Does Capitalism Cause Democracy?

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Do free markets lead to freedom? Or at least freedom defined as being able to vote politicians out of office? A lot scholars and others (me, for example), have believed that free markets produce a middle class which then demands more freedom and democracy. Evidence for this virtuous circle exists in the cases of South Korea, Taiwan, Brazil and so forth. The idea is that irredentist authoritarian states will eventually fall before a triumphant globalization.

Today's New York Times publishes an interesting article questioning this supposed dynamic. The article points out,

When President Bush declared last week that political openness naturally accompanied economic openness, his counterparts in Beijing and Moscow were not the only ones to object. Liberal and conservative intellectuals, even once ardent supporters, have backed away from the century-old theory that democracy and capitalism, like Paris Hilton and paparazzi, need each other to survive.

From China, where astounding economic growth persists despite Communist Party rule, to Russia, where President Vladimir V. Putin has squelched opposition, to Venezuela, where dissent is silenced, developments around the world have been tearing jawbreaker-size holes in what has been a remarkably powerful idea, not only in academic circles but also in both Republican and Democratic administrations — that capitalism and democracy are two sides of a coin.

So is it time to give up on the theory that free markets lead to liberty? I don't think so. Why?

Because as the Times article also notes,

The belief was that rising incomes would create a middle class that would agitate for personal liberty and political power. The tipping point seemed to occur when per capita income reached somewhere between $6,000 and $8,000. True, there were exceptions like tiny Singapore with its growing wealth and one-party state, but they were often dismissed as too small or transitional to really put a dent in the theory.

First, Venezuela and Russia are not good examples of "capitalist" countries. To the extent that their "economies" are growing, they are largely being fueled by high oil prices, not because their citizens are being allowed to invest, work hard, and own property.

Secondly, have these countries reached the per capita income tipping point? According to the CIA World Fact Book, Venezuela's per capita income on purchasing power parity basis is $6.900; Russia's, $12,100; China's, $7,600. To the extent that these countries have reached the democratic tipping point, they've only just arrived.

Looking at the GDP per capita data one finds that, for the most part–with the notable exception of oil autocracies (and Singapore)–countries at the top of the GDP per capita rankings are, in fact, democracies. Thus I conclude that the theory that capitalism leads to liberty is far from being disproved.

Discuss.

Disclosure: I freely confess to being a penurious shill for Big Free Markets (the bigger the better) and Large Liberty (the larger the better).

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  1. It may also be that capitalism leads to democracy, but only until the thesis that capitalism leads to democracy becomes the conventional wisdom.

    In other words, an authoritarian regime that is not aware of the link between capitalism and democracy may institute market reforms in an unknowing way, ultimately undermining itself – but an authoritarian regime that knows about the link in advance can take the precautions necessary to make sure that democracy is not the result of its market-based reforms.

    China, in particular, seem to have said, “Capitalism produces democracy, eh? Maybe it won’t if we do ‘X’.”

  2. Is Baily saying Democracy is the end of History?
    Democracy is merely a reform of monarchy. Instead of a king for life, you get a king for four years.
    The better question would be-where do rich nations go from here? What will rising wealth and technology bring that will improve on democracy?

    As for poor nations, what about Somalia? Somalia deliberately turned away from democracy in favor of kritarchy. The Democracy’s have attacked the Southern third of the country, and reimposed government at the point of a gun. But the northern two thirds still have very very small government. And in some ways at least, economic development has been very good by African standards.

  3. …like Paris Hilton and paparazzi…

    If I see another Paris Hilton reference today, I am going to vomit on my keyboard.

  4. for Big Free Markets (the bigger the better)

    Big markets or big firms?

    and Large Liberty (the larger the better).

    Liberty as in absence of government regulation, or liberty to make meaningful choices as an average guy living and working in contemporary society?

  5. Free markets only lead to Democracy to the extent that people are made aware of the shortcomings of their society. Free markets have the effect of spreading information and culture, but we’ve tried so hard to lock information down (via copyright) that the democratizing effect of capitalism has been diminished.

