The Crisis of Democratic Capitalism. By Martin Wolf. Penguin £12.99.
The basic argument here is that market capitalism and liberal democracy belong together, albeit in a difficult relationship. Both supposedly involve equality of status: the right of people to a voice in public affairs and to buy and sell what they own. Market capitalism drove economic growth, we are told, and led to pressures for ‘universal suffrage democracy’. But in recent decades increasing inequality and personal insecurity mean that democracy has become fragile and been partly replaced by ‘demagogic autocracy’, as populism becomes more influential. Yet both democracy and capitalism can be renewed, resulting in a bright future again.
There is a great deal of useful information here, and Wolf sometimes reveals the true nature of capitalism. For instance, between 1980 and 2016, ‘the real incomes of the global top thousandth rose by 235 percent’, while real incomes have been stagnant for large parts of the population. Most people are just ‘one disaster away from ruin’, with very little by way of savings. Companies ‘possess enormous economic and political power’, and there is a ‘huge imbalance of power between footloose corporations and local workers’: this last refers specifically to multinational companies moving jobs abroad, but in fact applies far more widely.
The rise of the market economy is said to have led to pressures for election-based democracy. But there is nothing about ruling-class resistance, with no reference to Peterloo, Chartism or the suffragettes, for instance. Universal suffrage arrived fairly late, first in New Zealand in 1893, in the UK in 1928 and the US only in 1965. The valid point is made that democracy is a continuum, not an either–or matter, but it implies more than just the ability to vote, and capitalism has an inherent imbalance of power between the owning class and the working class. And has market capitalism (with competition and private economic initiative) really been the predominant version of capitalism over the long term? Wars were fought to open markets in other countries to Western trade, and slavery played a crucial role, as did protectionism. There was supposedly an era of ‘mixed economy’ from the 1950s to 1970s, which changed to free markets from the 1980s (with a concomitant increase in inequality, as noted above), but in reality the state always interferes in some way, in defence of the interests of the ruling class.
Unfortunately, Wolf has no idea about alternative systems. He thinks that socialism means state control over the economy, and the idea of degrowth is dismissed with little argument, since it could only be implemented by a global dictatorship and would supposedly mean reversing centuries of human history. His solution is to use ‘piecemeal social engineering’ to achieve aims such as a rising and sustainable standard of living, equality of opportunity, and the ending of special privileges for the few. But of course the last of these would not mean an end to the wealth, power and influence of the one percent, as the power of the capitalist class is built into all varieties of capitalism, a system that can never be truly democratic.
Paul Bennett
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