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Will Capitalism and Democracy Survive?

2017 September 28
by Ian Welsh

Image by TW Collins

Systems of governance, and both capitalism and democracy are such systems, can run cycles of success, failure, and renewal for a long time. Consider Imperial Confucian China, with dynasties failing, sometimes with interregnums, then new dynasties arising. Dynasties would tend to be vigorous to start, corrupt and sclerotic at the end.

Or the Dark Ages and Medieval Europe, with forms of feudalism and monarchy surviving crises over many centuries.

Let’s consider the dynamic in a bit of detail.

A system survives when it gives power to those who support it AND are capable of continuing it.

This seems obvious, but it’s a little more tricky than it seems.


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Take capitalism: Capitalism runs through greed. It gives power to those who do whatever it takes to make the most money The more money you have, the more power you have. Money is the ability to decide what other people do, not just the ones you hire directly, but through purchasing power. Apple decides what Foxconn does, and heck of a lot of other people it doesn’t hire directly.

Capitalism’s prime directive is: “Do whatever makes the most money.” Whoever does that successfully also receives the most power.

In a capitalist society, people who do not respond to capitalism’s prime direct, do whatever makes the most money, do not get power. Since they have no power, they cannot challenge capitalism.

The catch here is part two of the prime directive, “and are capable of continuing it.”

Capitalism must also run the actual real economy, which consists of people and things: houses, food, sewer systems, airports, and so on.

If capitalism fails to run that system effectively, that has real effects which having more money cannot manage.

You see this in the hyperinflation of Weimar Germany. You see this in the Great Depression. You see this now, in America, where parts of the population are seeing absolute declines in life expectancy.

In Capitalism, there is supposed to be a transmission between the real economy and how much money powerful people have: you should get your vast wealth by giving people what they want, and that should be good for the economy, and if it isn’t, you should go bankrupt.

People who pursue money but cannot actually manage the real economy should lose that money, and therefore their power.

This happened in the Great Depression. The rich took their losses, and lost their power (though not all of them).  Those who remained were the smarter or luckier–more capable.

Still, the magnitude of the disaster was such that capitalism was in some danger. As many have observed, FDR rescued capitalism.

What happened in 2008 is that a large portion of capitalists lost all their money (and more than all their money). If the capitalist transmission system had been allowed to work, there would not have been a single solvent major bank or brokerage in the United States.

They had fucked up.

BUT, they had also bought the politicians and regulators, and thus, were bailed out.

The real economy, which is not GDP, then shifted into a lower state of activity.

This process has been going on for a long time now, since 1980 really. The rich have been getting richer and worse at managing the actual economy.

What should have happened in 2008 was that the rich took their losses and power moved to democratically-elected officials, as it did in the 30s. But democratically-elected officials, handed said power on a platter, refused to take it. (Yes, the Fed, but the Fed can be brought to heel any time either Congress of the President chooses to.)

Democracy, thus, also failed.

A system must give power to those who want to continue it. It must also run the actual society well enough to avoid being overthrown.

Democracy failed in 2008, but it has not failed, completely–yet. In Britain, we see the rise of Corbyn, who wants to take back vast swathes of the economy from private business; for instance, things like the train system, where private owners have made train travel cost more but less reliable.

In the US, the Democratic Party is moving towards single payer health care, because the private industry has failed to run health care effectively and efficiently for the majority of the population.

These are healthy movements. Capitalism has failed to do what it is supposed to do: Run the economy properly. They said, in the 70s and 80s, “We’re better than the public. Privatize and de-regulate, and we’ll do a great job.”

Instead, we’ve experienced a progressive decline, which has been leading to catastrophe.

If democracy succeeds in removing from the private sector what it cannot run effectively, and in removing the power from the wealthy whom have proven they cannot manage–as with Corbyn’s maximum salary proposal (though more comprehensive anti-trust actions are needed), then democracy will survive.

If democracy cannot manage what capitalism cannot, then democracy, too, is on the line. It will have failed to run society effectively, and will be seen to have failed.

Either democracy tames capitalism, or democracy and capitalism may both die.


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47 Responses
  1. September 28, 2017

    I keep telling people that capitalism is dead – 1 of the results of this is hinted to buy your Fed slide – keeping money out of the system, so that if anything untoward should happen it can be recovered.

    the reason I say that capitalism is dead, is under capitalism all of the people who bet wrongly and were wiped out with capital losses, would be gone from the system. which is why I term are current phase “Neo-aristocracy”. At this point, the people who hold power do not have to worry about maintaining enough capital, and therefore do not. But this has consequences, one of them is that without capital in place than many people who could work, do not.

    Democracy has also gone in to eclipse, we do not have to mount the best candidate, and therefore we do not.

    This state of affairs can go on, because a large fraction of the world is not yet willing to realize that we are in a new state of affairs – there has to be a war, which will take a bit of time. There is also a change in generations, with the new generation numb to the Overton changes that the old generation and started for itself. Longer life has its disadvantages – because before now the younger generation would be in charge.

    So the answer is, “Democracy and capitalism did not survive.”