  6. Why connect an idea as elegant as the free market with a pig’s breakfast of mixed blessings and dubious virtues such as democracy? Democratic mass movements, as often as not, come in the form of repressive “populist” reforms. The more I learn about the history of the United States, the more it seems as though we’re stuck with democracy because of the monumental difficulties inherent in inventing or implimenting anything that might be better – but it seems to me as though it’s democracy that freedom increasingly must be protected from.

  7. Maybe it’s that whole thing where, if you’re living paycheck to paycheck you really couldn’t care less about the regulations on investing money, where you can travel and when, and what you can buy from where because you don’t have the money to do any of it anyway. Once you have the means to do things that your government won’t let you do, that’s likely when people start asking questions about their form of government.

    *after rereading this, it really looks like a big “duh” to me.

  8. Capitalism coexisted quite comfortably with slavery in the U.S. for more than 250 years, and it was not eliminated by free markets but by evangelical idealism that culminated in civil war. The myth that capitalism inevitably leads to democracy was invented in the post-WWII era by such people as Friedman and Hayak to rebut the false charge from the left that capitalism was “really” fascism.

    Capitalism, middle class values, and democracy are all closely linked, but they don’t have to occur all at once. It seems that a massive demand for a certain product–cotton, for example, or oil–can keep an economy going for an indefinite amount of time without democracy manifesting itself. There’s a new meme out that the collapse of the Soviet Union was due in no small part to the collapse in the price of oil in the mid-80s, thanks to a decision by the Saudis to increase production.

    I expect that, ultimately, China and Russia will become much freer than they are now, but I don’t see that as the inevitable result of capitalism. I think that widespread education and substantial prosperity will ultimately lead to demands for intellectual freedom, due to intellectual freedom’s intrinsic charms. But “bad luck” could delay that happening for 50 or even a 100 years. After all, Russian intellectuals have been dreaming of western-style freedom for 200 years, and they still have a long way to go.

  9. > but we’ve tried so hard to lock information down (via copyright) that the democratizing effect of capitalism has been diminished.

    “Information” (as an abstract thing) is way more available now than ever before (obviously because of the Internet). I think greater information ultimately leads to freedom, and maybe capitalism has been the thing that made greater information flows possible, and that it’s only a matter of time before people living under authoritarian regimes reach a tipping point of discontent as they learn more and more about the outside world and how/why the system in which they live is not desirable.

  10. having just returned from 6 weeks in Beijing, it is apparent to me that it’s not democracy that spells the downfall of authoritarian regimes but rather disposable income

  11. Democracy != freedom.

    People who are tired of being looted by monarchs or oligarchs imagine, foolishly, that under a democracy or under some other system controlled by popular elections they will stop the looting.

    They are wrong. As the Fabian society’s stupendous success in enclaving England has demonstrated, by dividing the electorate and setting different actions against each other, it is possible to not only keep the looting going, but to expand it.

    So long as governments exist they will rob and murder. Searching for a system that does not do this is as futile as searching for a carnivore that doesn’t eat meat.

  12. Ask low wage workers how much liberty and freedom they feel that they have. Corporate empires are just tyrannies, democratic principles should be extended to the workplace!

  13. AV: With all due respect, I believe your interpretation of the history of slavery is just about backwards. The rising incomes in Britain and the United States fueled by capitalism were exactly what created the political pressures to outlaw slavery on a global basis for the first time in history. If worldwide wealth had not risen from an average of around $600 in 1820 to $7000 today, I suspect slavery would still be around and the world would be populated by a lot fewer and much sicker people. But that’s another whole discussion.

  14. Some thoughts on power and economics…

    “The fact that the exercise of power is ubiquitous in private exchange shows that it is mistaken to think of society as composed of a political sphere, meaning governments and other bodies with formal powers of coercion, and a private economic sphere in which the exercise of power is absent. The rejection of this public-private division raises important issues concerning the appropriate scope of for democratic political competition (in addition to market competition) as a guarantor of accountability in the economy (Dahl, 1977, Bowles and Gintis, 1993).”

    http://www.santafe.edu/research/publications/workingpapers/07-01-004.pdf

    Seems like it has something to say on the topic.

