Capitalism, historically, has been viewed as a companion to democracy. The development
of free markets, in which anyone could participate, enabled ordinary people
to take control of their lives and confront centralized economic power, just
as democracy initiated an assault on political power.
Markets, of course, have existed since the dawn of time. People have always
strived to satisfy their basic needs, by producing as much as they could and
then bartering the rest. A real turning point, though, occurred with the invention
Money divorced people from the need to produce their own food, and through this
it enabled specialization and the foundation of trades. Further, through the
use of savings it enabled the first investments, in the ingredients
needed for greater production capacity, and in the tools associated with new
With time, markets increased in size. This in turn led to concentrations of
economic power (capitalism in effect helps create the problem it is supposed
to solve), and with them the first modern forms of economic competition. Such
development also fueled a variety of economic institutions, centered around
different production specialties. Similarly, the first financial institutions
were created, starting with the proverbial moneychangers at the temple gates.
Capitalism is defined as any system of markets. More deeply, though, it is money:
its sheer existence. Capital is simply saved money. Any society
that uses money necessarily is at least partly capitalistic, and hence exposed
to all of the systems risks.
In recent decades the growth in economic activity has been phenomenal. One consequence
of this is that the largest corporations now have more economic power than most
nations. There is an undeclared war around the world between corporations and
governments, and for the most part the companies are winning. Business regulation
is failing, and a new form of global aristocracy is being established, within
the structure of democratic nations.
This is not an equilibrium position. The tension that has developed between
business and government must be resolved. If the companies prevail, we will
have democracy in name only. If the governments can revitalize their protective
function, and rein in the corporations, we may yet have a well-functioning worldwide
The corporate system now constitutes an alternative approach to the overall
organization of human society. It impacts every aspect of our lives. It also
has innumerable deleterious effects, including on government, employees, consumers,
communities, and the environment.
In the first lesson in this series, we learned that democracy is based on a
core set of principles, and further that it is in conflict with capitalism.
The reason for this is that capitalism has its own distinct foundation.
Democracy is based on cooperation. Capitalism (and the corporations through
which it is implemented) celebrates and is inseparable from competition. Democracy
stands for human equality, personal freedom, and their associated ethics. Corporations
operate on the principle that, if we dont do it, someone else will,
which is identical to the idea that, we have the power to do it, so we
will, i.e., natural law.
For democracy, value lies in diversity. Under capitalism, money is the measure
of all value. Moreover, selfish interests are more important than the common
good. Inequality is acceptable, and inevitable. And life, everything in life,
is a business. Everything, and everyone, is a product for sale.
The benefits of markets are great, but the threats posed by modern corporations
are so severe that they must be properly checked. Such checks can be divided
between those that apply to the companies, and other checks on their executives.
Executives are of course subject to civil and criminal penalties if it can be
shown that they have broken the law. In virtually all democracies, though, the
law is selectively applied. White-collar crime is neither investigated
This needs to be rectified. In addition, executive behavior can be controlled
through ostracism and shame. Activists need to identify not only unethical companies,
but also their leading managers, and then pillory these individuals in press
releases and at demonstrations.
Checks on the companies themselves are the responsibility of government, the
media, and also the people. For the first, government regulation needs to address
every possible area of abuse.
For the people, the main checks are company protests, from letter writing to
demonstrations, but more importantly boycotts. Boycotts can force virtually
any company, certainly any consumer products company, to change. Since so many
companies are unethical, it is essential that boycotts become much more widespread.
A related regulatory issue, to empower consumers, is that all products must
be properly labeled. Labels should include not only the products ingredients,
but also a description of the social and environmental costs that were incurred
in its manufacture. In particular, anything that involves genetic engineering
or cloning must be labeled as such.
The final checks are structural remedies. For the first, corporations should
not be legal persons. Such status is actually another example of an anti-check:
a barrier that exists to a well functioning society and democracy. In the United
States, the Supreme Court ruling that granted it must be reversed.
In addition, there is the issue of profit. It all starts with the profit motive.
The communists believed that the problem was the existence of private property,
but they got it wrong. It is not that everyone should be poor, its that
no one should be too wealthy. The real problem is profit. Profit, at least as
it is created on a large scale by corporate institutions, needs to be eliminated.
All for profit organizations should be restructured as non-profits.
Present-day capitalists will of course oppose this change. They argue that individuals
act only out of self-interest, not for others, and that society therefore requires
unfettered selfishness. Through such beliefs capitalists, ipso facto,
reject the possibility of ethics.
Capitalism is creating an authoritarian structure that is akin to a new form
of feudalism. The reason for this is that it is a system of exploitation. It
follows the tenets of natural law. Under its principles and practices, the most
ruthless always win. Humanity cannot base its society on this type of structure,
on a system that is obsessed with selfishness and greed and where everything
is evaluated in monetary terms. We must choose democracy, and implement the
controls that are required to ensure that markets, and market participants,
do not overwhelm our lives.
© Roland O. Watson 2008