  2. Frank Stain permalink
    September 28, 2017

    Capitalists have failed to be effective managers of the real economy b/c the basic conflict in capitalist society between capital owners who want to accumulate wealth and workers who desire a share of the pie has become inexorable and unforgiving in an era of low productivity service work and low growth rates. The owners of capital have been running an all out assault on the institutions of democratic society for quite some time now with the intention of weakening forms of solidarity and institutionalized popular power, as evidenced by the right wing attack on voting rights, unions, and basic expectations of responsive government. The point of all this is to open up previously protected areas of civic life to mass looting. Talk about an infrastructure push is likely to be just another form of mass looting as bridges and major roads becomes toll roads pulling in rents for the finance industry.
    Massive govt spending would pull the economy out of its below-capacity state, but the owners of capital do not want that, because it would lead to inflationary pressures (which threatens people who lend money) and the rising wages (which threatens business owners). Instead of investing in growth, the owners of capital today spend their money buying back their stocks and cashing out to investors through dividends. The problem has become a structural one throughout the corporate world. Corporations have become shells for extracting value from the productive economy and placing it in the pockets of parasitic financiers. The shareholder value movement deserves a large share of the blame for this.
    The attack on monopoly and monopsony is finally getting a broader hearing on the left. This is a big part of the problem. The solution, though, will have to involve a fundamental, democratic restructuring of corporations to prevent them from being used as tools by financial parasites.

  3. September 28, 2017

    “…Democracy too is on the line. It will have failed to run society effectively, and will be seen to have failed.”

    When this happens, after a period of dissolution and panic, totalitarianism of some religious/political stripe or Thug-boss rule appears. And then the trains seem to run on time.

    Pity. We had such promise.

  4. Rich permalink
    September 28, 2017

    Minor disagreement. Perhaps it’s simply syntax.
    Their idea is to get the most money by doing the very least or, preferably, do nothing at all.

    The Rentier Class. Capital gains. Tax cuts only for certain financial classes. Have the FBI entrap then prosecute assistant NCAA basketball coaches for taking bribes on the order of $10,000 dollars, while not finding the resources or political will to entrap, ensnare, prosecute and jail the bankers, financial Titans, federal reserve officials, and SEC leaders who defrauded the entire country to the tune of $16-32trillion dollars. That’s easily $50,000 to $100,000 for every man, woman, and child in America.

  5. realitychecker permalink
    September 28, 2017

    Query: Does having a crooked sheriff mean that the system he is supposed to be enforcing was a bad idea?

    I would say no, let’s dig a little deeper, but most here seem to be chronically willing to condemn the system/ideology of capitalism in its essence, when crooked rule-enforcers seem to me to be the real problem.

    Still, this was a wonderful post, Ian, and thank you for it. I am certainly in full agreement with the idea that if we want to avoid the perils of a corporate society we need to become more self-sufficient and localized.

  6. nihil obstet permalink
    September 28, 2017

    I don’t think capitalism and democracy are inherently bound together. In fact, they are inimical, since the power of money in capitalism trains everyone, owners, workers, and consumers, in deference to power rather than in free self-government. Capitalism is based on greed, which will not lead to a good end. It may be possible for a democratic society to regulate the relationships that capitalism creates and depends on, but I’m not even sure of that.

    Capitalism depends on growth. The growth has been largely obtained by monetizing more and more areas of the planet, society, and thought. We’re running out of planet. Capitalism will have to end (although a really ruinous world war doing to everybody what WWII did to Germany could make a reset), but I don’t think democracy will have to.

  7. Frank Stain permalink
    September 28, 2017

    I would say no, let’s dig a little deeper, but most here seem to be chronically willing to condemn the system/ideology of capitalism in its essence, when crooked rule-enforcers seem to me to be the real problem.

    The problem is the systemic incentives that capitalism generates, not the moral character of the persons occupying power. People are people, and will behave similarly and predictably faced with similar inducements and incentives. The problem is structural and systemic. In the postwar, Fordist era, an attempt was made to construct a viable countervailing power that would put its thumb on the scale against capitalist concentration and in favor (to a limited degree) of collective rights. Ultimately, however, that effort collapsed when capitalists amassed enough power to be able to dismantle those protections. The failure of a slightly more humane capitalism was brought about by capitalists who refused to accept their compromised status. Capitalists today are not more crooked than postwar capitalists. They are just operating in an environment where the rewards of sociopathic greed have become obscene and impossible to turn down.
    It makes no sense to blame bad enforcement when the fact of bad enforcement is itself a consequence of the power of capitalists to undermine a sense of the public good and the public interest. Bad, corrupt govt is not an accident. It exists because some people benefit thereby.

  8. someofparts permalink
    September 28, 2017

    Seems a shame to me that the hard-headed clarity on display here is confined to small pointy-headed enclaves like this one.

    Everywhere I go people are hungry for this information. Waiters, retail clerks, students, retirees – all the people I meet going about my day – snap around and light up when I drop bits of the thinking from this place into ordinary conversation.

    I told a waiter at a diner that the kids on Chapo Trap House say we should nationalize Amazon and he cracked up and shared the joke with the other wait staff. I told a fellow retiree at the dog park that what we have is a crime scene, not an economy, and she grinned ear to ear and wanted to keep talking.

