Markets or democracy? You choose

Essays Published November 1, 2004 in Published in the New Internationalist, November 2004

Benjamin Franklin is an American icon.

One of the ‘Founding Fathers’ of the United States, he was a man of many talents: inventor, diplomat, traveller, media mogul, statesman. He was also one of the small group of men who drew up the Constitution of the United States in 1787; the constitution which, at the time, was regarded as a radical leap forward for the still young concept of ‘democracy’ as a system of governance, and which every American politician, and most American people, will still tell you is the basis of the best democracy in the world.

It might seem surprising, then, to learn that Franklin held a more realistic view of the document he helped to create. It was, he thought, merely a temporary creation; one which would probably serve the new nation well for a while, but certainly not forever. His last words before the Constitution was signed in 1787 are never quoted by today’s American politicians, and with good reason.

‘I agree to this Constitution’, he said ‘with all its faults, if they are such: because I think a General Government necessary for us … [but] … I believe … that this is likely to be well administered for a Course of Years, and can only end in Despotism as other Forms have done before it, when the People shall become so corrupted as to need Despotic Government, being incapable of any other.’

Today, even the fiercest critics of the Bush presidency would have trouble maintaining that the USA is (yet) a despotism. It might do us all good, though, to take Franklin’s warning seriously – for it is hard to claim that the USA is a real democracy either. Indeed, it is hard, today, to make that claim for almost any system of national governance anywhere on Earth.

‘Democracy’ is the last great Sacred Cow. Even in dictatorships (the Democratic Peoples Republic of North Korea, anyone?) its name is taken in vain. From Washington to Moscow, from Davos to Porto Alegre, democracy is the only system to be seen to be promoting. The reason is obvious: democracy may not be perfect but it is, in Winston Churchill’s oft-quoted words, ‘the worst form of government except for all the others.’ It may not be a panacea but it does, at least, let the people decide.

Except that, increasingly, it doesn’t. Today, the world finds itself in a strange situation. There are more ‘democracies’ on Earth than there have ever been; more people today can elect or reject their governments than at any time in history. And yet more people, too, are disillusioned. In most Western democracies, the numbers of people bothering to vote are at an all-time low, and still falling. In newer democracies, things are rarely much better.

In late 2002, the World Economic Forum released the results of one of the biggest surveys of global opinion ever carried out. It took in the views of 36,000 people from 47 countries, which the Forum said could be extrapolated to represent the views of 1.4 billion of us. Two thirds of those questioned – most of whom lived in democracies – did not believe that their country was ‘governed by the will of the people.’ Democracy, in other words, may well be spreading faster and further than ever before – but people didn’t seem to believe it.

There is a reason for this. It is a simple reason, but one that is not discussed as often as it should be. The reason is this: the global free market and systems of democracy are not, as we are told from all sides, complementary: they are antagonistic. You can have one but, it seems, you cannot have the other. The spread of the free market does not aid the spread of a free politics. Quite the opposite: it eats democracy for breakfast.

The reasons for this have been well-rehearsed. Put crudely, the more globalised the economy becomes, the less control national governments have over their own economies. The liberalisation of banking and investment laws has meant that distant shareholders and brokers can bankrupt entire economies in hours if they perceive a threat to their ‘stability’ – a threat, in other words, to the ability make a quick buck within the boundaries of a nation state. At the same time, the liberalisation of trade through GATT and the WTO, in tandem with the neoliberal recipes pushed onto the poor world by the World Bank and the IMF, has empowered and enlarged multinational corporations, and weakened governments, to the point where national economic decision-making can no longer be decided by elected officials alone, and must favour the interests of huge corporate blocs.

The results of this process, are not hard to spot. Sit on a bus or visit a bar in many nations in the world and you can hear the same complaints about politicians. They don’t listen. They don’t understand us. Nothing ever changes. Voting makes no difference. They’re all the same. Some of these complaints have probably been levelled at political elites since the dawn of time, but they have a new and very real edge today. For it is demonstrably true that, as the power of the market has eaten away at the power of the people, politicians, like politics itself, have changed. These days, in virtually every democracy on Earth, ‘right’ and ‘left’ have become almost meaningless terms. Whoever you vote for, they will have to keep the markets happy, or see their economy crushed. Whatever and whoever you vote for, you will get neoliberalism.

