Capitalism and Democracy: Year-End Lessons
Wednesday, 18 December 2013 09:12
By Richard D Wolff, Truthout | News
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2013 drove home a basic lesson: US capitalism's economic leaders and
their politicians now regularly ignore majority opinions and
preferences.
For example, polls showed overwhelming popular support for
higher taxes on the rich with lower taxes on the rest of us and for
reversing the nation's deepening economic inequalities. Yet Republicans
and Democrats, including President Obama, raised payroll taxes sharply
on January 1, 2013. Those taxes are regressive; they take a smaller
percentage of your income the higher your income is above $113,700 per
year. Raising the payroll tax increased economic inequality across 2013.
For another example, many American cities and towns want to
use
eminent domain laws to help residents keep their homes and avoid
foreclosure. Eminent domain is a hallmark democratic right as well as US
law. It enables municipal governments to buy individual properties (at
market prices) when doing so benefits the community as a whole. Using
eminent domain, local leaders want to compel lenders (e.g., banks, etc.)
to sell them homes whose market prices have fallen below the mortgage
debts of their occupants. They would then resell those homes at their
market prices to their occupants. With their mortgages thus reduced to
their homes' actual prices, occupants could stay in them. They still
suffer their homes' fallen values but avoid homelessness. Communities
benefit because decreased homelessness reduces the fall of other
property values, reduces the number of abandoned homes (and thus risks
of fire, crime, etc.), reduces the number of customers lost to local
stores, sustains property tax flows to local governments and so on.
Used this way, eminent domain forces lenders - chiefly banks - to
share more of the pains produced by capitalism's crisis. Most Americans
support that, believing it will help reverse income and wealth
inequalities and also that banks bear major responsibility for the
economic crisis.
Yet the country's
biggest banks are using "their" money and laws
(that they often wrote) to block municipalities' use of eminent domain.
"Their" money includes the massive bailouts Washington provided to them
since 2007. Big bank directors and major shareholders - a tiny minority -
fund the politicians, parties and think-tanks that oppose
municipalities' use of eminent domain. In these ways, capitalism
systematically undermines democratic decision-making about economic
affairs.
For yet another example, the recent bankruptcy court decision about
Detroit allows the city to cut retired city workers' pensions. Those
workers
bargained and signed contracts with Detroit's leaders over many
years. They accepted
less in wages and benefits in exchange for their
pensions as parts of their agreed compensation for work performed. Now
that an economic crisis and the unemployment it generated have cut
Detroit's tax revenues, this system's "solution" includes cutting
retired workers' pensions. Other cities are expected to adopt this
solution. Inequality worsens as the costs of this economic crisis shift
from lenders to cities (usually rich) to retired city-worker pensioners
(never rich).
In these and other ways, 2013 taught millions of Americans that
capitalism repeatedly contradicts the democratic idea that majority
decisions should govern society as a whole. The system's tendency toward
deepening inequalities of income and wealth operated across 2013 in
direct contradiction to the will of substantial American majorities.
The same happened in the decades before the
1930s Great Depression.
However, in that Depression,
a mass movement from below (organized by
the Congress of Industrial Organizations - CIO - and socialist and
communist parties) successfully reversed capitalism's tendencies toward
inequality. Supported by majorities of Americans, it was strong enough
to obtain
Social Security, unemployment compensation and millions of
federal jobs for the people whom private capitalists could not or would
not employ. Those programs helped average people rather than bailing out
banks and other large corporations. That movement also got the
government to pay for those programs by
taxing corporations and the rich
at far higher rates than exist now. Capitalism's deepening inequality
was partly reversed by and because of a massive democratic movement.
However, that movement stopped short of ending capitalism. Thus it
only temporarily reversed capitalism's tendencies toward inequality.
After World War II, business, the rich and conservatives mobilized a
return to "capitalism as usual." They organized a massive government
repression of the coalition
(CIO, socialists and communists) that led
the 1930s movement from below. By such means as the
Taft-Hartley Act and
McCarthyism, capitalism resumed its development of ever-greater
economic inequalities, especially after 1970. In the Great Recession
since 2007, the absence of a sustained movement from below has allowed
inequality to worsen as our examples above illustrate.
The lessons of recent history include this: To secure democratic
decision-making and the kind of society most Americans want requires
moving beyond capitalism. Capitalism's difficulties (including its
crises and inequalities) and its control of government responses to
those difficulties keep teaching that lesson. The widening gap between
democratic needs and impulses and the imperatives of capitalism is
becoming clear to millions in the United States but also in other
countries.
For example, the Rajoy government in Spain recently imposed new
levels of repression on the strengthening protests against its austerity
policies. Spain's unemployment rate today exceeds the US rate in the
worst year of the Depression. Rajoy wants fines of up to $40,000 for
offenses such as burning the national flag, insulting the state or
causing serious disturbances outside Parliament. Indeed some fines go up
to $800,000 for "demonstrations that interfere in electoral processes."
Contradictions between democratic rights and demands and the
processes of capitalism are accelerating into clashes in legislatures
and the streets. Informed by history's lessons about capitalism and
democracy, today's movements more likely will recognize the need to
confront and supersede capitalism to secure real democracies. Policies
that achieve only temporary reversals of capitalist inequalities no
longer suffice.
The system's imperatives to profit, compete and grow are
now so costly to so many that its critics and opponents are multiplying
fast. Once they confront and solve the problem of politically
organizing themselves, social change will happen fast, too. (??? ed)