  15. Capitalism coexisted quite comfortably with slavery in the U.S. for more than 250 years, and it was not eliminated by free markets but by evangelical idealism that culminated in civil war

    The end of slavery can better be seen as inspired by capitalism by looking at England rather than America.

    England began to abolish slavery as early as 1804 because they saw it as a violation of contract rights, not so much out of religious conviction.

    The abolition of slavery by 24 other DEVELOPED nations by peaceful means, and the continuation of slavery in some undeveloped countries even today, also points to a link with capitalist economic development.

  16. There was an economic collapse of the USSR in 1989, followed by capialistic actions, some sense of democracy, and with the new wealth in oil and gas, a slippage back toward one government in total control. Investigators say to follow the money, for thrieves do just that. But the common warning flag seems to be freedom of speech. Without that freedom, there is no hope, even if you make over $6K/year. Do you think there’s a Reason.com in China?…how about Russia? …or Vietnam…or Cuba…or North Korea?

  17. I guess Bailey and I blogged the same idea simultaneosly. He had more stats than me!

  18. Of course, if Bryan Caplan is (or I am, on different grounds) right, democracy isn’t all that splendid a deal, anyway, and one of the down sides of affluent democracy is the society’s ability to consume much more government as a luxury good.

    BTW, “penurious”? Oh, please!

  19. Tarran et al: Do not mistake my comments as endorsing “democracy” as some kind of end in itself. Democracy is merely the way that people replace the politicians who ideally would run the very limited governments provided for in constitunional republics.

    Still, the GDP per capita data do seem to speak loudly about the interesting correlation between average per capita wealth and democratic governance. Perhaps another way to look at it is provided for by the World Bank’s Governance Indicators which show a very strong correlation between rule of law, free speech, education and democracy.

  20. The error in correlating democracy with capitalism is the same error in correlating politics with economics: instead of perceiving government as a protector of liberty, people perceive it as a guarantor of prosperity. From such a perspective, the type of government is irrelevant; human nature apparently prefers to be fed than free.

  21. Ask low wage workers how much liberty and freedom they feel that they have. Corporate empires are just tyrannies, democratic principles should be extended to the workplace!
    Mark

    I wonder just how this economic democracy thing would work.

    Someone has an idea. His or her idea involves a new product or service. It has a theme, a mission statement. That idea requires a division of labor to implement. That means hiring workers to participate in the idea by performing certain tasks of implementation. But, now the idea comes that they should vote on every production decision? How does that fit in with the entrepeneurs original idea made real with their help? Can they vote to change his vision? Wouldn’t they just vote themselves less production and less work place cohesion for higher pay?

  22. The major problem with the “capitalsim brings democracy” theory is that, eventually, after the democracy shows up (and in some cases before) people figure out that they can “vote themselves whatever they want”, thus getting rid of both the capitalist system and the democracy.

    Another problem is also the fact that this assumes democracy is necessarily a good thing. As one of the previous commenters mentioned, democracy has its problems, particulary if you see it in the Aristotelian light that democracy is a corrupt form of government (matched with the uncorrupt Republic). While democracies have, in general, been better at producing the types of freedoms that work best in capitalist systems, any form of government given the correct restrictions and leaders can thrive.

    Government, like most human inventions, is simply a tool and neither good nor bad. It eventually comes in how that government is used and what its primary goals are.

    Finally, there is no “end of history” brought with democracy. All nations go through cycles in which they go through various types government, amounts of freedoms, corruption, etc. As we are currently seeing in America and the UK, even the most stable and free democracies fall on times of extreme government corruption and abuse of power. The problem comes in catching it fast enough to prevent the collapse into even worse systems.

  23. Rule of Law is the key, not “democracy.” Singapore may not be a Democracy, but life there is pretty pleasant. I’m not sure why it is always cited as a counter-example, I’m sure most Americans would find life in Singapore much better approximates the ideal of a civilized state for free men than a “democracy” like Iran, or even Italy.

  24. “Astounding economic growth” in China, Russia, and Venezuela, despite democracy, has more to do with where they started from. They have no choice but to grow quickly at this stage. When their economies become more evolved (for lack of a better term), something similar to a democracy will be necessary to continue growing.

