Pandora's Box: Are Democracy and Capitalism Counter Intuitive?

Krithika Ramnath and Mihika Sujjir.

“Democracy is when the indigent, not the men with properties, are the rulers.” - Aristotle

What democracy was meant to be it, is not:

In ancient Greece, democracy was the ideal form of government, as they weren’t perturbed with the socio-economic problems that persist in most developing and developed nations today. Corruption, inequality, formation of autocratic and autarchies as an effect that stemmed from problems like corruption and when politicians who are megalomaniacs. Aristotle opines, democracy is supposed to be for the proletariat's, and not for the elites who work for their own vested interests.

Since the Industrial Revolution, democracy and capitalism have had a paradigm shift. Both these systems have grown to ameliorate each other; trying to benefit and lobby for their vested interests. Democracy stands for the freedom of all, regardless of class, creed, colour, and gender.

Democracy stands for equity in all aspects whereas Capitalism is the stark contrast to the very crux of democracy. The market that is run by capitalists stands for the free flow of goods and services where some people get left out of the bounties of the market. As Adam Smith said no man works for the betterment of others, capitalism has been built on this belief.

Capitalism is based on how the upper echelons of the power spectrum use democracy to get what they want. Hence theoretically, democracy and capitalism are opposing ideologies. This brings us to deliberate on a serious question: Do democracy and capitalism need each other?

History repeats itself:

In hindsight, the present systems are now evolving like the systems before that. The 20th century was plagued with the ideological warfares, poverty and a falling autocratic system. There was a void of power left by the imperialists in the nations left in the colonised countries. Autocrats no longer had a clout over the countries, but this led to extremely vulnerable states, where plutocrats and extreme communists emerged powerful.

In the cases of Cambodia, Vietnam, and India amongst others, had varying types of socialist systems. While Cambodian people battled labour camps, Vietnam was caught in the cross hairs between Communist China and Capitalist America. India, on the other hand, closed its doors to outsiders and struggled with problems of poverty. These are some of the few countries, where an authoritarian regime led to the fall of democracies that still face the brunt of its past. The Easterners saw what the westerns were failing at and decided to swing the other way. In a failed attempt to restore democracy and by extension, capitalism, the 20th century was a war torn era.

Capitalism and Democracy :

The world has shifted towards a capitalistic outlook where political ties are forged so that countries can reap benefits from others. With its propagation of a profit-first mindset and economic freedom, corporations have now fostered this monomaniacal obsession with profit maximisation.

But every mania comes at a cost and in this case it is humanity.

Capitalism relies on low wages to maintain profitability. Higher profit margins do not increase societal wealth but rather, they inflame income inequality. This pandemic is the perfect example of how certain capitalist governments have prioritised protecting the economy over safeguarding its human capital. Unemployment rate is at its highest since the Great Depression, essential workers are applauded in every manner except higher salaries, and hospital staff are treating patients around the clock with limited personal protective equipment. India is facing a humanitarian crisis due to a poorly implemented national lockdown, causing migrant workers to walk hundreds of kilometres to their hometowns surviving on just water and little to no food, which in many cases has resulted in their death.

And yet, the talk to cure an ailing economy never incorporates the very element that sustains it: the people.

It is evident that capitalism may have succeeded as an economic system but it has absolutely failed as a social system. Furthermore, when a democratic government fails to address these problems, it loses its essence and turns to the next available option: authoritarianism.

Democracies all around the world are dwindling, but democracy in the economic sphere has already completely vanished. Liberal democracy is based on the Magna Carta tradition where it propagates division of the political and economic sphere which can now be deemed as redundant since the power has moved from the political sphere to the economic sphere and as a result, severely requires a strong democracy to save it from the wrath of savage capitalism.

Athenian democracy, although flawed, stressed the inclusion of the working poor in free speech and in political judgements. A heavily regulated democracy is one that is regulated by society and not surveilled by the leaders. In order to break this persisting idée fixe of profit-over-people, we need society, especially the poor, to regain control over influencing policies in their favour and a stronger judiciary to keep exploitative corporations and powerful plutocrats in check. With millionaires and billionaires adding on to their wealth during a pandemic while workers are struggling to survive, we need to set a balance between capital and labour.

Political instability threatens democracy:

Part of the reason for a war ravaged world lies in the fact that capitalists were self serving. The subdued masses remained reticent in fear of being targeted by politicians and crony capitalists who have deep pockets. Democracies work when both the invisible hand and the capitalists work in tandem with each other. According to C.Wright Mills,

Capitalists and elites are formed when they have an institutional proximity.

In the recent past, populism has been gaining some ground. Countries that are run by extreme right wing governments are examples of how the elites of the society are swaying votes their way. While the 1% of the 1% are trying to bail themselves out of the financial crisis, there are millions of jobs that are lost. Countries like Hungary, Brazil, UK and the US are all in the same basket and the basket is filled with elites. Dirty politics denigrates the system and brings a bad name to democracy in itself. As democracy’s name is being toiled, almost 70% of Americans and the French think that democracy is a broken system.

In retrospect, the left swooped the votes from under the right every time they made a mistake. Now, the democracies have resorted to gerrymandering. Illegitimate democracies, human rights violations increase ten fold. American President Donald Trump, who is anti-immigration, made it very clear that only people who pay taxes would be allowed into the country. While you look at this in a way a bureaucrat would, it makes logical sense; but when you look at it from the perspective of how governments run by elites are robbing them of their rights in their country with nowhere to go, it is inhuman.

Conclusion:

Democracy has led to a pandora’s box of problems. These socio- economic problems have been deep rooted and become a part of the society as the elites who run the government from behind the scenes make democractic decisions. This leaves us in a quandary - are all democracies broken?

“Democracy is not dead, it needs alteration”

Democracies should not be run by billionaires making decisions for their own self righteous purposes; and should rather work hand in hand to alleviate socio-economic qualms. While wall street billionaires are looking after their own, the meek and voiceless are lost. Democracy stands for everything that capitalism is not. They are similar in many ways, with the only difference being democracy strives for bridging the gap and capitalism is exacerbating a preexisting one. Democracy is not dead, it needs alteration. Scandinavian countries are the epitome of smooth running democracies. Taking inspiration and constantly mending our systems for more inclusive and crime-free ones, should be our reason to be.

The COVID-19 pandemic has exposed our already crippled systems; while people are complaining of how 2020 keeps getting worse, what they fail to realise it, it was already “worse.” This was and is the reality. One could say, the virus has done us all a favour and opened our eyes. Why are institutions like the World Economic Forum and the International Monetary Fund demanding a reset on capitalism? It's because this pandemic is giving us the opportunity to do so. We find more solutions to a conflict when there's more at stake. It's imperative, especially now, that we take into account our human capital, reduce negative externalities and stop considering the stock market as the prime indicator of economic growth.

As stated by Jim Cramer, a former hedge fund manager, "At the end of the day, the market has no conscience."