- Feb 1, 2007
Free Market VS. Democracy: (1-0)
We are not exactly taught that they go hand in hand.
It is taken as so self-evident that it does not even need to be said.
Because of that, it tends not to occur to anyone to question it; not even a lot of people who question just about everything else.
It is assumed also that it is impossible to have one without the other.
Hence, Americans for generations think that Communism and Democracy are opposites.
One is a political system, one is an economic system.
The opposite of Communism is Capitalism, and the opposite of Democracy is Dictatorship (or Anarchy).
I shouldn't have to bother to point out that distinction, but like I say, the assumption is pretty wide-spread.
It fools otherwise intelligent people, who believe in individual rights and freedoms - such as the entire Libertarian Party.
Many realize that some socialist and communist countries have been/are democratic, and that countries with individual ownership and stock markets can have a dictatorial government.
But it actually goes a lot further than that.
An open market makes democracy impossible.
In a true Democracy, all of the citizens which live in a society collectively make the decisions which affect them.
In a free market, the "market" itself makes a great amount of the decisions which affect the citizens in a society.
The "market" decides what gets produced, how much of it, when, how much it costs, who is employed and at what rates, what housing, stores, entertainment, schools, transportation, services, etc. are available, in what areas, and for how much money (or labor equivalent). These things make up the majority of what daily life consists of. Foreign policy, interest rates, and government spending and services tend not to affect the day to day reality of most people. Where the effects do lie (services, for example), they tend to be in areas where the free market would produce very different results if left to its own.
There is no actual conscious "market" entity which makes decisions. It is a matter of people with some amount of money (it would be hard for someone with no money at all to affect the market) making individual decisions (generally assumed to be self-interested choices).
This means that a person with more purchasing power has more power over society, be that buying goods or hiring employees.
Which in turn means essentially that the wealthy control society, not just incidentally or inevitably, but by design.
It is made to seem that a restricted market is a restriction of personal freedoms. The constitution spells out very specific freedoms, and the general principals of life, liberty, and happiness. This is not necessarily the same as saying everyone is allowed to do whatever they want. In any society (save anarchy) it is assumed that there will be limitations on what we will collectively allow individuals to do. There are often some restrictions on activity which does not even effect anyone but the actor (victimless crimes), generally on religious based "moral" reasons. Life consists primarily of the process of sustaining life, which in our society consists of work and consumption, production, service, housing - employment and the subsequent purchase of food and housing. Therefor things which concern markets clearly have great affect on more than just the individual who, say, owns a factory. In other words, it is appropriate to restrict freedoms which affect other people. That's what a society or community of people is all about.
If a factory owner were to sneak into the houses of his employees and steal $10 from them each, that would be illegal. If he were to announce a $0.10 cut in pay for them, it is assumed he should have the "right" to make that decision - even though it has the same (in the long run, much greater) effect on the same people, and for the same reason.
Either way, the owner gets money which would otherwise belong to the employees.
Corporations, by law, are required to prioritize profit first and foremost. If the CEO would like to be "socially responsible", they would have to find a way to prove it would be in the financially best interests to do so. Many times it isn't.
Corporations are given rights, while no individual can be held responsible for crimes the corporation commits. The penalty for, for example, ignoring a flaw in product design which kills a dozen people: fines. Clearly some individual, or set of individuals, made that decision. But that is the entire point of an LLC (limited liability corporation).
I propose that if (for example) an auto maker detects a defect and fails to institute a recall because a recall is more expensive than the out-of-court settlements (Palahniuk got that example from real life) every single stock holder, even if they are not on the board, should be tried for manslaughter.
Say a mechanic were hired to fix the brakes of a car, and accidentally forgot to reinstall them. After they got the car down they discovered the problem, but it was late in the day, and they didn't feel like jacking it back up to fix it. The following day, the owner picks up the car, and dies in a crash. This would be at least criminal negligence and involuntary manslaughter.
Corporation does the equivalent, the consequence - if any - consists of a fine; generally one which is small enough not to threaten the actually business. In fact usually a fine smaller than the amount they profited from the illegal action they took.
Then the company will factor in the cost of settlements plus the fine, and you still come up with a dollar amount comparing profit to an individual persons life.
Could just as easily be yours.
The benefit of the corporation is that the pooling of capital can make a larger company. The addition resources may allow things which could not be done without it. The creation of Airbus required so much venture capital to form a company to compete with Boeing it required a consortium of governments to fund. Few individuals, even wealthy ones, could afford to build a jumbo jet factor plus engineering research faculties with their own money. The corporation prioritizes profit (over, say, the creation of jobs, or products which society would benefit from) because otherwise, what incentive do individual investors have to buy in?