  25. Given the monetary amounts that seem to indicate a start of a democracy movement in a country I have to ask if this is on a sliding scale. In absolute terms Greece, Rome, Venice, Iceland, the United Kingdom and the United States were republics/democracies well below what would be considered $7-8,000.00 today.

    There may be an aristocratic component to the development of democracy in the sense of democracy for me but not for thee. As some of the elites want a say in how a government is run and if there no way for one person to gain the upper hand over the others a form a democracy begins to develop.

    Capitalism may develop previously powerless elites who make democratic changes that trickle down to the rest of the population unless the current elites find some way to co-opt the newcomers. For that reason that the new rick can be co-opted I’m not fully convinced that capitalism = democracy

  26. Capitalism isn’t an economic system only; it’s a politico-economic system. True capitalism does not exist in an unfree nation. Let’s not use the word “capitalism” when what we’re really talking about are mixed economies. Hell, true capitalism does not exist even in the United States.

  27. One small problem is the sustainability of economic growth. This is why free-marketers engage in wild confirmation bias in denying or minimizing the possibly catastrophic effects of global warming.

  28. I always kind of cringe when I see the word “democracy” in discussions like this. It has become a sort of catch-all term that has lost it’s true meaning. We are, in fact, a republic, not a democracy. And the term democracy could conceivably include anything from Russia to Iraq. Have a relatively free election and you can call yourself a democracy.

    Freedom and liberty should really be the operative words here. Capitalism tends to produce freedom and liberty because without them economies will begin to falter and drift back into statism or anarchy.

    The other factor is time. In our hyperactive information society we expect changes to occur in very short periods of time. It just doesn’t happen that way. Institutions have to form and develop over time to provide the basis for a stable and lasting free society. It would take Russia and China 10-15 more years to lay these foundations. Whether their rulers will allow this is questionable.

  29. Capitalism coexisted quite comfortably with slavery in the U.S. for more than 250 years, and it was not eliminated by free markets but by evangelical idealism that culminated in civil war. The myth that capitalism inevitably leads to democracy was invented in the post-WWII era by such people as Friedman and Hayak to rebut the false charge from the left that capitalism was “really” fascism.

    Slavery was an institution of the state. It was written into law. Capitalism had nothing to do with it. And being that a civil war erupted over it I can’t see how capitalism “coexisted quite comfortably” with it. Capitalism allowed for the spread of ideas that showed the contradiction of the situation.

    These authoritarian countries that are toying with “capitalism” have no idea what they are doing. They want the wealth and power of the USA but have little understanding of the process necessary to maintain it.

    They think they can control and bottle it up for their own purposes. When they realize they can’t control it they will either attempt to suppress it’s effect or be forced to relent to it in some fashion. This seems to be a common tale through history.

    The question I think remains is: can it go the other way? Can increasingly less capitalisim (free markets specifically) in a democracy lead to an inexorable shift to authoritarianism? Or is there a maintainable balance that is eventually produced between pro-market and anti-market advocates in a democracy?

  30. Edward: With regard to the sustainability of economic growth, may I suggest that you read some Paul Romer and Jesse Ausubel? Also, you might also take a look at my essay “The Law of Increasing Returns,” as a kind of primer on the topic.

    With regard to confirmation bias, I just depressingly pointed out that research by the Yale Cultural Cognition project finds that it’s pervasive across the political spectrum.

  31. Liberty as in absence of government regulation, or liberty to make meaningful choices as an average guy living and working in contemporary society?

    There is a very large degree of overlap in those two categories, Dave W. Indeed, the only meaningful difference in them arises if you devalue the loss of liberty by your fellow citizens, so long as the jackboots leave you alone.

    research by the Yale Cultural Cognition project finds that it’s pervasive across the political spectrum

    I knew it!

  32. Can increasingly less capitalisim (free markets specifically) in a democracy lead to an inexorable shift to authoritarianism?

    I would say yes. Somebody has to be restricting economic freedom and property rights. My guess would be that contractions in capitalism cannot occur without a corresponding increase in the size and power of the state.

  33. Ron,

    Thanks for the links. I’ll take a look at them.

  34. The question I think remains is: can it go the other way? Can increasingly less capitalisim (free markets specifically) in a democracy lead to an inexorable shift to authoritarianism?

