Guest Commentary: Capitalism is Economic Oligarchy, Socialism is Economic Democracy

By Connor Gorman

Much has and will continue to be written about different economic models in both serious and not-so-serious (but still accurate and informative) ways.  It should be noted that most (though not all) mainstream economics courses, analyses, etc. start from a capitalist framework without even acknowledging the possibility of alternative structures.  But this piece isn’t about that.  This piece is about an analogy, an analogy between economic systems and political ones.

In the U.S. it’s often believed that political democracy (which the U.S. is thought to have despite some questionable assumptions, but that’s a different story), individual liberty, and capitalism are the pinnacles of freedom.  However, this conflates several distinct things.  Political democracy exists when the people collectively decide how to run certain aspects of society.  This is in contrast to such systems as political monarchy, dictatorship, and oligarchy where one or a few unelected and unaccountable individuals make these decisions.  The problem here is that the types of things that fall under modern conceptions of political democracy (since really everything is political) are limited to a small subset of what’s necessary for society to function.  In particular, one major category of decisions that’s largely excluded from democratic control by the people is the way resources are distributed and the priorities placed on their use.

For instance, one recurring theme in Davis city politics centers around the merits of various project proposals from hotels to innovation centers to apartment buildings and whether or not the city should approve their construction.  However, regardless of your position on any of these (or the larger questions that often surround them) it’s important to realize that all of the city council and even commission meetings where approvals are sought occur toward the end of the process when it comes to proposals put forth by private developers (as is the case with most of them since the city doesn’t typically have the funding to build these things and even if it did it would probably still have to go through private construction companies).  Prior to this, developers have already made major decisions about such things as the general layout and design of the project in addition to making the fundamental decision of whether or not to bring forward a proposal to begin with.  And even when city input is requested or required the ultimate decision about whether and how to proceed still lies with the developer.

In other words, capitalism is economic oligarchy where a few unelected and unaccountable individuals decide how to run most economic aspects of society.  Now some may say that it’s not individuals
making these decisions, it’s the market, and to some degree that’s true.  In order for a business, especially a small business, to survive under capitalism it’s sometimes necessary to engage in behaviors which aren’t desired by any of those running it.  However, this was (and is) likely true of authoritarian political systems as well (monarchs don’t rule in a vacuum and external factors need to be accounted for) but this isn’t a reason to support, uphold, or encourage such things.  Furthermore, not only do situations exist where those in charge of political or economic decisions make choices that are clearly unnecessary and made purely for personal gain at the expense of others, but even when market forces dictate the direction that a business takes the people still aren’t collectively doing so and thus, it’s still not democratic (the notion of voting with one’s dollars has a lot of problems).  This is where socialism comes in.  There are a lot of possibilities (and debates) when it comes to the details of socialist economic policies and structures but the unifying theme and basic premise behind all of them is economic democracy where the people collectively decide how resources will be used (not to be confused with heavily regulated but still privatized industry combined with welfare capitalism which is sometimes referred to as socialism).

At this point some may try to argue that socialism infringes upon our individual liberties because people aren’t “free” to make certain decisions, but what exactly aren’t people “free” to do under socialism?  Capitalists (those who own a significant portion of the means of production) wouldn’t be “free” to control or exploit others the same way that monarchs and nobles aren’t “free” to control or exploit others under political democracy.  Similarly, people wouldn’t be “free” to allow themselves to be controlled or exploited just to survive but it’s unlikely that many people desire such an arrangement anyway.  It’s hard to have or make use of your individual liberties and personal autonomy when you’re living in poverty, being exploited at work, or enduring the stresses and violence associated with an oppressive and alienating society.  The so-called “free market” is a misnomer since it guarantees freedom only to those with a sufficient amount of wealth and power and even then this isn’t always the case.  As mentioned above, small businesses (and under certain limited circumstances, larger businesses as well) are sometimes forced by the market to make decisions that they wouldn’t otherwise make in order to keep afloat so even capitalists confront plenty of situations where they don’t have much freedom under capitalism and should, in many ways, be opposed to it along with their workers.  In order for everyone to experience and enjoy true freedom, all systems of oppression (racism, patriarchy, etc.) need to be dismantled and society needs to embrace full democracy (both political and economic).

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Disclaimer: the views expressed by guest writers are strictly those of the author and may not reflect the views of the Vanguard, its editor, or its editorial board.

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  1. Jeff M

    I would be helpful if all contributing articles include some bio of the author.  If this is from a recent college graduate, I would temper my response due to the lack of his life experience contributing to his ignorance.  If a college professor, I would be more direct in aggressively debunking his communist propaganda.  If a Russian bot… well then we should just ignore it.