    Back in the day the Chinese used traveling theater groups to get their message out. I wonder how long we could do that here before the authorities jailed us or the alt-right storm troopers killed us.

  9. September 28, 2017

    Capitalism is Corporatism, is Fascism. Democracy, true Democracy, capital D Democracy, our idealic Platonic view of Democracy would be by necessity inherently social, would be Socialism.

    Mandos is right, it’ll get worse before it gets better. If it gets better.

  10. someofparts permalink
    September 28, 2017

    Just in case it needs saying, I’m not anti-capital, I’m pro-balance. I want an economy that produces more places like Trader Joe’s – smart, well-run, delightful businesses – and I want good national healthcare too.

  11. realitychecker permalink
    September 28, 2017

    I respectfully submit that the concepts and data around rule enforcement, and punishment theory in general, deserve much more careful consideration.

    We don’t limit monopoly effectively, though we have laws that say we want to; we don’t allow corporate failures to fail, though we say that is how we’ll enforce success for the best; we don’t punish rule-breakers in the race for material success, though there is no other way to limit their anti-social excesses.

    And we don’t acknowledge and honor the central role of competition in capitalist philosophy.

    Crooked sheriffs are not something we should accept. But we do. Capitalism doesn’t have a chance without adequate rule enforcement. The limits are what was supposed to keep the system sane.

  12. Frank Stain permalink
    September 28, 2017

    We don’t limit monopoly effectively, though we have laws that say we want to; we don’t allow corporate failures to fail, though we say that is how we’ll enforce success for the best; we don’t punish rule-breakers in the race for material success, though there is no other way to limit their anti-social excesses.

    But again, this is a purely ahistorical analysis that is little more than armchair moralizing about capitalism. The reason we don’t do any of these things is because capitalists were unhappy with a system in which their choices were restrained by meddlesome bureaucrats, and set out to construct a regime of capitalism in which the public power to fight monopoly and law breaking was destroyed. So what you need to incorporate into your thinking, clearly, is a historical awareness that the failure of enforcement and condoning of law breaking is itself a product of the dynamic of capitalism and its search for a (temporarily) viable regime of accumulation. What looks like a moral problem from the perspective of empty armchair moralizing is in fact revealed as a systemic problem when you are able to take a dynamic, historical perspective.

  13. EverythingsJake permalink
    September 28, 2017

    I fear fascism is the likely next scenario. Michael Parenti’s observations on Germany in the book “Contrary Notions” are on point:

    “What the fascist state attempts is a final solution to the problem of class conflict. It obliterates the democratic forms that allow workers some room for an organized defense of their interests.

    … a similar fascist pattern emerged to do its utmost to save corporate business from the troublesome impositions of democracy. Fascism’s savage service to big capital remains almost entirely a hidden history.”

    I suspect weapons like the Active Denial System will become more common on our streets. The LAPD already has one. Perversely, it may be that the only hope is that climate change will drive widespread re-localization, although the costs are terrible to contemplate.

  14. realitychecker permalink
    September 28, 2017

    @ Frank Stain

    First, I think most of us are in “armchairs” lol.

    Then, you say:

    “The reason we don’t do any of these things is because capitalists were unhappy with a system in which their choices were restrained by meddlesome bureaucrats, and set out to construct a regime of capitalism in which the public power to fight monopoly and law breaking was destroyed. So what you need to incorporate into your thinking, clearly, is a historical awareness that the failure of enforcement and condoning of law breaking is itself a product of the dynamic of capitalism and its search for a (temporarily) viable regime of accumulation. What looks like a moral problem from the perspective of empty armchair moralizing is in fact revealed as a systemic problem when you are able to take a dynamic, historical perspective.”

    And to that, I say, bribing a sheriff is not that different from bribng anyone else, except that he can do so much for you. It happens everywhere. Punishment is the only way to limit it, and we don’t punish like we should. Not that complicated, really.

    The corporations sought to buy legislators and rule-enforcers to get around the rules of capitalism, and were not punished for it, and then those purchased ones delivered for their owners, and were not punished for it.

    Punishment, properly applied, would make a big difference in outcome.

  15. Ché Pasa permalink
    September 28, 2017

    “Capitalist democracy” has always ever been an oxymoron. The People (non-capitalists) have no effective say in their government (barring active and persistent revolt) and the say that capitalists have is not much different nor more than the say that barons have in an aristocratic/monarchical government.

    The goal of the capitalist is “money for nothin.'” Not only are the chicks free, so is nearly everything else the capitalist needs or desires, while revenues pile up (preferably offshore and tax-free) from work and production the capitalist does not do.

    Our colonial ancestors sought money for nothin’ from land and slaves, the land stolen from the Indians, land worked by slaves kidnapped from Africa or bred like cattle on the land stolen from the Indians.

    Theft — not just greed — is a fundamental tenet of capitalism. 

    The so – called “rules” are made by the capitalists themselves on their own behalf. If it doesn’t work out, oh well. Time for more theft and exploitation.

    If there’s nothing handy to steal and exploitation is resisted, then there’s war, imperialism, genocide or whatever it takes to keep the system going.