    Since all actions, political, social, religious, require the allocation of scarce resources (i.e. economic activity), control of the economy is totalitarian.

    So, yes, every shift away from the free market is a shift towards totalitarianism.

  35. I think capitalism only really came to shine during the Enlightenment period when people desired more freedom in general. Democracy began to flourish in this era along with capitalism. Perhaps if we look back to the Revolutionary War, we see capitalism causing democracy. Although I think the progression goes more like this: Capitalism => EDUCATION => Democracy.

  36. Of course, the thing is that you can’t have a free market without a government to regulate it. (At least not for long.)

  37. Dan, you’ve repeatedly claimed the bizarre, illogical notion that a free market requires a government. When you do business with someone, do you only hold up your end of the bargain because you’re afraid they’ll hurt you?

    Wow. I think that says alot about you, and almost nothing about the rest of humanity.

  38. H-Man:

    In absolute terms Greece, Rome, Venice, Iceland, the United Kingdom and the United States were republics/democracies well below what would be considered $7-8,000.00 today.

    I am wondering if when you mention Iceland you are referring to the Icelandic Commonwealth of 900-1260 AD which was a kritarchy, not a democracy?

    Also, although primarily an agricultural/fishing society, it lasted for three hundred years, longer than the US so far.

  39. It’s confusing cause and effect to say that rising wealth caused by a more free market system tends to cause democracy. Rather, an autocratic government tends to limit the growth of an economy by tamping down the creativity and incentive to work hard that contributes to a vibrant economy. China’s explosive rise in GDP hasn’t caused the slight relief in oppressiveness; rather, the central government’s decision to ease up on the degree of oppressiveness has caused the economy to boom, creating a feedback loop where a growth-minded government has reluctantly granted freedoms to keep the expansion going.

  40. RC Dean, Rex,

    I don’t think I phrased my questions very well. I think I am more curious as to what the future holds for the modern democracies of today.

    I think I have a good idea as to what is going to happen with those countries just now “flirting” with capitalism. There are a lot of historical examples out there. The particulars may differ or the order of events, but there’s a general template that seems to play out.

    Modern democracies are relatively new historically speaking. For most of history democracies, and their like, have been confined to small local areas (town, province, city-state) and generally spent most of their lives fending off larger more powerful and aggressive authoritarian states. Democracies were an anomaly.

    Now they are the governments with most of the wealth and power. Most of which was achieved with generally capitalist economies. What happens to them(us)now? I guess I’m asking one of those “end of history” questions.

    Will democracy ultimately erode the capitalist foundation that allowed it to exist? Or will a balance be reached that keeps it stable?

  41. “democratic principles should be extended to the workplace!”

    Let’s vote the bosses out, the owners defunct,
    and sell the place to the highest bidder and blow town.

  42. “I’m sure most Americans would find life in Singapore much better approximates the ideal of a civilized state for free men than…”

    Hey, like chewing some gum and getting a caning…What does failure to flush get you?

    Trouble with Libertarians in a would-be-utopia
    like Singapore is that they if they see a “Don’t TOUCH the wet paint” sign — they do. That’s one of my observable definitions of Libertarians. The other side of the sign is meant for me-ism.

  43. My read is that relatively free markets create satisfaction for successful market participants. If a political system can be fashioned such that wealth generation is not greatly restricted and posession of the wealth one creates is largely perceived to be secure, there are all sorts of non economic illiberal ideas they could get away with.

    Free markets and political freedom go together to the extent that political freedom helps generate material prosperity. We generally think of this correspondence as being pretty strong across the range of possible policies because, in large part, tyrants are kleptocrats.

    China has seemed content to leave material wealth alone and is in the process of creating a content middle to upper class. They are very likely buying tolerance for their snooping and civil liberties violations.

  44. Will democracy ultimately erode the capitalist foundation that allowed it to exist? Or will a balance be reached that keeps it stable?

    No… Western governments will become more socialist, and more totalitarian, until we are living in George Orwells 1984.

    Humanity has lived under violent despots for most of its history. Even so-called “democracies” of the past had government protected slavery, government sponsered segregation and apartied. Most of the worlds population still live under despotism.

