], political and economic freedom is understood as a mutual presupposition.

Milton Friedman, one of the seminal thinkers of neoliberalism, saw a “system of economic and political freedom as a necessary condition for political freedom in competitively organized capitalism.” In the light of the history of democracy and capitalism, such positions are regarded as completely ideological. The “Levelers” and Harrington, early socialist or utopian communist movements and their ideologues, are acknowledged by Macpherson alongside Hobbes and Locke [3]. The crystallization of elements of middle class society still in the predominant milieu of feudal rule always went along with the demand a) for radical democracy from below (as a condition for the autonomy of the people) and b) for a democratically legitimated state authority which uses its power to remove social inequality and the power claims of wealth. The freedom bound to private property serves particular interests while the “general will” (volonte generale) of the law legitimated by democracy always presupposes the power to limit these particular interests.
Luciano Canfora (2006) showed how the classes privileged by property always supported the democratic form of rule since antiquity as long as this rule as long was not a threat to their property privileges. In Marx’ “Bonapartism theory” – on the backdrop of the failure of the 1848 revolution in France – this diagnosis was concretized for the bourgeois capitalist society. When the bourgeoisie sees its social-economic power threatened by the working class (and by the proletariat revolution), it foregoes direct political power or transfers this power to an authoritarian dictator (MEW 8).


This contradiction appears in the process of middle class revolution. The watchword “Freedom, Equality and Solidarity” of 1789 was interpreted differently by the great systems of political thought since the 19th century – liberalism and socialism. For liberalism, freedom meant the abolition of “feudal chains,” “political self-determination of the middle class against the absolutist monarchy and the free mobility of the working class, abolition of serfdom and slave labor (on the labor market). Society emphasized the legal equality, not the political equality of the citizens.

The universal and equal right to vote was first realized in the 20th century by the labor movement. In the 19th century, democracy was the watchword of the left, for many a synonym for socialism (cf. Rosenberg). Up to today the equality term of liberalism did not explicitly refer to the economy and society. For the left, the triad of “freedom, equality and solidarity” meant firstly that freedom (of individuals) can only exist under the presuppositions of economic equality and security. Freedom rights and civil rights (proclaimed with the Declaration of Human Rights) were to have actual universal authority. Solidarity relations and social securities had to be built against the laws of individualist power competition in society.

The economic historian Karl Polanyi referred the catastrophes of the early 20th century to the independence of market forces over against their social “embedding.” For him, freedom was directly connected with control of markets. “Civil rights” unrecognized in the past must be incorporated in the state basic law. […] The end of the market economy could represent the beginning of an era of unknown freedom. […] Freedom is a vested right extending far beyond the narrow limits of the political realm into the inner structure of society and was not only a right of the privileged perverted from the start” (Polanyi 1978). Thus the relation of capitalism and democracy, the understanding of democracy itself, can in no way be interpreted as naively as Fukuyama and Friedman (and their innumerable disciples) proclaimed. Rather the relation and understanding of democracy itself are characterized by contradictions that break out and are varied again and again (corresponding to concrete historical circumstances) in political and social struggles up to the present.

The double role of the bourgeois and citizen emphasized by the young Marx is a basic contradiction of middle class democracy. The formal equality of citizens (which in no way existed before the universal right to vote) stands in a structural conflict with the social inequality between owners of the means of production and paid workers. This social inequality between the classes is the basis of the political power relations in the state. [4] The struggles of subordinates aim at annulling this structural conflict by expanding democracy to society. Marx understood this as “the masses reclaiming state authority” (Marx 1862). In reality this developed very differently after 1917.

In the reformist perspective of social democracy, fixing a balance of power between the classes in German basic law (and ensuring this balance through the democratic state) was central. Acknowledgment of private property and the market should be joined with the collective security of wage-earners through laws, wage contracts and the modern welfare state (including “full employment”). The temporary “marriage of democracy and liberalism” (Goran Therborn) first occurred in the times of the “Golden Age” Fordist postwar capitalism. Organizing this compromise is always a result of the class struggle and the development of the respective “historically concrete” power relations between the classes. Wolfgang Abendroth described this basic problematic of the relation of class struggle, the workers’ movement and democracy with the formula “political democracy and antagonistic society” (1967).

