Liberalism, Capitalism

I do not know when I learned that capitalism is an economic system and democracy is a political system. Junior high or High School? I have been thinking for a very long time I got a better education at Anderson Highland than many people have had since.

The one time I spoke with my nephew #3, he said there were no Socialists in his household; they did not wave the blue flag. That confused me, since Socialists wave a red flag. I wrote Socialism. He has chosen not to read it. In that he is not alone.

I wonder if all those using liberal as a pejorative and laud conservatism understand liberal government is self-government. Could it be those conservatives do know what they mean, and have no interest in being governed equally with all the other citizens, that they want to be ruled rather than governing themselves? It is starting to look like it, from Trump's fundraising to DeSantis' educational edicts.

A long time ago – I think the Nineties – it was pointed out Singapore was capitalist without being democratic.

Now Aeon published Liberalism against capitalism pointing out the same conclusion: capitalism does not need liberal democracy.

Judge Lambros’s profound ambivalence reflects a contradiction that seems to lie at the heart of liberalism. On the one hand, the promise of a liberal society is of a society of equals – of people who are equally entitled and empowered to make decisions about their own lives, and who are equal participants in the collective governance of that society. Liberalism professes to achieve this by protecting liberties. Some of these are personal liberties. I get to decide how to style my hair, which religion to profess, what I say or don’t say, which groups I join, and what I do with my own property. Some of these liberties are political: I should have the same chance as anyone else to influence the direction of our society and government by voting, joining political parties, marching and demonstrating, standing for office, writing op-eds, or organising support for causes or candidates.

On the other hand, liberalism is usually uttered in the same breath as capitalism. Capitalism is a social system characterised by the fact that private persons (or legal entities like corporations) own the means of production. Combined with liberalism’s protection of rights and liberties, this means that, just as I get to decide what to do with what I own (a 2004 Hyundai with a busted A/C unit and squeaky wheel bearings), so did the legal entity US Steel get to decide what to do with what it owned: the Youngstown Works.

Liberalism’s apparent commitment to capitalism threatens to prevent it from delivering on all that it promises. To see this, it is important to remember that formal political processes do not exhaust the way our society governs itself. One of the main tasks for a society is to organise economic production. We humans are a species that makes stuff. We make tools, dwellings, food, art, culture, more little humans, and much else. Moreover, we usually do this together, as a joint activity. Such cooperative production inevitably produces a division of labour: some hunt while others gather; some fish while others sow; some design artificial intelligence while others squeegee windows at the stop light.

When American liberalism faced off against the Soviet Union's Communism, it was easier to conflate liberalism with democracy (just as we conflated tyranny with Marxism). Those who want to dismantle American democracy and our Constitution, may resurrect Marxism as a potent alternative. It was that during the Twenties and the Thirties, until Stalin's show trials and its invasion of Poland. Marxism addresses an inherent conflict between democracy and capitalism.

This means that the way society organises production has re-emerged as a contested political issue. But it does so in a fractured ideological moment. Liberalism’s hegemony is perhaps at a nadir. Populist authoritarians and ‘illiberal democrats’ have attracted a surprising level of legitimacy and support, while post-liberal ideologies look ahead to new possibilities. Critics on the Left and the Right offer two main visons of the near-future. On the Left, critics suspect that the return of industrial policy might be less than the ‘new economic world order’ its proponents tout it to be, reflecting liberalism’s inability to get to the root of capitalism’s problems. Those who hold this view, like the economist Daniela Gabor, see legislative efforts like the US president Joe Biden’s Inflation Reduction Act (IRA) or the European industrial policy proposed by the French president Emmanuel Macron as merely underwriting private profit-making by using the state to ‘de-risk’ some capital investments, making them safer for capitalists who reap massive rewards with little downside. Some socialists even go so far as to suggest that Biden’s IRA is a regression to a kind of feudalism. On the Right, some so-called post-liberals, like the political theorist Patrick Deneen, hope that an industrial policy focused on restoring blue-collar manufacturing jobs to the US heartland will turn out to be a revolutionary first step toward throwing out liberalism with all its (hypocritical) aspirations for individual liberties and social equality.

I read Jack Reed's Ten Days That Shook the World after seeing the movie Reds. The book confirmed my impression of the film as an American seeing the soviets as the continuation of democratic government. The original soviets were worker's councils running industry and parts of the government. They only shared a name with the later Soviets. 