    Capitalist democracies are run by the capitalists. Thus, they are served — and truthfully, only some of them are served. Only if they take matters into their own hands are the People more than an afterthought in a capitalist democracy.

    The pent up frustration of the American people was relieved during the 19th century through westward expansion, not democracy. Of course that expansion required theft of land and genocide of the Indians. The Native peoples were unable to prevent it.

    The anomalous period from the Depression through the advent of the Reagan era — when the middle class and even some of the impoverished benefited modestly (but more than they had previously) was at least in part motivated by fear that if the lesser people did not benefit noticeably there would be an uprising that would overthrow the rule of the rich. The Bolshevik Revolution put the fear of God into the plutocrats, and the fear was it could happen here. Better to throw bones to the multitude than risk it. Meanwhile, of course, the War intervened, causing havoc and destruction on a titanic scale, but also opening enormous opportunities for well-placed capitalists. Many of the benefits the People enjoyed post-war were expressed as rewards to the masses for their service in defeating the Axis of Nazis, fascists and the Empire of Japan. Little did they know that their rewards would expire after thirty some-odd years.

    And they had no say in it.

    Democracy has been a figment all along. Whether the current iteration of neo-liberal capitalism can survive is an open question.

    

  16. atcooper permalink
    September 28, 2017

    It may be a small thing, but most folks fears are informed by industrialization. If we’re looking at a deinstrialized future, or extremely limited industrial future, then it’s much more likely that whatever comes next can’t look like a 20 th century first world phenomena. The precedent required for gas chambers is an infrastructure that can accommodate.

  17. Tom W Harris permalink
    September 28, 2017

    “The illusion of freedom will continue as long as it’s profitable to continue the illusion. At the point where the illusion becomes too expensive to maintain, they will just take down the scenery, they will pull back the curtains, they will move the tables and chairs out of the way and you will see the brick wall at the back of the theater.” — Frank Zappa

  18. Billikin permalink
    September 28, 2017

    Well, what do we call things? Was the Roman Empire a Republic? I think that we would say no. However, it retained many of the institutions of the Roman Republic. Eventually it became the Kingdom of Rome (the Western Empire, that is), neither empire nor republic. Did Augustus save the Republic? My impression is that many Romans thought so, at the time. One political ploy that he frequently used was to threaten to resign. (Maybe Trump should try that. ;))

    Is the US a plutocracy? You can certainly make that case, although democratic and republican institutions remain.

    In the modern era, both capitalism and democracy were anti-aristocratic movements. Both have been successful and have spread around the world. Even dictators tend to put on the mantle of democracy, and even China has embraced capitalism. I think that it is too early to announce the demise of either. However, capitalism has a self-defeating tendency. It started by empowering the bourgeoisie at the expense of the aristocracy. But, because it tends to concentrate wealth and power, it tends to produce a nouveau aristocracy, or at least a new landed gentry. And when wealth is concentrated in the hands of a few, the economy as a whole is enfeebled. History has shown that a caste society with a feeble economy can last for centuries, if not millennia. People will accept that state of affairs as normal. Capitalism sows the seeds of its own defeat, and also leads to aristocracy, not democracy. Not that we haven’t learned how to curb the aristocratic excesses of capitalism. We did that by the end of the 19th century. We just don’t apply those lessons.

  19. Peter permalink
    September 28, 2017

    History, especially the last sixty years has shown that the growth and power of capitalism has enabled the spread of democracy throughout the world. Many countries that were once ruled by dictators now have at least somewhat representative governments, look at South America, parts of Asia and even Africa. Even the Saudi royals are bending to capitalist pressure to liberalize so they can become an acceptable investment destination. There was no other reason for them to relax the prohibition on women driving or attending sports events.

    The communist world spread nothing but authoritarianism and China is trying to maintain that power over its people by offering them the benefits of capitalism in exchange for the hope of democracy.

    The globalist multinational capitalists today are moving to consolidate their power over democratic states with a NWO that makes their present influence in our democracy look petty. The only force contesting that move is the growing populist nationalist movement.

  20. Jeff W permalink
    September 28, 2017

    I’ve never understood how capitalism is supposed to work, really. You can obviously maximize profit and make money in all sorts of ways that have nothing to do with or even run counter to ”giving people what they want” or doing what’s good for society. You base power on money in a self-reinforcing cycle—the more money you have, the more power you get; the more power you have, the more money you get—so that anyone who thinks things should be done differently has next to no power to change things. And you dole out the bare minimum of surplus value being created, if that, to keep the populace quiescent. How is that supposed to bring about good results in the long run?

  21. V. Arnold permalink
    September 28, 2017

    Tom W Harris
    September 28, 2017
    Zappa was a very smart guy; good post.
    The genuine problem; the majority don’t know it’s all an illusion; they mistake it for reality.
    One cannot change the thing, that one cannot see…

  22. V. Arnold permalink
    September 28, 2017

    The Hopi had a word for our existence;
    Koyaanisqatsi
    (n.) “life out of balance.” a state of life that calls for another way of living

  23. September 28, 2017

    Too few appreciate the importance of balance in our lives. Walk in beauty, my freind.