    In other words, capitalism is economic oligarchy where a few unelected and unaccountable individuals decide how to run most economic aspects of society.

    This is so ridiculous of a statement I really don’t know where to begin.  It is exactly the opposite… socialist systems are centrally controlled by the likes of Vladimir Putin, Fidel Castro and Hugo Chavez… and their armies.  The economies of democratic capitalist states are controlled by a balance of elected officials (in our case it is supposed to be by the people for the people, but prior to Trump being elected it had degraded into by the ruling class for the ruling class) and the producers: the capitalists and the workers.

    Today our electronic communication-connected rattlebrained youth, having been sufficiently purged of personal coping skills by their clutching helicopter Baby Boomer parents, have decided they would prefer not to have to work hard and compete in a free market economy.   They love the old hippy socialist fool Bernie Sanders for offering them more free stuff and what they think would be an easier life.  Some of them, aided and abetted by their older professional protesting siblings and still-recovering-from-the-drug-consumption-of-the-60s leftist parents, attempt to hold a mantel of moderate by pointing to the Scandinavian countries and screaming for “Democratic Socialism!”

    If these kids really knew enough to qualify in their demands, they would note that the Scandinavian countries, with respect to their economies, are more capitalist than the US.  It is their capitalist economic success that allows them to fund greater government-paid social benefits.

    True socialism and its category of collectivist styles of governance are all proven dismal failures.  They can only survive feeding off the success of the industrialized capitalist state within them and around them.   The primary reason for their failure is the breaking of the basic human motivations and incentives for people to strive toward growth, achievement and innovation.   Capitalism creates chaos to those wired to want order, consistency, fairness and an easier life.  But socialism creates greater misery for all.

    Now, some will prefer this as people within the socialist system will be more fair in their misery.  However, the problem is that the misery will just continue to expand in economic decline.

    And that is the fundamental difference between capitalism as a system and socialism.  Capitalism is an economic growth system; socialism is a ticket to a spiral downward is economic malaise.

    Those that demand it should be shouted down as being against the US and its principles of human freedom.

    1. Howard P

      To paraphrase a quote I heard somewhere, “capitalism is a lousy system, but it is far better than the ones in second place…”

      And if you own stocks, even if you own hem in mutual funds, I guess you’re part of the oligarchy…

      1. Jeff M

        I believe that the human need to progress is both a blessing and a curse.  It is a blessing in that  it has helped us accomplish tremendous things to improve the overall human condition.  It is a curse in that it causes us to repeat mistakes previously made.

        Yes, democratic capitalism is a flawed system… but by far better than all others.  Our need to progress causes us to fixate on the flaws without truly understanding and appreciating this truth.

        1. Jeff M

          Like GB, Canada system of governance is both a constitutional monarchy and a parliamentary democracy.  However, Canada is capitalist in its economic structure and function.  Like the cold, resource-rich and low population-density Scandinavian countries Canada can simply afford richer social social programs.  However, Canada would be a much different country were it not for its wealthy neighbor to the south that it trades with.   Canada’s GDP is $1.5 trillion.  Total Canada and US trade is $500 billion.  So 1/3 of Canada’s economy is in US trade.  Contrast to the US economy being $18.6 trillion.  And no, socialism in the US did not cause the US to have a $18.6 trillion GDP.

  2. Ken A

    I agree that the global elites (aka the gang getting ready to party in Davos) have more power than they should but they don’t “decide how to run MOST economic aspects of society”.  The owners of the Nishi and Covell Village sites are some of the richest and most connected people in Davis yet they have been unable to convince the non elite to give them the OK to develop their land.  (I’m betting that the city of Davis won’t come up at all in Davos unless someone is talking about where a Napa winemaker went to school)

    1. Don Shor

      Yeah, I’m pretty sure almost every country in the world is actually a mixed economy with most of the debate being about the degree of mixing.

      but the unifying theme and basic premise behind all of them is economic democracy where the people collectively decide how resources will be used (not to be confused with heavily regulated but still privatized industry combined with welfare capitalism which is sometimes referred to as socialism).

      So can I still choose which plants I’m going to sell, and how much to charge for them, or is that going to be decided collectively? Let me know, since I’ve got to order tomato plants pretty soon.

    2. Jeff M

      Dailykos is not a place I would go to for in-depth objective information on this topic, IMO.

      Socialism is a system of governance; it is not defined because there are things government pays for from the taxation of production.

      Socialism is a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.

      In other words, NO PRIVATE PROPERTY FOR YOU comrade.

      The correct advocacy for the US if you are someone that would like to see stronger social programs is to value capitalism and advocate for policy that makes it easier to start and grow business and industry.

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