Tom Hill, UK-based ecological economist, writes about the interplay between democracy and economics and how the two could be brought into closer alignment.
In centrist and mainstream political analysis market capitalism is often portrayed as being a natural bedfellow to democracy, sometimes to the extent of attempting to outright ban the criticism of capitalism on the basis it represents ‘an extreme political stance’. By contrast and in response, left-wing political discourse (in Europe at least) regularly frames market capitalism as being in opposition to democracy by making the case that markets are constructed in the interests of the powerful.
While I am inclined to agree with the left’s criticism of capitalism, I think that the common conflagration of ‘markets’ with ‘capitalism’ is unhelpful - particularly when it comes to thinking about their respective relationships with democracy. Insight into the importance of the distinction between capital and markets can be found in the work of David Schweickart, an American Mathematician and Philosopher. Schweickart has a particular interest in Economic Democracy - a socioeconomic philosophy that makes the case for a shift away from traditional corporate capitalism towards new business models that better service the needs of a broader range of stakeholders.
To many, the most recognisable manifestation of ED will be the traditional ‘cooperative’, though the philosophy goes much deeper than that. As with cooperatives, ED tends to be supportive of markets while opposing capitalist ownership models and entitlements; under ED, goods and services can be sold in the marketplace but crucially the beneficiaries are the workers, their customers and society at large rather than the corporate managers and shareholders that disproportionately benefit under capitalism.
In common with many left-wing critiques of capitalism, Schweickart shares the view that in capitalist societies the political leaders that are elected to represent us are generally incentivised to serve the interests of capital rather than those of the average wage labourer. Examples of this are plentiful; from the merry-go-round that exists between careers in public office and those in senior corporate roles, through to the alarmingly high correlation between the spend on election campaigns and the likelihood of being elected. However, he also supports competitive markets for goods and services arguing that, whilst not wholly benign, they are preferable to the allocative mechanism that is central to the planned economies because they are both more efficient and also entail greater freedom and choice than is available in a centralised approach.
According to Schweickart the core conditions of economic democracy are as follows:
Worker self-management: businesses are controlled democratically by their workers.
The market: businesses engage each other and their customers in a way that is largely free of governmental price controls; goods and services are exchanged at prices that are largely determined by the forces of supply and demand.
Social control and allocation of investment: funds for new investment are acquired through the use of public investment banks. A fraction of the profits that are derived from enterprise are returned back to these banks.