  24. V. Arnold permalink
    September 28, 2017

    Ten Bears
    September 28, 2017

    Thanks for that; ditto back to you friend.

  25. bruce wilder permalink
    September 28, 2017

    I am always uncomfortable with rhetoric that reifies”capitalism” as actor and cause. It is the wrong grammar for understanding political agency and behavior, wraps too much that ought to be examined openly into a black box, sealed with a label.

    I understand “capitalism” as an epochal label for a system of economic institutions characterised by money finance, private enterprise and anonymous trade in exchange for payments of money. It can be contrasted with that other epochal label, feudalism. Like feudalism before it, capitalism has never been a singular or fixed thing, never been stable for any prolonged period, never been purely one thing in any time or extensive place.

    I have noticed that when people want to rant against current political trends, and invoke the agency of capitalism-the-thing, there is liable to follow a serious confusion between capitalism-as-a-set-of-functional-institutions and the ideology that apologizes for and advocates for capitalism in a front for the defense of vested interests of the powerful.

    Such confusion is understandable. The ideological apologists for capitalism want people to be confused. Milton Friedman was a short, skinny liar, who wanted a lot of people to believe convenient falsehoods about how the political economy as a system works. He was not the first or the last to make a living creating propaganda for capitalism. The generation of rationales for bad behavior and opaque or misleading narratives of current events is, arguably, now a familiar feature of actually existing capitalism.

    A classic idea in apologetics for capitalism is the self-regulating Market. It has been a very powerful idea, recurrent now for more than 300 years. The institution of the market magically resolves conflicts and neutralizes the ill effects of greed. Rivalry and exploitation are beneficent competition, you see, and the interests of all are melded into a general interest by the working of the Market. It is b.s. and nonsense. In a way, the falseness of the apology, of the neoliberal ideology and even mainstream neoclassical economics is a feature of actually existing capitalism. But, the thing is, the apology, the ideology (neoliberalism currently), the conventional accounts of the social science of economics are false accounts of how the political economy works in a functional sense.

    Economics hides the economy.

    What I would say about episodes like the German hyperinflation or the American Great Depression is that there is buried in the politics of economics a great and terrible struggle over the distribution of income and power and sometimes that struggle breaks into the open as a breakdown in the system of cooperation.

    A deep division of labor and a lot of sunk cost investment entails deep conflicts of interest. The Great Depression from 1933 to 1939 was a political stalemate over income distribution. The hyperinflation was a political response to the demands for reparations, in which the German middle class got caught in the crossfire.

    Capitalism, imho, does not so much foster democracy as it begrudgingly discovers that it needs the countervailing power of democracy. Left to itself, the power of wealth unopposed is liable to become a parasite careless of the health of the body politic on which it feeds.

    The economy is organised by and around bureaucracy, not “markets”.

  26. scruff permalink
    September 29, 2017

    “Their idea is to get the most money by doing the very least or, preferably, do nothing at all.”

    I cannot for the life of me find any do-ing in the foundation of capitalism; it is wholly about *owning* for a living rather than *working* for it. If there is such a thing as an “act” of capitalism, it seems to be the deliberate and forceful hoarding and withholding of capital so as to starve the independence out of people.

  27. Peter permalink
    September 29, 2017

    @BruceW

    I enjoy how you begrudgingly agree that capitalism, in all its forms, has been responsible for spreading democracy. The reasons are straightforward with the stability that democracy brings along with the rule of law and protections for investors that are mandatory for success. While needing democracy the capitalist have always tried to limit what they see as the excessive demands of the administrative state.

  28. Jeff Wegerson permalink
    September 29, 2017

    Democracy is a political system. Capitalism is an economic system. The opposite of democracy could be fascism or monarchy. The opposite of capitalism could be communism or a moneyless tribalism.

    Lots of in-betweens on the spectrums of both. Mix and match to your heart’s content.

  29. Jessica permalink
    September 29, 2017

    Society changed fundamentally when the industrial economy matured into a post-industrial society. This changed the main driving force from physical infrastructure (which shows up as capital in the account books) to knowledge.
    In industrial society, capitalists served a useful role: they got the industrial society built out. They did not do this fairly, efficiently, or humanely, but they did it. The first world in say 1960 was vastly more prosperous for most (but certainly not all) its citizens and they were much better educated. That is why we shifted into a knowledge-driven economy.
    A knowledge economy requires a quite different set of rules to work well. Those who do knowledge work must be compensated and motivated, but at the same time, the creation and distribution of knowledge must be for the sake of knowledge, not for the sake of profit. No society has found those rules yet. Instead the rulers from the old industrial regime and their rules remain in place. So what we have is a knowledge economy that is trying to emerge but that is warped in many ways in order to fit it within the rules of the industrial economy. This is why fully industrialized economies now grow slower than industrializing economies and any industrializing economy that matures adequately runs into the same brick wall. Japan is a clear example of this and South Korea and Taiwan too.
    To be absolutely clear, when I say a knowledge economy, I am not talking about what people generally mean by that. The currently existing knowledge economy is to the real thing as a badly done bonsai is to a sequoia. Just as the currently existing Internet is a deliberately undermined card catalog for the library that the Internet should be but is not.
    Because the elites no longer actually have any positive role to play, there is nothing holding them together. We no longer have a ruling class. We have a congeries of factions. So far, they are able to come together in order to crush alternatives, but other than that, each of these shifting factions works only for itself. The elites are no longer able to enact even those reforms that would be to their benefit. This is why a spirit of plunder and rent collecting dominates.
    The primary role of much of the next 10% or 20%, the top minions of our oligarchs, is to create and distribute ignorance. The result is a level of mass misunderstanding that is more intense the more one has been educated in the elite credential issuing institutions. I am not sure how the power of the current ignorance machine compares to that of its predecessor, religion.