Constitutional questions become the terrain of this battle. How is the relation between market freedoms and state intervention calibrated and substantively determined? If the regulation mode of capital accumulation characteristic for a development period becomes fragile in the “great crises” of capitalist development and the relation of politics and the economy must be re-calibrated, the dynamic and power of class conflicts decides which interests prevail. The British sociologist T.H. Marshall argued that democracy in Western Europe and North America develops on different stages from acknowledgment of individuals as legal subjects and political rights of participation (universal franchise and freedom of association) to a system of social civil rights. This occurs in the modern welfare state in the time after 1945 (with a pre-history in the inter-war period). Espino-Anderson (1990) continued this line and urged a social-democratic, Scandinavian variant. This model was the result of the labor movement that aimed at social integration, i.e. at the reduction of class schism and emergence of a vast non-commodified sector (and a corresponding labor movement) from the capitalist economic system. Social integration also means the politization (and organization) of civil society. With the social pressure-groups (for example, unions), intermediate organizations formed between society and the state in the narrow sense. For conservatives, this is a sign of the substantive weakening of the state by the power of organized interests. However the self-government of society and a withdrawal of the state in society are involved. These moments are marginalized by the bureaucratization of association power (and partly by its nationalization, i.e. dependence on public funds). At the same time the struggle over hegemony is fought out.


Thus the relation of capitalism and democracy is very strained. The basic contradiction between formal (political) legal equality and real (social-economic) inequality is reinforced by other contradictions. One is the tense relation between (individual) freedom and (state) sovereignty. This is the central theme of conservative discourse that upgrades sovereignty over individual freedom rights and conjures the (alleged) dangers of unbridled individual freedom (anarchy). On the other side, the history of modern democracy is filled with conflict over the concrete form of democracy, representative or plebiscite democracy, democratically legitimated elite rule or “self-government” in a base democracy as in the council system at the beginning of the 20th century (Demirovic 2009). Self-government operates in our constitutions (German state constitutions and industrial relations schemes) as well as authoritarian- corporatist moments. The new social movements of the 1970s opened the constitutions and laws for plebiscite elements and popular referendums. Adding plebiscite elements in the legal system of the EU would lessen the democracy deficit.


The crisis of democracy often talked about today refers finally to the repression or withdrawal of elements of a social state democracy in the last quarter of the 20th century. The crisis of democracy is a crisis of participation and a crisis of legitimation appearing in the “weariness with politics,” the loss of credibility of the “political class and attractiveness of anti-democratic value orientation” (cf. Deppe 2008). Neoliberalism puts in question those elements of social integration in the modern welfare state as universal social securities (and of civil rights). For neoliberalism, social inequality and social uncertainty (Robert Cassel) are moments of a competitive ideology emphasizing more individual output and adjustment to the demands of the market. For Colin Crouch, social-economic changes made possible this policy’s success: the disintegration of the industrial working class and its representative organs, unions and worker parties. The basis was thereby taken from corporatism – as the dominant political form of welfare state democracies.

“Post-democracy” describes a “novel” phenomenon where the political rules of democracy are retained (elections and parliaments) while the power relations and decision-making authority are shifted in favor of economic elites. The “most important reason for the decline of democracy” is today the “imbalance between the role of the interests of businesses and all other groups of society. This leads to politics becoming an affair of elites – as was the case in pre-democratic times (Crouch 2008). As this transformation is carried out, the contradictions and tensions appear.

By Thorsten Hild
[This article published 1/21/2010 is translated from the German on the Internet, http://www.wirtschaftunddesellschaft.com.]

…More and more people have stopped asking the question about the purpose of politics. Declining participation in elections and weariness with politics deplored on all sides confirm this. The political interest of people can only be regained when this question is earnestly raised and answered again.

Finding a convincing positive answer to this question should be a matter of the heart for every politician and everyone active in the political realm. This is my first point. Since politics decides over the fate of people, doing something with engagement and conviction in this area should not be taboo or laughed at. Such a basic attitude like a good old home remedy an help strengthen resistance against the infectious and rampant opportunism that has long led to a widespread intellectual helplessness in politics where positions are hardly investigated but repeated or adapted to the spirit of the times. They have little radiating power on people.

Firstly, people whether rich or poor have unequal capabilities for organizing their life in all countries. Politics is necessary to balance these differences and further and guarantee the social cohesion enabling every individual to lead his or her life with others. Secondly, the increasingly pressing environmental- and climate problems can only be deactivated with the help of politics. Only politics can ensure that human provisions and the necessary production and marketing will no longer be organized without regard for nature. Thirdly, peace and disarmament can only be attained with a politics that understands war credibly and not with two standards as `ultima ration’ (Willy Brandt in his Nobel Prize for Peace speech) and relies on negotiations, mediation and balancing interests.

Such a politics must follow two principles: every political initiative aiming at social cohesion and social and ecological progress must start from the person, his needs, distresses and fears and consider the effects of our way of life on the environment from the first in order to serve the person, the environment and peace. The weakest in society must get the strongest political hearing and their needs must be addressed first of all. Those who are better or very well-off must cooperate. A corresponding legislation must provide for the necessary obligation. Strengthening the “weakest” and winning the “stronger” are indispensable prerequisites for a social order supported by human cooperation and not antagonism, a society with a human face.

