Thursday, September 11, 2008

Democracy vs. capitalism - 1/8/08

[I wish that we were making even the slightest bit of progress in thinking about these issues. Alas, we're not.]

This post is the first of a series in which I try to work out some of my feelings about democracy and capitalism. I wrote a post on May 22 of last year, which said some of what I think. It's bad form, I guess, to quote oneself, so I shan't, but, in that post, I outlined the basic conflict I see between the two systems.

I want to go further here and start to think about how we resolve those conflicts. Let me discuss it through the medium of the issue of offshoring jobs.

Offshoring is vitally important, not only for the effects it has already had, but for the future potential. I don't want to discuss comparative advantage here, but that idea, which is thought to allow maximum (and efficient) production in all nations, may no longer hold. With the triumph of technologies that eliminate borders, there may be nothing left (at least someday) for Americans to trade - not without a serious diminution of living standards in the U.S. There are other effects, like the lowering of prices, which factor in on the positive side, but I'm not writing about that here. I'm merely trying to show that offshoring is an important issue.

Unemployment insurance is a matter that we do not trust to the capitalist system, that is, we do not assume that companies will lay people off, but support them for a certain length of time. Because it is a social goal not to allow people to go without that support, the democratic system kicks in and provides for this insurance (which it does by taxing the capitalist system, i.e., making it less efficient).

Offshoring, however, of much greater potential import for restructuring the way we live, is left totally within the capitalist sector. Yes, I know there were some ineffectual Congressional hearings, and it flared as a campaign issue in 2004, however briefly, but polticians have steered clear of any real action.

Companies get to decide what industries, professions, jobs will be handed over to other countries. If that means that a town is without its source of livelihood, or a family is without a means of making a living, that's how change goes - at least you can pay a dollar less for that sweater down at Wal-Mart. But democracy keeps its hands off the issue.

I know that Ronald Reagan had a lot to do with this. His dislike of government (in all matters except his personal living style and providing arms illegally) has become the accepted norm, which means that, despite his stated intent, he hurt democracy to the benefit of capitalism.

For we are all complicit in allowing certain issues to fall outside of the purview of our elected representatives, and to be under the control of our decidedly unelected CEOs. (Offshoring is not the only such example; our energy policy, such as it is, seems to be driven far more by the desires of capitalists than by the needs of the people.) But what is the end result of this division (drivers' licenses to the democratic system, job policy to the capitalist)? It's not simply that business items fall into capitalism, because these items cross all lines in our society.

And how do we restrike this balance before everything important is handled by those who want to make money, not those who wish to fulfill larger social goals?


mcfnord said...

companies don't decide what industries, professions, and jobs move to other countries. commercial pressure decides these things. if company x didn't make the move, then company y would, and goodbye company x.

and if *american* companies are prohibited from responding to commercial pressure, goodbye american companies.

unless there's a global democracy, i'm not sure how you will bend these competitive pressures to meet the employment goals of your Ten Year Plan. i do know the result will be inefficient, so less wealth for all, but a job for you, at lower pay due to inefficiencies mandated by the state. don't we have enough of these already?

Androcass said...

I'm not exactly sure you read what I wrote here, and I won't try to rehash it. I have never argued that companies can be prevented from doing what they say they "need" to do, but it is possible to put a value on their actions and require them to pay for that value. For a corporation to pay some fraction of their increased profits to compensate for their long-term reduction of "national value" is certainly something that, in a democracy, is worth discussing.

I have never proposed a Ten Year Plan, and wouldn't. Neither, though, am I convinced that the current situation is "efficient" merely because it is the result of allowing corporations to do anything they want, and an argument based on that assumption is probably not going to see much sympathy from me.

mcfnord said...

Ten Year Plan is an allusion to the old Soviet system and controlled economies. Democracy does have an arms-length relationship with capitalism, but that's because it seems to outperform the alternatives.

Quantifying external effects such as job dislocation is rather hard, and philosophically I don't know how it would work. I certainly disagree. Microsoft pays me $51/hr right now... pretty sweet. Should my job disappear wholesale to another person in another nation, you are saying America would have a legitimate criticism of Microsoft. I'm saying $51/hr was pretty effin sweet while it lasted (just like life itself). It's vaguely possible that machines themselves might replace me... I think Microsoft's committment to me extends as far as EACH HOUR I'VE WORKED, and not beyond that. I don't think there'd be commerce if there was an assumption of longer-term (life-long?) engagements. I can't imagine what quantification of external effects from employment shifts would look like, beyond a deeply political arena.

My first comment basically says that I dispute that companies determine which jobs are outsourced. Markets do that, companies are just along for the ride. In essence I'm saying their hands are tied as much as our own.

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