  30. September 29, 2017

    The rich are getting better at managing the economy. They just manage it for their own benefit. Capitalists aren’t ineffective, they just don’t care about us.

  31. RenoDino permalink
    September 29, 2017

    Democracy and Capitalism are small potatoes that are no longer on the table. We have transitioned to the recognition that our survival depends upon maintaining our Imperial Project and hegemony in a unipolar world where we frighten our allies and terrorize our enemies. We no longer feel a need to promote our sacred and illusionary values to advance the Empire because the current international order is predicated on our willingness to enforce our demands through the ruthless application of military force. Trade is war conducted by other means so it too adds another weapon to our arsenal.

    The ideas of Democracy and Capitalism now seem quaint and rank right there with other dead letters like Free Speech and the Rule of Law. We’ve shed all of those pretenses and have embarked upon the final grand chapter of the Imperium, one we have spent the last seventy years, trillions of dollars and the last remnants of social fabric in preparation for. All that’s required in exchange is your blind patriotism.

  32. V. Arnold permalink
    September 29, 2017

    RenoDino & Jessica
    You have both posted very interesting and cogent realities of our present.
    Disturbing to say the least; but hardly surprising for those of us paying attention; I would suggest solutions are no where to be found.
    Pity really; but inevitable when all is said and done…

  33. Sid Finster permalink
    September 29, 2017

    We don’t have capitalism, if we ever did.

    We have crony capitalism. Big difference.

  34. Peter permalink
    September 29, 2017

    The globalists from multinationals and the political class seem to think we have too much independent democracy now. They want to build a collectivist type structure that solidifies their power and control over all nations and economies. Too many people believe this form of non-democratic but efficient world government is needed to overcome nationalist resistance to the NWO.

    We have already seen how efficient, secretive and undemocratic these forces can be with examples such as the TPP. Even national environmental laws could be overruled by their unelected tribunals. Until the US pulled out of the Paris Climate Accords the globalist were seeing little resistance. The alarmist Warmers cleverly used propaganda and fake science to frighten enough leaders into surrendering their democratic powers to an unelected body of technocrats and economic interests. They moved quickly to capitalize on this new power and issued mandates to reduce CO2 which the latest research from warmer scientists show that its effect has been overstated and the predictions from their models are too hot.

    I don’t know if the globalists can be stopped but they are being confronted by democratic forces in the US and Europe.

  35. Darius permalink
    September 29, 2017

    Capitalism and crony capitalism have been revealed in the 21st Century to be the same thing. Capitalism elevates the accumulation of money to the exclusion of all other human values. It inexorably leads to the concentration of money, and therefore power, with a few winners and many, many losers.

    A problem I see for socialism is with what do you replace the price machanism for guiding purchasing, production and distribution decisions. Another problem is how to avoid a descent into Stalinism.

  36. bob mcmanus permalink
    September 29, 2017

    Jessica above nailed much in the comment starting: “Society changed fundamentally when the industrial economy matured into a post-industrial society. ”

    +1

  37. Frank Stain permalink
    September 29, 2017

    I have noticed that when people want to rant against current political trends, and invoke the agency of capitalism-the-thing, there is liable to follow a serious confusion between capitalism-as-a-set-of-functional-institutions and the ideology that apologizes for and advocates for capitalism in a front for the defense of vested interests of the powerful.

    There has to be some kind of balance between the investigation of the structural dynamics of capitalism, and the emphasis on culture and practice and how individuals actually go about making sense of the fixed structures they find themselves living in. You can’t just dispense with the agency of capital per se and reduce everything to the contingent process of culture and the meanings in people’s heads. This was surely an important aspect of the Piketty reception. Despite his faults, what Piketty managed to do was remind people that capitalism has basic, enduring properties which persist across time. Those properties, in turn, explain enduring relations that coordinate the relations of social actors as they go about their business. The enduring structure places enormous pressure on individuals to adjust their normative orientation to the structure. If you want to deny the importance of the agency of capital in favor of culture or individual agency, you would have to explain why the basic characteristics of capitalist production have successfully spread to every corner of the globe despite huge differences in environment & culture, and how they also display strikingly similar distributive patterns.

  38. bruce wilder permalink
    September 29, 2017

    @ Jessica

    You’ve packed a lot of provocative and insightful ideas into a brief comment.