This is clear in the following concrete examples:

A fiscal policy that relieves more strongly the one who earns more than the one who early little or nothing does not fulfill these prerequisites. But German fiscal policy acts that way.

An educational policy that supports more strongly those with better education chances than those with lesser education chances also does not fulfill these prerequisites. But German educational policy acts that way.

An economic policy that shatters public se4rvice, privatizes public enterprises and intensifies the pressure of private profit maximization misses the chance of setting environmental- and employment-priorities. These priorities include accelerating railway construction over individual transportation and making it attractive and affordable for people, carrying out changes in energy policy more quickly or offering dignified work and life perspectives to young persons and adults with hard life stories who do not want to be employed and trained in businesses oriented in profit and competition. But German economic policy acts that way.

A financial policy that fails to ensure employment and capacity utilization of businesses with public spending programs and allows the market to balance its inherent fluctuations squanders resources. But German economic policy only pursues an active economic- and jobs policy in the greatest distress as in the current financial- and economic crisis, not out of political-economic insight.

Every foreign policy that does not aim at strengthening economically and socially weaker countries, promoting their economic and political independence and enabling them to catch up to the richer countries does not fulfill these prerequisites. German foreign policy only restrictedly fulfills these prerequisites.

In this way, political decisions as in health care policy can be judged according to the principle whether they promote social cohesion and make possible social and ecological progress or not.

A politics that like German politics in the past years has resulted in real losses of purchasing power for employees, pensioners and recipients of social benefits and tries to force developments abroad with war and armament-exports and is content in environmental- and climate-questions with international agreements instead of courageously leading the way as one of the richest and most technologically developed industrial countries has obviously lost sight of these principles.

A politics that ignores these principles deepens the division between poor and rich, educated and less educated, makes the weak weaker and the strong stronger and simultaneously robs them of the resources necessary to master burning problems. A government acting this way is more and more like a firefighter who sets himself on fire. After setting the fire, this kind of arsonist seems very zealous in fire-fighting operations and boasts of preventing worse things and encourages transferring this picture to politics. One thinks only of the stirring speeches given by the rulers for the freedom of the capital markets and their legislation with which they first gave free rein to the headless panic-stricken speculation. Since the outbreak of the extensive fire, the same politicians act as very passionate warners and deliverers of the financial system – without changing the legislation responsible for the speculation and thus already preparing the next fire.

However the politics practiced in Germany in the last years did not only formally approach the conduct of that firefighter. For whatever motives, it was and is no longer focused on social cohesion and social progress. Whoever abandons development of individuals to themselves and does not consider the grave differences in development prerequisites must run aground on the way to a human society. Whoever puts the weak under pressure further weakens them and forces them off the road instead of taking on their problems and anxieties, encouraging and enabling them to make the route more passable. Instead the successful one is preferred who turns his back anyway on the gains already reached.

German politics has long abandoned the way to a social order that strives for social balance and enables the individual to lead his or her life with others. Whoever acts that way and still uses the word humanliness like the German chancellor in her New Year address, robs this term of all meaning and integrating power. Whoever does not see this will not convince others of a different progressive policy or move them to go this way.

One must become politically active to not helplessly run behind developments. The famous sentence of Chancellor Helmut Schmidt is inverted or turned upside down: Whoever has visions should be the physician. The opposite occurs. Whoever has no visions or any notion how things could be improved will have to constantly run to the physician because he cannot name or will not see the original sicknesses responsible for its development. A good physician will urge changing one’s way of life and not be content with treating symptoms.

While the statement “something is basically wrong here” is very common in day to day life, it does not seem socially acceptable in politics any more. When something is essentially going wrong, it makes no sense and is hardly promising to flee into the seamy side of day to day politics and be deceived that the frequent and increasingly serious problems will be solved. The political principles must be examined and redefined. Firstly, for what reasons and for whom politics is done must be clear. Then the challenges to be overcome must be identified. Necessary and appropriate measures should be discussed.

Therefore the question that politicians in Germany must first raise on this background is whether they want to do politics for people or whether they put their politics in the service of those who can realize their interests because of their social hegemony. German politics in the last years has clearly pursued the interests of the powerful. German politics serves the desires of banks and insurance companies, the rich and wealthy, military alliances like NATO while repressing the interests of others, the socially-weak, pensioners, low-wage and average wage-earners, recipients of social benefits, small entrepreneurs and persons who reject violence to realize personal goals. Cutting them down to size or putting them in their place is a precedent interest of the powerful. Whoever doubts this need only search the daily news telling us about current political decisions and who are given advantages and who are given disadvantages.

The question posed at the outset can be answered in a sentence: Politics should be used to make possible a human society, peace and protection of the environment. If it does not try this or even prevents this, political forces must be developed that correct this malformation and show an alternative to people. Every political counter-design and every political opposition must be measured in these questions and claims.

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