American journalist Thomas Friedman has famously called this the ‘golden straitjacket’ – a process by which the global economy ‘narrows the political and economic policy choices of those in power to relatively tight parameters …. Once your country puts on the Golden Straitjacket, its political choices get reduced to Pepsi or Coke – to slight nuances of taste, slight nuances of policy …’

Plenty of people question Friedman’s optimistic view of just how ‘golden’ the straitjacket of the global market really is – but the Pepsi versus Coke effect is plain to see. Moving back to the USA for a moment, the similarities of the two main parties there are much commented upon. There is, in the forthcoming presidential elections, just enough difference between the Kerry and Bush camps to make it worth voting – no-one with their eyes open imagines that a Kerry presidency would be a simple continuation of what Bush has started. But on the economic big picture, there will be no change of direction.

But it is perhaps in the majority world where the truly dangerous impact of the slow death of democracy can be seen. Take, for example, the case of Brazil. The Workers Party (PT) swept to government in 2002, spearheaded by Brazil’s first working class president, ‘Lula’ da Silva, on a wave of resentment against the neoliberal policies of the previous government. Within a year, Lula had bowed to neoliberalism himself, accepting an IMF loan and its accompanying conditions, slashing benefits for state employees and expelling critics within the PT who complained. Brazil’s cities are filling up with expensive foreign chainstores, while their shanties remain packed, and the rich-poor gap widens.

Few would suggest that Lula’s government has not made improvements to the country – fewer would suggest that Lula and his party do not have the best intentions. But good faith is not the issue. Maria Victoria Benevides, a Sao Paolo University academic who helped draw up the PT’s governing programme, summed it up when he explained to a journalist why the PT government seemed so hamstrung. ‘The mission they had in mind is much more difficult than they had hoped’, he said simply. Lula and Co had had their good intentions exposed to the tsunami of the market, and many of them had not survived the deluge.

Over in South Africa, a similar situation has developed, as I discovered for myself when I visited the country in 2001. The ANC – another great liberating government welcomed with joy by its people – has also given over its hugely divided country to the neoliberal machine. Two years after it came to power in 1994, it adopted an economic programme partially drawn-up by the World Bank, which has resulted in increased unemployment, a widening gap between rich and poor and, most controversially of all, mass cut-offs of electricity and water in some of poorest communities in the country, as newly privatised utilities screw the poor for payment of bills they simply can’t afford to meet.

Why would the ANC do this? Again, their hands have been, to a great extent, tied. Michael Sachs, the party’s head of policy and research, admitted this to me in a candid interview in his office two years ago. ‘The approach we take’, he told me, ‘is saying, how do we engage with globalisation? And if we engage with it in a way which is unrealistic, that is dictated to by probably what are good principles, but which don’t recognise the reality of a unipolar world with the strength of finance capital which exists out there … you’ve got to take these things into consideration.’

The problem, then, all over the world, is stark and similar: the market is undermining democracy. We know this, and we know, too, the result: the end of true political choice. And yet few people seem to have drawn the obvious conclusion: either democracy goes, or the market does. The two, at least as currently prefigured, cannot exist together.

What, then, can be done? There are plenty of suggestions out there, but none of them is self-contained and none of them ultimately convincing. We probably shouldn’t expect them to be; this is, after all, a deeply fundamental and structural problem. It is not insoluble, but it requires vision. If we can’t roll back the advance of the global market – and it looks increasingly unlikely – then we will have to do something else: we will have have to reinvent democracy; take it to its next stage.

We will have to move on, in other words, from the assumption that ‘democracy’ means voting for one of two groups of neoliberals every four years, then letting them get on with running the country. We will have to begin to take power right back to local level, on the one hand, and look at reining in markets and financial flows globally, on the other. Nobody pretends it’s going to be easy.

What seems clear, though, is that for this to happen we need to first face the facts. We need to look at this problem in the cold light of day and say out loud what we already know, deep down, to be the case: democracy, as we know it, is dead. It was murdered by the market, and there is no bringing it back, at least in the body we used to know. We need to accept this reality and move on, into what can hopefully become a new phase of genuine people-power, with the market as its servant, not as its master.

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