Ultimately, the free market at large allows the economics of a society to function more efficiently, and ultimately increases total production.
America's enormous GDP is certainly correlated with our minimal restrictions on the economy and on corporations compared to most of the world.
But we also have the worlds top income inequality (to say nothing of wealth inequality - the richest don't really need income, they can easily live a lifetime on what they already have). I won't get into that, as I have in recent entries.
Point is, why should it be a goal of society to have a large GDP?
What good does it do us?
In economics, there is no value in stability or sustainability. The goal is growth. Total profit in a given quarter is less important than percent increase relative to last quarter.
A large, but consistent, profit would be considered bad. It is taken as an axiom, with apparently minimal thought as to what purpose constant growth serves - never mind the fact that it is inherently impossible to grow forever.
For an individual, what is the point of working a bunch of overtime, skipping vacations, to make lots of money, if you never have any time to actually enjoy it? The money is not inherently good if it doesn't actually end up buying something which you enjoy. The ultimate goal is happiness (well, the real ultimate goal is successful reproduction, but I think we rightly focus on our conscious selves' goals, not those of our genes).
Does a high GDP cause the greatest happiness for the greatest number of citizens?
In conclusion, America's version of "democracy", seems to be another version of the elite rule which has always been there everywhere throughout history. Emphasizing free markets insures that those with money will always keep their power. Unlike the other versions, however, it has a built in mechanism to prevent citizens from rebelling.
The idea of democracy allows everyone to feel it is fair. We are told that anyone can get to the top - even though the most likely way for many of us is the lottery, the possibility is there.
We are told that democracy allows us to decide what goes on around us, and while some do notice that we are only voting for representatives, and that the "party" system severely limits even that choice, the fact that those representatives are severely limited themselves in the scope of their power is glossed over.
Most important of all, the high economic standards mean everyone can afford lots of cool stuff, and even if they are less happy than they could be (if, say, they lived somewhere where they couldn't afford 200 channels or a new SUV, but they only had to work 30 hrs a week to pay the rent and bills and had 5 weeks paid vacation per year). The stuff one can see, can count, can be sure of. Most people would not risk giving up what they know they have for something they might or might not get. As long as the conditions for the average person are at least good enough, they are unlikely to question anything.
It is taken as so self-evident that it does not even need to be said.
Because of that, it tends not to occur to anyone to question it; not even a lot of people who question just about everything else.
It is assumed also that it is impossible to have one without the other.
Hence, Americans for generations think that Communism and Democracy are opposites.
One is a political system, one is an economic system.
The opposite of Communism is Capitalism, and the opposite of Democracy is Dictatorship (or Anarchy).
I shouldn't have to bother to point out that distinction, but like I say, the assumption is pretty wide-spread.
It fools otherwise intelligent people, who believe in individual rights and freedoms - such as the entire Libertarian Party.
Many realize that some socialist and communist countries have been/are democratic, and that countries with individual ownership and stock markets can have a dictatorial government.
But it actually goes a lot further than that.
An open market makes democracy impossible.
In a true Democracy, all of the citizens which live in a society collectively make the decisions which affect them.
In a free market, the "market" itself makes a great amount of the decisions which affect the citizens in a society.
The "market" decides what gets produced, how much of it, when, how much it costs, who is employed and at what rates, what housing, stores, entertainment, schools, transportation, services, etc. are available, in what areas, and for how much money (or labor equivalent). These things make up the majority of what daily life consists of. Foreign policy, interest rates, and government spending and services tend not to affect the day to day reality of most people. Where the effects do lie (services, for example), they tend to be in areas where the free market would produce very different results if left to its own.
There is no actual conscious "market" entity which makes decisions. It is a matter of people with some amount of money (it would be hard for someone with no money at all to affect the market) making individual decisions (generally assumed to be self-interested choices).
This means that a person with more purchasing power has more power over society, be that buying goods or hiring employees.
Which in turn means essentially that the wealthy control society, not just incidentally or inevitably, but by design.
It is made to seem that a restricted market is a restriction of personal freedoms. The constitution spells out very specific freedoms, and the general principals of life, liberty, and happiness. This is not necessarily the same as saying everyone is allowed to do whatever they want. In any society (save anarchy) it is assumed that there will be limitations on what we will collectively allow individuals to do. There are often some restrictions on activity which does not even effect anyone but the actor (victimless crimes), generally on religious based "moral" reasons. Life consists primarily of the process of sustaining life, which in our society consists of work and consumption, production, service, housing - employment and the subsequent purchase of food and housing. Therefor things which concern markets clearly have great affect on more than just the individual who, say, owns a factory. In other words, it is appropriate to restrict freedoms which affect other people. That's what a society or community of people is all about.
