Capitalism and Democracy: a Recurring Debate

By Armando Chaguaceda

HAVANA TIMES – It’s common in the social sciences to recur to extremes, be they epistemological or political. Such extremes imprison reality in a Manichean lens.  Paradoxically, the extremes sometimes coincide, with their viewpoints based on an explanatory teleology that ignores real subjects and processes situated in social history.

There’s an abundance of radical idealist readings that deny the complex and dynamic reality of modern societies. Instead, they place their bets on utopias that are disconnected from real processes. Their affirmative visions of the status quo establish mechanical causal effects between phenomena that coincide in time and space but belong to different dimensions of the social world. The intellectual sphere, with its fraternities of apologists, and dogmatic adversaries of liberal modernism, is a good example of what I’m speaking of here.

In the past few days, I attended a debate with colleagues from different fields. It focused on the responsibility of progressive elites in the global crisis of the polyarchies (rule by many). The discussion was based around a provocative text by Yanina Welp, “Democracy and the decline of the Elites” (Nueva Sociedad 290, November-December 2020). From this starting point, we discussed the systemic impact of the privileged minority’s egoism and corruption on the democratic health of open societies.

We considered the problem of citizen indifference. This seen as a response to cultural changes and the disconnection of globalism, but also to politicians who are alienated from the multiple demands of the common people.

As fate would have it, shortly after that exchange I came across two opinion pieces on the ties between capitalism and democracy.

In the first, a Latin American philosopher denied any possibility of a link between those two “intrinsically incompatible” phenomena. On the opposite side, a liberal economist maintained that there was “a natural correspondence between the market economy and liberal democracy”. Both pieces appeared to ignore the last centuries of human history. This ignorance was undoubtedly due more to ideological postures than to an unfamiliarity with the modern dynamics of economic exploitation and political domination.

Let us recognize: the strategic logics (the means and the end) of capitalism and democracy are different. Capitalism expands its means (creation and capture of markets) in order to obtain its economic objective – the accumulation of profit – as efficiently as possible. Democracy expands its means (subjects, institutions and rights) and its ends (individual participation, collective self-government) simultaneously, for the regulation of political coexistence. This marks a clear difference.

However, both capitalism and democracy operate within the framework of mass societies, ruled by nation-states within an interconnected international system. Both incorporate diverse, contradictory and dynamic versions and pairings.

Academics such as Branko Milanovik, James Robinson, David Collier and Dani Rodrik have pointed this out in recent pieces. Renowned intellectuals like Barrington Moore, Nikos Poulantzas and Charles Tilly, among other voices, previously noted this same thing. Separately, from different sources, ingredients can arise and combine to produce the miracle of a nutritive and tasty plate. Rare, but desirable. We can better understand the conditions of this intersection if we review the contemporary versions of elites and regimes.

In the countries where capitalism and democracy coexist, the dominant group consists of an oligarchy of business owners and politicians. Members of both factions share a common objective: the accumulation of capital. However, there’s a counterweight, comprised of movements, institutions and rights that are protected by the democratic regime. The middle and working classes use these to limit the weight of oligarchic money and power.

Meanwhile, the polyarchs – functionaries and business people of a neopatrimonial capitalism – coexist within the structure of hybrid regimes. Their clientele comes from the loyal middle class and hyper-exploited popular sectors. In the end, under the totalitarianism of one-party systems and sultanic despotism, the governing powers merge the actors and mechanisms of income extraction and political repression. This is done in a way that is qualitatively and brutally superior to other alternative orders.

We can think of the State as the terrain where the constellations of political and economic power crystallize.  The possibility of substituting or containing those who are governing us badly becomes the key to limiting capitalist exploitation. That’s only possible in a democracy, where such possibilities are stable and protected.

