Capitalism in a Democracy

We hear from time to time, "If only government was run more like a business, government would run better." We have a real test of that sentiment now in Michigan, where the Republican controlled legislature and the Republican governor, Rick Snyder, have replaced the duly elected government of six cities with "emergency managers". Snyder was chairman of the board of Gateway, a computer company, and CEO and co-founder of Ardesta LLC, a venture capital firm. Like Donald Trump, he was a successful business man, but an outsider with no experience in politics.

By closing schools, firing duly elected officials, cutting back pensions, selling off city-owned property—things corporate executives commonly do, Snyder accumulated a surplus of $575 million according to the Detroit News. But the residents of Flint, Michigan, one of the cities taken over by an "emergency manager", have been poisoned by lead and other chemicals in their water because of a decision by the governor to save money. Darnell Early, the fourth emergency manager of Flint since 2011, quit his job, a common practice in business, though rare in government among politicians who must serve out their terms of office.

For 20 years I taught Russian and Soviet history at Bucknell. By contrast to the situation in Michigan, the Soviet Union was a good example of a political party running a country's companies. The Communist Party of the Soviet Union (CPSU) called itself a socialist party, a workers party. But all the socialists who did not escape to Munich, Paris, or New York were slaughtered among the 700,000 confirmed executed as "enemies of the state" to maintain CPSU control of the country. The USSR no longer exists.

Have you ever noticed that US companies are not run democratically? Why is this? I was in the former Yugoslavia in 1986-87 at the height of "worker self-management". All companies in Yugoslavia were "democratized". Workers or their representatives in companies functioned as the board of trustees. Periodically workers voted on what to do with the profits in the company: (1) save them, (2) invest them in expansion, or (3) give everyone a raise. Far too often workers chose (3). Yugoslavia no longer exists.

Efficient companies are run by dictators informed by capitalist principles. Only governments run democratically. Here's why. Capitalism is the most efficient economic system. However, most of the money made in a capitalist system tends to be kept by the dictators themselves, the top 1% of the population. The middle and lower class are thereby left out of decisions critical to their lives.

So how do the rest of us get a say in the way our city, state, and nation treat us? Truly democratic government is answer to that problem, not the cause of all our problems. The members of democratic governments are dependent on the majority of voters in their districts, and that majority is always the lower class and the middle classes. A well-oiled society needs (1) the most efficient economic system balanced by (2) a democratic government that responds to the majority of voters, who are all to often left out of economic decisions.

Our problem is not the American government, as President Reagan famously proclaimed. The major problem with the US is the interference by economic forces in the democratic government at every level. As the country grows larger and larger in size and population, its government cannot grow smaller and smaller, a fundamental position of the Republican Party. That's just stupid.

The only reason the Republicans want to do this stupid thing and reduce the federal budget is that smaller government means fewer inspectors, fewer regulators, fewer tax collectors, and on and on. This means the government can be more easily controlled by corporations and the superrich. The very purpose of government is regulate the entire society, including the economy, to maintain balance between managers and workers.

We need to maintain a productive capitalist economic system, but also a healthy political system. They are two discrete and incompatible systems, one a collection of dictatorships, the other a democracy. We need to keep both strong for a healthy, balanced society.