If a factory owner were to sneak into the houses of his employees and steal $10 from them each, that would be illegal. If he were to announce a $0.10 cut in pay for them, it is assumed he should have the "right" to make that decision - even though it has the same (in the long run, much greater) effect on the same people, and for the same reason.
Either way, the owner gets money which would otherwise belong to the employees.
Corporations, by law, are required to prioritize profit first and foremost. If the CEO would like to be "socially responsible", they would have to find a way to prove it would be in the financially best interests to do so. Many times it isn't.
Corporations are given rights, while no individual can be held responsible for crimes the corporation commits. The penalty for, for example, ignoring a flaw in product design which kills a dozen people: fines. Clearly some individual, or set of individuals, made that decision. But that is the entire point of an LLC (limited liability corporation).
I propose that if (for example) an auto maker detects a defect and fails to institute a recall because a recall is more expensive than the out-of-court settlements (Palahniuk got that example from real life) every single stock holder, even if they are not on the board, should be tried for manslaughter.
Say a mechanic were hired to fix the brakes of a car, and accidentally forgot to reinstall them. After they got the car down they discovered the problem, but it was late in the day, and they didn't feel like jacking it back up to fix it. The following day, the owner picks up the car, and dies in a crash. This would be at least criminal negligence and involuntary manslaughter.
Corporation does the equivalent, the consequence - if any - consists of a fine; generally one which is small enough not to threaten the actually business. In fact usually a fine smaller than the amount they profited from the illegal action they took.
Then the company will factor in the cost of settlements plus the fine, and you still come up with a dollar amount comparing profit to an individual persons life.
Could just as easily be yours.
The benefit of the corporation is that the pooling of capital can make a larger company. The addition resources may allow things which could not be done without it. The creation of Airbus required so much venture capital to form a company to compete with Boeing it required a consortium of governments to fund. Few individuals, even wealthy ones, could afford to build a jumbo jet factor plus engineering research faculties with their own money. The corporation prioritizes profit (over, say, the creation of jobs, or products which society would benefit from) because otherwise, what incentive do individual investors have to buy in?
Ultimately, the free market at large allows the economics of a society to function more efficiently, and ultimately increases total production.
America's enormous GDP is certainly correlated with our minimal restrictions on the economy and on corporations compared to most of the world.
But we also have the worlds top income inequality (to say nothing of wealth inequality - the richest don't really need income, they can easily live a lifetime on what they already have). I won't get into that, as I have in recent entries.
Point is, why should it be a goal of society to have a large GDP?
What good does it do us?
In economics, there is no value in stability or sustainability. The goal is growth. Total profit in a given quarter is less important than percent increase relative to last quarter.
A large, but consistent, profit would be considered bad. It is taken as an axiom, with apparently minimal thought as to what purpose constant growth serves - never mind the fact that it is inherently impossible to grow forever.
For an individual, what is the point of working a bunch of overtime, skipping vacations, to make lots of money, if you never have any time to actually enjoy it? The money is not inherently good if it doesn't actually end up buying something which you enjoy. The ultimate goal is happiness (well, the real ultimate goal is successful reproduction, but I think we rightly focus on our conscious selves' goals, not those of our genes).
Does a high GDP cause the greatest happiness for the greatest number of citizens?
In conclusion, America's version of "democracy", seems to be another version of the elite rule which has always been there everywhere throughout history. Emphasizing free markets insures that those with money will always keep their power. Unlike the other versions, however, it has a built in mechanism to prevent citizens from rebelling.
The idea of democracy allows everyone to feel it is fair. We are told that anyone can get to the top - even though the most likely way for many of us is the lottery, the possibility is there.
We are told that democracy allows us to decide what goes on around us, and while some do notice that we are only voting for representatives, and that the "party" system severely limits even that choice, the fact that those representatives are severely limited themselves in the scope of their power is glossed over.
Most important of all, the high economic standards mean everyone can afford lots of cool stuff, and even if they are less happy than they could be (if, say, they lived somewhere where they couldn't afford 200 channels or a new SUV, but they only had to work 30 hrs a week to pay the rent and bills and had 5 weeks paid vacation per year). The stuff one can see, can count, can be sure of. Most people would not risk giving up what they know they have for something they might or might not get. As long as the conditions for the average person are at least good enough, they are unlikely to question anything.
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