PS 201 Introduction to US Politics
The American Political Economy Lectures
Fall, 1998
Conflicting Views of the Relationship of Capitalism to Democracy | ||
Elite Democratic -- Economic Liberalism | Popular Democratic Critique | |
Markets | Markets efficiently allocate resources, spur efficiency and innovation, steer production toward consumer demand (a benign "invisible hand") | Markets produce environmental and social externalities, engender wealth stratification and social hierarchy, are liable to be nonresponsive to collective needs, and suffer periodic crises rooted in their unplanned and uncoordinated nature (a malign invisible hand). |
Markets maximize voluntary relationships and minimize the need for political coercion | The wage relationship is itself often coercive, since most people must sell their labor to live, while corporations can usually replace workers from the pool of unemployed | |
Competition is open to all (equal opportunity) and advancement is based on merit (inequalities of outcome are justified) | Competition is unequal (initial conditions vary); factors other than merit (race, gender, etc.) frequently intervene; and the system is liable to systematic biases in what it rewards and excludes | |
Consumers are sovereign--their decisions drive the market--therefore business elites are ultimately accountable to consumers | Consumer preferences are shaped by advertising; consumers cannot express preferences for collective goods in the market; consumer sovereignty implies the subordination of the poor | |
Human Nature |
Capitalism and markets reflect human nature: People are naturally self-interested Freedom is economically based, and this consists of the capacity to acquire, consume, innovative, and produce (consumer culture and entrepreneurship) |
When rational egoism and material fulfillment alone dominate, the fabric of collective life becomes tattered. Freedom is as much a matter of political participation and personal expression as it is the pursuit of economic gain, and personal fulfillment comes as much from care for and cooperation with others as from private pursuits. |
The State |
The public interest is best served by non-interventionary
("laissez faire", "deregulatory") government, since:
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Government intervention can promote the public interest:
Bureaucracy should be open, accountable, and participatory, and should seek to reconcile public involvement with quality science.
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Corporate Power |
Corporations take risks in order to produce socially useful products; they embody faith in the future and the "spirit of giving" (Gilder, Wealth and Poverty) | Corporations produce for private profit; public benefit is neither their primary goal nor a necessary result. The growth of advertising has raised to a high art the manipulation and fabrication of desires. Corporate planning shapes markets and public policy. Corporations do take risks, but they also strive to shift risk-taking and losses onto others (government and people). |
The political power of corporations is overstated; what power they do exercise is a legitimate defense of their interests. (Alternatively: the hierarchical organization of political power is desirable because it contributes to social stability.) | Corporations exercise substantial direct influence on politics through campaign contributions, lobbying, funding of 'think tanks', etc. More important still is their structural influence: private control of investment makes the state dependent on corporations for economic growth, taxation (tax revenues are affected by economic cycles) and borrowing. "Business confidence" determines investment. See text pages 94-95. | |
The internal hierarchy of corporations is a rightful prerogative of private ownership, essential to effective management, and is voluntarily accepted as a condition of employment. | Key institutions, notably the workplace, ought to have democratic authority structures if people are to participate effectively and believably in shaping society and gain experience in democratic decision-making. See text page 84. | |
Labor Unions | Labor unions are coercive; workers should not be forced to join or contribute to them (union shops), nor should union leaders have the power to make political contributions not specifically authorized by members. | Labor unions and the labor movement are essential as a countervailing power to that of corporations, and laws protecting the right to organize and the right of unions to participate effectively in the political process are required if labor is to have any influence. |