The Aeon article has a different solution:

This dichotomy ignores the possibility of a liberal anticapitalism. This may sound like an oxymoron. Neither liberals nor their critics disentangle liberalism from capitalism (though some historians have begun to). Most liberals even emphasise the happy marriage between the two. Among those liberal egalitarians who stress the redistributive New Deal as liberalism’s moral core, few seriously grapple with big issues of political economy. Liberals advance institutional and procedural solutions – ‘structural change’ to representative processes, expanding voting access, etc – but rarely question the basics of political economy like who owns what and lords it over whom.

Aeon article, Liberalism against capitalism, has another critique and solution:

For Rawls, liberalism revolves around two ideals: society as a fair system of cooperation, and people as free, equal, capable of acts of joy, kindness and creativity; and disposed – if not always without reluctance – to cooperate with one another to flourish. Rawls shows that these ideals lead to principles that we can appeal to in designing, improving and maintaining our basic political and economic structures.

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But even a society that fulfilled equal opportunity would still fall short of the full ideal of liberal equality. More difficult to specify but infinitely more powerful than equal opportunity is the value Rawls called ‘reciprocity’. This is the idea that it matters that we are, are seen by others as, and see ourselves as, fully participating members of society, on equal footing and status with other participants. Capitalism makes reciprocity impossible because it requires a division of labour that prises apart the ‘social roles and aims of capitalists and workers’. Consequently, Rawls said, ‘in a capitalist social system, it is the capitalists who, individually and in competition with one another, make society’s decisions’ about how to invest its resources and what and how to produce. This makes it hard for workers to see themselves as active participants in directing society because, well, they aren’t (with the limited exception of voting in a ballot every few years).

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Anticipating the economist Thomas Piketty’s claim in Capital in the Twenty-First Century (2013) that capitalist societies ‘drift toward oligarchy’, Rawls argued that economic and political inequality ‘tend to go hand in hand’, and this fact encourages the wealthy to ‘enact a system of law and property ensuring their dominant position, not only in politics, but throughout the economy’. The wealthy use their dominant position to set the legislative and regulatory agendas, monopolise public conversation, hold political decision-making hostage by threatening capital flight, and engage in outright corruption. Reforming campaign finance rules to keep money out of politics is perhaps an important start in curbing this tendency. But it’s just a start.

Rawls was sensitive to Karl­ Marx’s criticism that liberal rights might be empty or merely formal – naming protections without really providing them. In response, Rawls insisted that rights to political participation must be given ‘fair value’. In A Theory of Justice, he observed that the full policies needed to protect political liberty ‘never seem to have been seriously entertained’ in capitalist societies. The reason is that the conversion of economic inequality to political domination happens quickly. ‘Political power rapidly accumulates’ when property holdings are unequal, and the ‘inequities in the economic and social system may soon undermine whatever political equality might have existed’. Ensuring political liberty therefore requires us not just to restrict the use of money in politics but, in Rawls’s words, ‘to prevent excessive concentrations of property and wealth’ in the first place.

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This is where Rawls’s liberal critique of capitalism leaves us. Not with a silver bullet, but with a moral compass and an agenda. His critique leaves out some important things. Notably, he had little to say about race and ignored the dynamics of ‘racial capitalism’. No reckoning with capitalism is complete without this dimension. Nevertheless, he helped illuminate the important fact that what we need, and many of us want, are decentralised, cooperative forms of economic production that are consistent with the core liberal values of social equality and basic liberties. But we’ve yet to discover at scale how to have this cake and eat it. Rawls’s work provides little help on this, but fortunately we do not need to rely on his theoretical and philosophical approach in isolation. Here we can turn to social science and to the countless examples of activists and visionaries – from Jackson, Mississippi to Preston, England – developing participatory economics, community wealth-building, and other new and richer forms of what the political theorist Bernard Harcourt today calls ‘coöperism’.

What is certain are Republican policies – they favor the oligarchic, they favor the authoritarian, they favor the white nationalist. It was the Republicans who demolished estate/inheritance taxes, which were intended to break up concentrations of wealth, not to endanger the family farm. Race may be the great stumbling block for Americans living up to its creed of equal rights for all.

I put all this out there for people to think about it. We cannot afford to see capitalism as democracy.

sch 8/13