    Eventually, Western countries will just return to the natural state of oppression and mass poverty.

    Happy now?

  45. First off, I feel that democratic principles and capitalism can be highly incompatible. Capitalism tends to concentrate wealth in a small group at the top of the corporate structure (management, CEOs, shareholders wealthy enough to invest large amounts of money). The economic elites then have enormous power over the general population. Our “democratic” government is hardly representative of the people, it really caters to the corporate bottom line, and always has. Large concentrations of economic power tend to deform democracies rather than strengthen them.

    The structure of corporations themselves is clearly anti-democratic. The few people who make up the management have complete control over the tons of workers, who will be affected by management’s decisions. Under America’s corporate system, the only goal of corporations is to maximize shareholder profit, corporations cannot pay their workers any more than necessary or they can be sued by their shareholders. Corporations are granted the rights of personhood, and our system basically says that they have to be pathological persons whose only goal is to maximize their own gain.

    When I talk about democratic principles in the workplace, I do not mean that every production decision should be voted on by the workers. I simply believe that management should be held accountable to the workers through elections. Tyrannies are wrong! This would basically ensure that all workers would be paid a living wage, corporations wouldnt outsource jobs just to maximize profits by exploiting low wage workers in other countries, etc. Doesnt anyone else find the authoritarian structure of corporations to be disturbing?

  46. Libertree,
    Yes that’s the period of Icelandic history I was thinking of. I was thinking of the Althing which was parliamentary in nature but your characterization of their form of government as a kritarchy is more correct.

  47. Doesnt anyone else find the authoritarian structure of corporations to be disturbing?

    I have worked for many corporations in my life. Not a single corporation I worked for owned a single gun… nor did any of them ever threaten my life or my freedom. All of these corporation, I was free to quit my job at any time, and completly disassociate from them.

    However, our democratic government has 2.5 million Americans locked in cages. Our democratic government regularly invades other countries. Our democratic government regularly does paramilitary invasions of citizens homes. Our democratic government insists it has the right to regulate me and tax me, EVEN THOUGH I DON’T LIVE INSIDE THE UNITED STATES!!! There is no way to escape the non-spot threat of violence and torture that our government, and most democratic governments, use on their citizens.

    Under America’s corporate system, the only goal of corporations is to maximize shareholder profit, corporations cannot pay their workers any more than necessary or they can be sued by their shareholders.

    Yes… so government regulation, enacted by democraticly elected officials, forces corporations to exploit cheap labor under penalty of the law. So, of course, when government forces corporations to act evil, the solution is to give the people who forced the corporation to be evil, EVEN MORE POWER!

    When I talk about democratic principles in the workplace, I do not mean that every production decision should be voted on by the workers. I simply believe that management should be held accountable to the workers through elections.

    Why would anyone start a company under that system?

    Doesnt anyone else find the authoritarian structure of corporations to be disturbing?

    I don’t work for a corporation. While, every single day, there are hundreds of thousands of pages of rules that I must follow, the slightest misstep and I can be thrown in prison. Clearly, my freedon is most threatened by the people who intend to lock me in a cage, not the people I buy a computer from.

  48. Mark Morales:

    There is an element of capitalism you seem pretty blase about, if you perceive it at all. That is, it is fundamentally unwise to reduce property ownership to democratic principles.

    If you want control of a company, you either need to start a small one of your own or invest to a level of control you are comfortable with in an existing one. The key here is that ownership requires investment. That way, you don’t just vote more money for yourself at every vote because you don’t care what happens to the rest of the company.

    As a laborer at a job, you are contracted to work there for a wage. That is all.

  49. Doesnt anyone else find the authoritarian structure of corporations to be disturbing?

    No.

  50. Venezuela is a democracy. All of its recent elections – even the ones that elected and reelected the candidate that NYT doesn’t like – were internationally certified as fair and open.

    Russia? Not so much.

  51. “The belief was that rising incomes would create a middle class that would agitate for personal liberty and political power.”

    Yes – FOR THEMSELVES. In a situation like China, where (to pull numbers completely out of my ass), 2% of the population rises out of the proletariat to join the 0.2% of the population that are elites, that new “Middle Class” is going to identify with the old elite, and their agitation is going to come in the form of demands to join that elite, not for universal suffrage for the peasants that they now look down on, too.

