Guest post, Larry Zacharias, Retired Professor, University of Massachusetts, Amherst
I’ve been thinking of two interrelated themes these days: on the one hand, our apparent descent from democratic populism toward a new sort of corporatism or fascism; on the other hand, the underlying pragmatic drive of capitalism – or, more correctly, capitalists – to get things done notwithstanding the inefficiency of the democratic process.
Hayek’s comparison of the market vs. voting is apt: 100 persons with 100 preference curves are not easy to sort out by voting or legislation, so someone will always be dissatisfied; whereas in a market system, those same 100 have to pay for what they want, and if the end results are unsatisfactory, they can go back and pay more in the second go-round. The market works well when everyone begins with the same resources to pay for their needs and desires, but in the real world, there is substantial inequality of wealth, and so the outcomes cannot be fair.
Can we fix this? To some extent yes, especially if we have a political system that limits inequalities or generates options and decisions about spending our resources (i.e., for “public goods”) that represent the broad majority and most can agree with. But if the political system has been bought and paid for by the same interests that distort the market system – i.e., those who begin the day with substantially more resources than the rest of us – then the political process will be similarly corrupted. That is the direction we are headed in today.
Populist movements traditionally arise to redress this imbalance and overcome an oppressive political economy. But our current populism has been corrupted, insofar as the usual channels of political communication are controlled by the super-wealthy, and so in turn the super-wealthy have leverage over the populist movement as well as the system as a whole.
Where does capitalism fit into this equation? For one, capitalism works because entrepreneurs and business managers crave, above all, to get things done. This entrepreneurial drive, in turn, works out for the common good – we the people benefit by having new products and activities to chose from and jobs that pay us the wherewithal that enables us to benefit from all these options. But that very same drive to get things done hates inefficiency; and the democratic process, if not strictly speaking inefficient, is at least slower than the top-down decision-making characteristic of business. So when government gets in the way of business, or entrepreneurs think they can do a better job at something than government, business leaders call for a shrinking of government, a substitution of market processes. In some instances businessmen have reasonable grounds for argument; but when the call for shrinking government and displacing it with private enterprise becomes a slogan or catchphrase without well-reasoned grounds – i.e., the new American populism – then we head down the slippery slope of corporatism or, in the end, fascism.
The populism of 21st century America seems to be little more than expressions of genuine dissatisfaction corrupted by the catchphrases of capitalism and controlled by a part of the wealthy elite. Was P.T. Barnum correct, that “you can’t fool all of the people all of the time”? Let’s hope so.