Capitalism Crushes Freedom, Markets
|January 9, 2007||Posted by Staff under Progress Report, The Progress Report|
Anti-Democratic Behavior Accompanies Capitalism
Your Mortal Enemy: under capitalism, democracy is now for sale to the highest bidder.
An edited and amended extract of David C. Korten’s Schumacher Lecture in Bristol on October 17 1998:
FOR THOSE of us who grew up believing capitalism is the foundation of democracy, market freedom, and the good life, it has been a rude awakening to realise that under capitalism democracy is now for sale to the highest bidder, the market is centrally planned by global megacorporations larger than most countries, denying one’s brothers and sisters a source of livelihood is now rewarded as an economic virtue, and the destruction of nature and life to make money for the already rich is treated as progress.
The world is now ruled by a global financial casino staffed by faceless bankers and hedge fund speculators who operate with a herd mentality in the shadowy world of global finance. Each day they move more than two trillion dollars around the world in search of quick profits and safe havens, sending exchange rates and stock markets into wild gyrations wholly unrelated to any underlying economic reality.
With abandon they make and break national economies, buy and sell corporations, and hold the most powerful politicians hostage to their interests. When their bets pay off they claim the winnings as their own. When they lose, they run to governments and public institutions to protect them against loss, with pronouncements about how the poor must tighten their belts and become more fiscally prudent.
In the United States, the media keep the public preoccupied with the details of our president’s sex life and calls for his impeachment for lying about an affair. Meanwhile, Congress and the president work out of view to push through funding increases for the IMF to bail out the banks who put the entire global financial system at risk with reckless lending.
They are advancing financial deregulation to encourage even more reckless financial speculation. And they are negotiating international agreements such as the Multilateral Agreement on Investment intended to make the world safe for financial speculators by preventing governments from intervening to regulate their activities.
To understand what is happening we must educate ourselves about the nature of money and the ways of those who decide who will have access to it and who will not.
As a medium of exchange, money is one of the most useful of human inventions. But as we become ever more dependent on it to acquire the basic means of our sustenance, we give to the institutions and people who control its creation and allocation the power to decide whether we shall live in prosperity or destitution.
With the increasing breakdown of community and governmental social safety nets, our money system has become the most effective instrument of social control and extraction ever devised. The fact that few of us think of the money system as an instrument of control makes it more powerful and efficient as an instrument of wealth extraction.
What of capitalism, the self-proclaimed champion of democracy, market freedom, peace, and prosperity? Modern capitalism involves a concentration of wealth by the few to the exclusion of the many; it is more than a system of human elites. It has evolved into a system of autonomous rule by money and for money that functions on autopilot beyond the control of any human actor or responsiveness to any human sensibility.
Contrary to its claims, capitalism is showing itself to be the mortal enemy of democracy and the market. Its relationship to democracy and the market economy is now much the same as the relationship of a cancer to the body whose life energy it expropriates.
Cancer is a pathology that occurs when an otherwise healthy cell forgets that it is a part of the body and begins to pursue its own unlimited growth without regard to the consequences for the whole. The growth of the cancerous cell deprives the healthy cells of nourishment and ultimately kills both the body and itself. Capitalism does much the same to the societies it infests.
One reason we fail to recognise the seriousness of our predicament is because we fail to see how capitalism is destroying the world’s real wealth. It destroys social capital when it breaks up unions, bids down wages, and treats workers as expendable commodities, leaving society to absorb the family and community breakdown and violence that are inevitable consequences. It destroys institutional capital when it undermines the function of governments and democracy by weakening environmental health and labour standards, and by extracting public subsidies, bailouts, and tax exemptions which inflate corporate profits while passing the burdens of risk to governments and the working poor.
We are just beginning to wake up to the fact that the industrial era has in a mere century consumed a consequential portion of the natural capital it took evolution millions of years to create. It is now drawing down our social, institutional, and human capital as well.
Democracy and markets are wonderful ways of organising the political and economic life of a society to allocate resources fairly and efficiently while securing the freedom and sovereignty of the individual. But modern capitalism is about using money to make money for people who already have more of it than they need. Its institutions breed inequality, exclusion, environmental destruction, social irresponsibility, and economic instability while homogenizing cultures, weakening institutions of democracy, and eroding the moral and social fabric of society.
Though capitalism cloaks itself in the rhetoric of democracy and the market, it is dedicated to the principle that sovereignty properly resides not in the person, but rather in money and property. Under democracy and the market, the people rule. Under capitalism, money rules.
The challenge is to replace the global capitalist economy with a properly regulated and locally rooted market economy that invests in the regeneration of living capital, increases net beneficial economic output, distributes that output justly and equitably to meet the basic needs of everyone, strengthens the institutions of democracy and the market, and returns money to its proper role as the servant of productive activity.
It should favour smaller local enterprise over global corporations, encourage local ownership, penalise financial speculation, and give priority to meeting the basic needs of the many over providing luxuries and diversions for the wealthy few. In most aspects it should do exactly the opposite of what the global capitalist economy is doing.
Most of the responsibility and initiative must come from local and national levels. Supporting nations and localities in this task should become the core agenda of the United Nations, as the protection of people and communities from predatory global corporations and finance is arguably the central security issue of our time.
The first positive step would be to dismantle the World Trade Organisation on the ground that there is no legitimate need for a global police force to protect global corporations from the actions of democratically-elected national and local governments so that the richest one per cent of humanity can become even richer at the expense of the rest.
The WTO is a powerful, but illegitimate and democratically unaccountable institution put in place through largely secret negotiations with little or no public debate to serve purposes largely contrary to the public interest. The 99 percent of the world’s people whose interests it does not serve have every right to eliminate it.
Addressing the real need to police the global economy requires an organisation very different from the WTO–an open and democratic organisation with the mandate and power to set and enforce rules holding those corporations that operate across national borders democratically accountable to the people and priorities of the nations where they operate.
It should as well have the power to regulate and tax international financial flows and institutions. And it should have a mandate to make speculation unprofitable and to help protect the integrity of domestic financial institutions from the financial markets and the predatory practices of international financial speculators.
There are obvious questions as to whether such proposals are politically feasible given the stranglehold of corporations and big money over our political processes. Yet we could use this same reasoning to conclude that human survival itself is not politically feasible.
Global corporations and financial institutions are our collective creations. And we have both the right and the means to change or replace them if they do not serve.
From the Guardian (UK), October 21, 1998.
David Korten is president of the People-Centered Development Forum in Washington State, USA, and the author of WHEN CORPORATIONS RULE THE WORLD and the forthcoming THE POSTCORPORATE WORLD: Life After Capitalism.
Korten covers a lot of ground in these remarks. What are your reactions? Let us know!