    To comment narrowly on the economics: the ideology of capitalism has a tendency to make a morality play of capitalism — I suppose that is what ideology is in a way, a moralistic gloss on a complex institutional structure few understand and which the elite are motivated to obscure the workings of. In the reactionary conservative ideology in defense of capitalism, virtue is vindicated in the “free” market economy.

    In actual economics, stripped of the preaching and Mankiw’s Ten Lessons and the like, we learn that profit on sunk-cost investments is entirely attributable to political power and not at all to the inherent value of whatever the investment has enabled in terms of increased productivity, etc.

    Knowledge is the ultimate sunk-cost investment. The strict economics of it is: information wants to be free. You cannot charge for it and still benefit from it fully. It is a paradox.

    The other side of that paradox is the drone or parasitic role of rentier capitalism. All the financial returns to building an enterprise based on critical knowledge are based on an exercise of political power to create an economic rent and an artificial scarcity in which good applications of knowledge cannot be made. An effective cancer treatment or a genetic test or some medical device is made expensive by an exercise of political power, at the cost of leaving many untreated or useful techniques unapplied.

    The general label for this is financialization. The actual capital stock amidst the means of production — to the extent a somewhat tangible capital stock can be identified at all, apart from political power — is diminishing, because advances of knowledge result in cheaper tools and systems. A cell phone system consumes much less in terms of dedicated real resources than the mountain of copper AT&T once needed to operate a switched phone system. Part of the enormous increase in the share of income going to the top 1/10th of 1% is attributable to disinvestment, as systems requiring less in the way of dedicated resources replace more resource intensive systems.

    It does mean that “money” is increasingly artificial, based on the economic rents derived from arbitrary and politically vulnerable intellectual property and the like. The older scheme, which emphasized the economic rents associated with real estate and housing, is being cannibalized to feed the new system.

    @ Frank Stain

    Your comment is very impressive. Dense.

    I think every functioning economic institution takes on moral clothing; each has its own ethic and norms and other conventions that make it work. These change over time — strategic competition ensures that.

    An effective politics cannot dispense with ideology and ideology’s moral hectoring, but also cannot fulfill any substantive hope, without some idea for a structural architecture that goes deeper than slapping on a coat of figurative paint and crying out, “Now for something completely different . . . ” That’s a bad joke, not a political program.

    Piketty was very clever in his presentation, in adopting familiar neoclassical math forms, which suggest on the surface substitution of capital for labor in production and a role of capital in growth that is deeply familiar to academics trained in neoclassical economics. His presentation, though, was also deeply subversive of doctrinal faith in those forms.

  39. bob mcmanus permalink
    September 29, 2017

    If you want to deny the importance of the agency of capital

    No, Capital does not have agency. This is called fetishism, akin to worshiping the Storm God. The Real Abstraction that works for Marxians is understanding that Capitalists and Workers have the agency, but have institutionalized worshiping the Storm God because it gives them Power and avoids Responsibility.

    Wilder, you are flat out authoritarian. Whose institutions will rule? Yours? Your bosses or intellectual leaders? There is not a democratic populist bone in your body. The key for me was the projection in your analysis of feudalism/manoralism, and totally discounting the weapons of the weak.

    During and after the Revolution, the people will decide what to do and what they want, not the Priests of the Storm God or political scientists or institutional economists.

  40. the blame-e permalink
    September 29, 2017

    “Will Capitalism and Democracy Survive?”

    The United States of America does not have a democracy. We never have. We have a republic. Just ask Benjamin Franklin, as he was departing the first Constitutional Convention in 1787 what we have.

    “. . . [W]hat have we got—a Republic or a Monarchy?”

     “A Republic, if you can keep it.”

    And, actually, we do not even a republic. We have a federal republic. Meaning that all power is centralized in Washington, DC.

    The difference between a democracy and a republic is that in a democracy the people vote, and vote often. In a republic the people vote once for the people who will do all the other voting.

    So, will democracy survive? The answer is no. Democracy never existed in the United States. Democracy was a PR invention, created by professional politicians. Democracy is about the biggest lie being told Americans and the world.

    You might better ask whether we have a democracy or a monarchy? Just ask all these American political dynasties, like the Kennedys, the Bushes, the Clintons, the Obamas (because Michelle now thinks it is her turn), and the Cuomos then the answer would be “Yes.”

    Will Capitalism survive? We never had true capitalism in the United States. We had land barons, labor barons, financial barons, railroad barons, shipping barons, etc. Today, we have corporate oligarchs ruling over a hollowed-out, off-shored U.S. economy.

  41. Jessica permalink
    September 30, 2017

    @ Bruce Wilder
    “information wants to be free. You cannot charge for it and still benefit from it fully.”
    Information wants to be unshackled (free) but it does not require that it be unpaid for (free).
    Within the limits of any system in which large chunks of the production infrastructure can be held as private property, no one has found a way to charge for it without shackling it and destroying much of its utility.
    This most likely means that knowledge will have to be treated as the property of society as a whole. This could mean totalitarianism or a commons, but a totalitarian elite will have such a strong need to restrict information that it will be unable to run a knowledge economy well. So the knowledge must be a commons.
    Having something like a commons at the very heart of production will be different from the commons being only a part of the production by the parts of society with lower status and power. We will need to mature as individuals and collectively in order to be capable of running and living in a commons.