    The “median income” theory has the same problem as most analyses that look at median income – it doesn’t differentiate between a broad increase in wealth a very narrow, dramatic one.

  52. Venezuela is a democracy. All of its recent elections – even the ones that elected and reelected the candidate that NYT doesn’t like – were internationally certified as fair and open.

    Popular elections do not make a country a “democracy” joe. Otherwise Nazi Germany would have also been a democracy. Popular elections are a nessicary ingredient for a democracy, but popular elections don’t garantee democracy any more than a peanut garantees Reese’s Pieces.

    Venezuala does not have a free and indepentant press. Venezuala does not have an independent judiciary. Chavez abolished parlament, in violation of the constitution, and now rules by decree. That is NOT democratic!

    If Dubya shut down every television station that critized him, abolished congress and ruled by decree, and required that supreme court decisions first be approved by the president, and over 3000 of Bush’s political opponents were killed in extra-judicial police killings, you would not be calling Bush Democratic.

    Just admit you are wrong calling Venezuala a Democracy joe.

  53. Rex,

    I’m sorry, try again. There were no elections in Nazi Germany. None. When the Nazis came to power, that was the end of the elections.

    As opposed to Venezuela under Chavez, which has continued to hold open, contested elections that meet international certification.

    “Venezuala does not have a free and indepentant press.” Yes, it does. The government is commonly criticized on television and in the press.

    “Venezuala does not have an independent judiciary.” Yes, it does. The courts rule against the government.

    “Chavez abolished parlament, in violation of the constitution, and now rules by decree.” Not anymore. Parliament is back, and Chavez no longer rules by decree.

    I certainly do no support the closing of the coup-supporting TV station, Chavez’s leaning on the press, of the way he shut parliament for a time and ruled by decree – even though each of those actions is perfectly legal under the laws and constitution of Venezuela, they were not the right thing to do.

    That Chavez is both a bad guy, and the democratically-elected leader of Venezuela, does not mean Venzuela has ceased to be a democracy. It could, someday – Hugo certainly isn’t someone to be trusted – but a country that hold open, competitive elections, allows opposition parties to campaign, allows the media to criticize the government and endorse the opposition, and meets international standards in its electoral process is a democracy, whether you like the winner or not.

  54. China’s “market communism” is an utter fraud. A tiny sliver of the politically favored elite are permitted to live in and participate in a system of command-and-control monopolies that merely feign capitalism.

    It is exactly the same, except perhaps in magnitude, as the lifestyles of the bona fide Communists in the Soviet Union. They lived quite nicely and had all the trappings of capitalism, but were obviously not “capitalists.” Your dacha or mine, Comrade?

    No apologist for China has yet been able to short-circuit the old truism: “Freedom of the press requires the freedom to own a press.”

  55. Popular elections are a nessicary ingredient for a democracy

    The Athenians not only would have disagreed, they would have said that popular elections signalled the end of democracy and the start of oligarchy and demogoguery. I can’t say they were wrong.

    – Josh

  56. “China’s “market communism” is an utter fraud.”

    Yes, so we should stop referring to China as communist. Clearly they fall under the fascist rubric. (like the U.S. which might be said to be ‘fascist-lite’ as a friend of mine put it). Markets are allowed in China to the degree they serve the interests of the state. People have freedom as long as they do not interfere with or criticize state agendas.

  57. How is this a “virtuous circle”? Capitalism is evil and so is democracy. I’d think Ron would know better than to say that.

  58. Ask low wage workers how much liberty and freedom they feel that they have. Corporate empires are just tyrannies, democratic principles should be extended to the workplace!

    Good idea, but I’m not sure how to go about asking low wage workers how much liberty and freedom they feel they have. Should I send out a survey? Who should be included? Please explain how you went about it.

  59. ” To the extent that their “economies” are growing, they are largely being fueled by high oil prices, not because their citizens are being allowed to invest, work hard, and own property.”

    The average age of a Bentley buyer in Russia is 35.