Clearly those democracies exist but with an asymmetry of various resources between those that exercise their social, civil and political rights. Their ability to exercise these rights may differ, depending on each government’s capacities and ideological orientation. There are no “perfect” cases, or unique paths. In autocratic regimes, all rights are severely restricted, and, in extreme cases, suppressed.  In such societies, the most prevalent situation is a category of “semi-citizens”. These might be consumers, petitioners and, sometimes, simply submissive subjects.

Contemporary democracy, with a limited but real existence, today adopts the polyarchic form of the liberal republic of the masses. Such a Republic blends three main concepts. First, there’s a regulatory ideal, a way of life that questions the disproportional weight of hierarchy and power within the social order. Second is a social movement, a set of actors, struggles and demands for democratization. Finally, there’s the political order: a democratic regime that institutionalizes the values, practices and rules that guarantee the rights of participation, representation and political deliberation. Added to these are guarantees for the periodic renovation of those who hold state power.

The institutional foundations of these liberal republics of the masses goes beyond the classic Liberal format, encompassing the mechanisms of democratic innovation and the new autonomous social movements.

It’s from inside this kind of regime where the popular sectors have obtained permanent benefits and universal rights. These have not been achieved within oligarchic neoliberal regimes, different stamps of patrimonialism, or utopias of imprecise contours and terrible precedents. The achievements of these Liberal republics have evolved through a citizen-forming dialectic that encompasses the moments of social struggle, legal recognition, and political incorporation.

Rigorous and progressive academics such as D. Rueschemeyer, H.E. Stephens y J.D Stephen, J.D (Capitalist development and democracy, University of Chicago Press, 1992) have demonstrated this. It’s true that Liberal representative governments suffer from processes of corruption that are inherent to the very functioning of the system. It’s also certain that there’s increasing domination of power by oligarchs, with minorities that abuse the rules of the game in order to perpetuate their privileges. Still, in the liberal republics of the masses where there’s general respect for the Rule of Law, experience tells us that these trends can be countered.

Let’s take, for example, the situation of citizens in India, as opposed to those in China. These two gigantic nations are shaken every year by thousands of acts of popular protest. Nonetheless, the fact that a liberal democratic regime exists in India marks a difference. In that country, the specific demands – housing, services, an end to corruption – can be articulated and transformed into candidacies, programs and political parties that challenge power.

Meanwhile, in China, with its system of market Leninism, the only possibility is negotiating partial improvements with the all-powerful Communist Party. That doesn’t empower the citizens politically.

We could also compare the situation of the Venezuelan workers before and after Chavez and Maduro. We could contrast the rights of every kind – social, civil, political, economic and cultural – that underlings in Costa Rica and in Cuba enjoy and, more importantly, demand. We could evaluate the course of the citizen protests over the last two years in today’s Chile and in Nicaragua.

In Chile, the mobilization was channeled through parliamentary deliberation and the exercise of direct democracy into a commitment to rewrite the constitution. In Nicaragua, all possibility of civic action and democratic resolution of the conflict was squelched. The advantage of having a liberal republic – one simultaneously comprised of institutions and the right to exercise popular politics, through the institutions or in the streets – is in the end decisive for the masses in all those countries.

In this inconclusive Modernity, there are many capitalist societies without democracy. However, despite certain poetry disguised as social science, democracies without capitalism have never existed. Capitalism today, despite all that can be criticized, and despite peripheral corners and networks of resistance, is the form of production, distribution and consumption in effect globally.

Sophisticated readings from all coordinates of Latin America, demonstrate this*. It’s the material condition and context within which contemporary political regimes have developed, including the modern form of democracy.

Capitalism and democracy aren’t per se blood brothers, nor irreconcilable enemies. They’re contingent human forms, derived from our socioeconomic, cultural and political development.  Spurred on, despite stumbles and falls, by the demands of people and collectives that are ever more complex. Even though a certain neoliberal or Marxist pedantry, with their flat versions of progress, prefer to continue ignoring this.

* Ugo Pipitone, La salida del atraso: Un estudio histórico comparativo, México, FCE/CIDE, 2020

Read more by Armando Chaguaceda here on Havana Times.