Capitalism and Democracy

Can democracy truly flourish in a capitalist system?

In Capitalism 3.0: A Guide to Reclaiming the Commons, Peter Barnes argues that “…government puts the interests of private corporations first. This is a systemic problem of capitalist democracy, not just a matter of electing new leaders.”

Essentially, the people who have money have power, so government – while perhaps intended to level the playing field – will ultimately end up favoring those with power.

A recent political cartoon from Ted Rall gets to a similar point, asking with more than a little snark, “Is poverty a feature or a bug?

Even proponents of capitalism eye our widening economic gap with growing concern. Perhaps (or perhaps not) America was once a place where anyone could grow up to be anything and where pulling yourself up by your bootstraps was a viable strategy. But if such an America ever existed, it’s becoming increasing clear that it is no more.

Childhood poverty is an indicator of adult poverty, particularly if you are black. A longitudinal study by Caroline Ratcliffe and Signe-Mary McKernan showed that “while 4 percent of individuals in nonpoor families at birth go on to spend at least half their early adult years living in poverty, the comparable number for individuals born into poverty is 21 percent. This 18 percentage-point difference is driven by blacks; the difference for blacks is 24 percentage points, while the difference for whites does not differ significantly from zero.”

So if the current system is broken, what is the solution?

Conservatives might argue that our system of capitalism has been corrupted – that lessening government regulation and lowering taxes would create a purer form of capitalism which would then naturally correct our inequities.

Liberals might argue that our system has been corrupted by capitalism – that increasing government regulation and bolstering social programs would create a society that would be more fair.

Barnes argues that both market and state solutions are half-right and half-wrong. Instead he advocates for a “commons sector” a twin-engine to the corporate sector that would be composed of “institutions that preserve shared inheritances, charge corporations for degrading nature, or boost the ‘demanding’ power of people whose basic needs are ignored.”

In his vision, this sector would balance the power of corporations with power for the people – and power for future generations. It would keep corporations, and government regulation, in check, and lead to a relatively equitable system where everyone can prosper.

Efforts like this are underway in the real world.

Independent Sector is a coalition of nonprofits, foundations, and corporate giving programs committed to advancing the common good in America. Third Sector New England provides capacity building programs and services for individual nonprofits and the nonprofit sector. New Profit Inc is a venture philanthropy fund that invests in social entrepreneurs.

The White House’s Office of Social Innovation and Civic Participation is tasked with engaging the social sector – individuals, non-profits, foundations – as well as business and government – to find new ways to solve old problems and drive collaboration to make greater and more lasting progress in meeting the challenges our Nation faces.

These are good efforts, lead by thoughtful people and showing promising results.

And yet I remain skeptical.

As someone said to me today, the commons sector solution feels like putting a band-aid on a gaping wound. It might be good, but it is not enough.

There is staggering inequality in this country, and that inequality is deeply entrenched. Being born in poverty doesn’t just impact how much financial capital you have access to later in life, it impacts how you see yourself, how you advocate – or don’t advocate – for yourself. How you share your opinions in public settings, how you participate – or don’t participate in democracy.

Poor people are treated as invisible, and there’s only so much of that you can take before you begin to believe it yourself.

Adults who think their opinion doesn’t matter have no value to a democracy. But they do have a value to capitalism,

And, perhaps, adults who think their opinions do matter – while the life blood of democracy – present a real threat to capitalism.


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