    Real estate in Moscow is awfully pricey for it to be only because of oil prices, with nobody investing, working hard, and owning property.

  60. tarran writes: “When you do business with someone, do you only hold up your end of the bargain because you’re afraid they’ll hurt you? ”

    So, you’re saying you live by the principle “Let the Seller beware”?

    So if you’re busy looking out for the other party’s interest, who’s looking out for yours?

  61. libertree,

    The better question would be-where do rich nations go from here? What will rising wealth and technology bring that will improve on democracy?

    For this statement alone I declare you the winner of this thread.

    Read about Athens in ancient times? Democracy sucks moose, field mice, iguanas, and all manner of wild creatures upon the face of the earth.

    Pain,

    Will democracy ultimately erode the capitalist foundation that allowed it to exist? Or will a balance be reached that keeps it stable?

    Democracy by itself will ultimately erode the foundation of capitalism, as sure as day follows night. Large groups of people simply don’t track logic for very long.

    Sooner or later there will be a reason to pervert capitalism. For the children. Or because “everybody deserves free health care”. Or something like that.

    Democracy is not capitalism’s savior, it’s its nemesis.

    Alan V.,

    But “bad luck” could delay that happening for 50 or even a 100 years.

    Or forever.

    People today worship “democracy” because they can’t think of anything better to grasp at.

    The truth is, 5,000 years of recorded history shows that we still don’t have any idea how to take care of ourselves. Look at the sorry long term record of governments.

    The only real advance was The Bill of Rights. I’ll take most any form of government you want to put on the table, so long as The Bill of Rights is made its inviolate central core. In other words, the government is allowed to do absolutely nothing that violates the Bill of Rights.

    If you don’t have a Bill of Rights then you don’t have freedom. Being able to vote doesn’t mean squat, in and of itself. You can vote your Bill of Rights and your freedoms away whenever the whim strikes. As it seems to be doing here in the good old US of A.

  62. Rex,

    I’ve worked for lots of corporations too.

    All of these corporation, I was free to quit my job at any time, and completly disassociate from them.

    Maybe, you should take a look at what the corporate lawyers have cooked up. You aren’t necessarily so free to disassociate yourself as we once were. They’re trying to claim they have “rights” and “interests” in your skill set when you leave, and tie you up with “non-compete” clauses. I don’t know how successful they are in upholding their claims, but I know that the claims I’m hearing about in recent history are a lot stronger and more frequent then they used to be.

    I’m all for capitalism. I’m a greedy capitalist pig. But I’m not so sure modern corporations are entirely capitalist anymore…..I do find some modern trends a bit disturbing.

    There is a difference between Capitalism, and the Financier-ism (newly invented term) that we seem to be slipping into. I know too many people in too many corporations who feel that the top brass are not doing what is good for the long term health of the business. They’re doing what makes them the most money right now. Which is, anything that pushes the stock price up today (and to hell with tommorrow), because executive bonuses are based on stock performance.

    We’ve long ago reached the point where even if the executives screw the pooch (you know, small furry ear?) and wreck the corporation, these executives are still going to walk away rich, fat, and happy. It should be no surprise that under these conditions, the interests of the executives are not the same as those of the employees who actually care about the long term viability of the business.

    But this is actually an extremely complex subject, which I’m barely touching the surface of. The root of the problem, however, goes back to the first financiers like JP Morgan — who did NOT want a free capitalist system, precisely because it was too hard to predict his profits under such a system. The financieers want to tame the capitalist beast so they can control it for their own purposes.

    Which is not compatible with the free market that benefits the masses, and allows individuals freedom to operate and take their own risks. It’s all that risk taking that makes the whole system unpredictable, you know.

  63. For those of you still visiting this thread, I will just note that Freedom House now calls Venezuela “partly free” and Russia “not free.”

  64. As for libertree’s question:

    The better question would be-where do rich nations go from here? What will rising wealth and technology bring that will improve on democracy?

    For a good part of the answer, take a look at Joel Mokyr’s fabulous The Gifts Of Athena. See my review of it for an intro.

  65. Ron, just read your review. Good article, sounds like a fascinating book. But I don’t see that it addresses the question of “what comes next?”.

    If anybody actually knows.

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