    An artificial scarcity of knowledge is created ignorance.
    We get financialization because we have a work force sufficiently educated to run the knowledge economy that capitalism(sts) can not permit and capital that has no productive outlets for the same reason. Combine the two and voila, financial instruments of mass destruction.

  42. Jessica permalink
    September 30, 2017

    @LD

    “The rich are getting better at managing the economy. They just manage it for their own benefit. Capitalists aren’t ineffective, they just don’t care about us.”

    It is true that they just don’t care about us. They never did.
    They are effective at making sections of the elites richer for a certain period of time, but they are less and less capable of doing things that would benefit the elites as a whole.
    When a new powerful disease emerges, it kills its victims quickly. As the germ matures, it learns to keeps it victims, which after all are its universe, alive longer. Our elites don’t have that sense.

  43. Hugh permalink
    September 30, 2017

    I am with those who say that in the US neither capitalism nor democracy survived. What we have is kleptocracy, rule by thieves. Reinhold Niebuhr back in the 1930s said that for elites rationalize that what is good for them is THE good. We see this “heads they win, tails we lose” ethos every damn day, and it is a prime reason the country is going to hell. It is also important to understand that being rich or elite has next to nothing to do with merit, skill, or knowledge, and everything to do with birth, wealth, and connections, in other words, one’s class. You can see the resultant degeneration in our political leadership. President Reagan was an empty suit, but he was an intellectual power house, even with the onset of his Alzheimer’s dementia, compared to George W. Bush. And Bush looks positively statesman-like next to the intellectual blackhole that is Trump, clearly the most unfit person ever to occupy that office. If you think I’m beating up on Republicans, let me remind you of Bill Clinton who always managed to convey that he felt our pain, even though he was usually the source of it. Or how that sunk to Obama’s measured bafflegab. And how that seemed eloguent in comparison to Hillary Clinton’s tin-eared arrogance.

    As for democracy, we never had it. We always have had a republic run by the haves. It is just now the contradictions have become really jarring. Our voting processes are much more in danger from Republican efforts at voter suppression and the two party stranglehold of the ballot than they are from Russian hackers. Add to this a corporatized media which has become the sockpuppet of the rich and elites.

    Finally, note how undemocratic our national institutions are. Our judiciary far from being the most impartial of the three branches has always been the most reactionary and aligned with the interests of whoever the powers that be happened to be at any given time in our history from slaveholders to corporations. We have a House whose districts are gerrymandered and undemocratic. We have a Senate in which a majority of Americans are represented by just 18 Senators. The other slightly less than half get 82. And we have a President elected not by the will of the majority but by an anti-democratic “electoral college”.

    Put simply, neither our political system nor our economy work for us. This is not a fluke or oversight. They were constructed that way. Even so, in the last 40 years or so, they have gone off the rails. It is not that we always have had thieves. It is now we only have thieves.

  44. Hugh permalink
    September 30, 2017

    Sorry for a few typos. I was a little tired at the time.

  45. Peter permalink
    September 30, 2017

    @BobM

    It’s a relief to see we still have flaming Marxists agitating for the ‘People” The people you mention must be the snowflakes and antifa school teachers who must certainly know how to build a utopian post-revolution society. There are at least 60 million people in the US who don’t want a snowflake collective to make their choices for them and their support for the military and the police may be very important in the future.

    If the commies can only seize power then the people will finally rule. I wonder which people’s republic model you will use, the extinct USSR or the thriving North Korea or possibly the Buddhist influenced Myanmar Junta.

  46. bob mcmanus permalink
    October 1, 2017

    or the thriving North Korea or possibly the Buddhist influenced Myanmar Junta.

    Like I said, the projection of authoritarians is amazing, I say people you and Wilder instantly see dictators. That’s because you want a plan have a plan have standards and values…want to be a dictator. I want chaos, and do not want to impose my utopia on the world.

    I have my own kind of projection, my democratic anarchic vision sees power everywhere ans in everybody…and we all really suck.

  47. Amfortas the Hippie permalink
    October 1, 2017

    Re: Jessica.
    Well done.

    For all the hollering about how capitalism unleashes innovation and change, the winners of the last several rounds(mostly the same old families, it seems) try their hardest to arrest change…to freeze history into this Moment, where they are on top.
    (see: Heraclitus, “All is in Flux”)
    see also Buckley’s definition of “conservatism”, “to stand athwart history yelling ‘stop!'”.
    The Exhausted Elite are the “Dominant Minority” in Toynbee’s reckoning…descendants(biologically and/or ideologically) of the Creative Minority who gradually exhausted themselves and succumbed to the temptation to relax into their certainties(“we deserve to rule”)
    So back and forth we swing, a little further each time…Remember, the Enlightenment Project didn’t begin a mere 400 years ago. The Struggle(gr:”agon”) has been ongoing since the first priest got together with the first strong man.
    The lesson we have yet to learn was known as long ago as Thales…”Moderation in All Things”.
    It’s right there on the cornice at Delphi.
    We Universalise all the wrong things.

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