Is Participatory Democracy Possible Under Capitalism?

The Arab Spring and the Occupy Wall Street movement have become prominent expressions of the desire for democracy held by peoples throughout the world. In recent years, increasing numbers of activists around the globe have begun advocating for a participatory democracy that provides people with a meaningful voice in all of the major decisions that impact their lives. But what exactly is a participatory democracy? Is it attainable under capitalism? And if not, what sort of social transformation would be required to achieve it?

Capitalism is a market-based social system that requires a degree of government intervention to ensure that certain basic principles are adhered to. Consequently, as economist Jim Stanford notes, “There is no real debate over whether governments should ‘intervene’ in the economy: they always have, and always will. The real questions are rather different. How does government intervene in the economy? And in whose interests?”

In his classic treatise, Capitalism and Freedom, economist Milton Friedman made clear that government’s role is to intervene on behalf of capital because in a market system its “major function must be to protect our freedom both from the enemies outside our gates and from our fellow-citizens: preserve law and order, to enforce private contracts, to foster competitive markets.”

Friedman also argued that democracy is only attainable under a free market economy, claiming that economic freedom, or capitalism, is “a necessary condition for political freedom.” The form of democratic governance that Friedman was referring to is a liberal democracy based upon a constitution that prioritizes individual rights, most specifically the right to private property, which translates into private ownership of the means of production. Therefore, the role of a liberal democracy is to ensure the existence of a system of governance that maintains a separation between the political (public) and economic (private) spheres by, as Friedman noted, enforcing private contracts and fostering competitive markets.

Another champion of free market capitalism even defended undemocratic forms of governance as long as they are “liberal.” Economist Friedrich Hayek stated in 1981:

At times it is necessary for a country to have, for a time, some form or other of dictatorial power. As you will understand, it is possible for a dictator to govern in a liberal way. And it is also possible for a democracy to govern with a total lack of liberalism. Personally I prefer a liberal dictator to democratic government lacking liberalism.

Hayek’s statement makes evident that under capitalism the “liberal” aspect of the concept of “liberal democracy” is more crucial than the “democracy” aspect since it ensures conditions favourable to capital accumulation. It is this belief that rests at the core of U.S. “democracy promotion” efforts around the world, thereby allowing Washington to portray a democratic government such as that in Venezuela as “authoritarian” because, as Hayek explained, it governs with a lack of liberalism. Ultimately, Hayek’s statement supports Friedman’s argument that the only form of “democracy” that is acceptable under capitalism is a liberal democracy.

The prioritization of individual rights, which makes private property sacrosanct, and the ensuing separation of the political and economic spheres under liberal democracy inevitably results in a restricted democracy that limits the participation of citizens. The participation of citizens in a liberal democracy is limited to the political sphere because private ownership of the productive process allows economic elites to rule the economic sphere in an authoritarian manner. Furthermore, economic elites, due to their wealth and social position, also inevitably wield a disproportionate degree of influence in the political sphere in a liberal democracy. In short, under liberal democracy, political democracy exists to a degree while economic democracy does not exist at all.

In a liberal democratic capitalist society, workers are required to surrender their democratic rights and most of their individual freedoms everytime they enter the workplace. Most people who have internalized capitalist concepts of liberal democracy would never advocate a dictatorship in the political sphere, regardless of how benevolent it may be. And yet, as employees, they unquestioningly tolerate dictatorship in the economic sphere of their lives, whether benevolent or not. Consequently, workers are beholden to unaccountable elites in the economic sphere of their lives. Even small businesses represent inequality in power (and usually in wealth too) between the owner and the workers. And regardless of how benevolent small business owners may be, or how open to employee input, they still ultimately retain unilateral decision-making powers that render economic democracy unattainable.

In contrast, participatory democracy provides people with a meaningful voice in all of the major decisions that impact their lives, which requires people having democratic control over every sphere of their lives, including the economic sphere, or the workplace—where many people spend most of their waking hours. Therefore, the social ownership of the means of production is an essential component of participatory democracy.

So what might social ownership of the means of production in a participatory democracy look like? It could consist of state ownership of some or all of the productive processes. However, under such a system, it would be essential that the workers manage the production process in order to avoid the establishment of hierarchical structures in which the state simply replaces the capitalist as the boss, thereby resulting in a form of state capitalism, which is essentially what occurred in the “actually existing socialism” of the Soviet Union. As Joel Kovel notes, “One must unequivocally say that ‘actually existing socialism’ never passed over the threshold of restoring to the producers control over the means of production.”

Another model of social ownership consists of worker-owned enterprises, or cooperatives. In this instance it is crucial that there be some over-arching guidance through a participatory democratic process that ensures such entities produce in accordance with the needs of society rather than simply replacing competition for profit between privately-owned businesses with competition for profit between cooperatively-owned enterprises.

Essentially, in order to achieve social ownership of the means of production, management of the workplace—whether state-owned or worker-owned—must be democratic and carried out in coordination with the broader community to ensure that these enterprises serve the needs of both the immediate community and of society at large. Ultimately, social ownership of the productive process provides each and every worker with a meaningful voice in the economic sphere of their lives.

But while social ownership of the means of production is necessary to achieve a participatory democracy, it is not sufficient. After all, people need to be equally empowered in the political sphere. A participatory democracy deepens citizen engagement in decision-making beyond the mere formality of casting ballots in elections held every few years. In order to be truly effective, political institutions cannot be authoritarian—as is the case in liberal democracies and under the “actually existing socialism” of the past century—they must be responsive to the will of the people.

It was the top-down nature of policy-making—and the related lack of participatory democracy—that lay at the root of the failures of “actually existing socialism” in the 20th century. In the Soviet Union, the state not only owned the means of production, it also managed it; therefore economic democracy did not exist. There was also limited space for meaningful participation in the political sphere. As Alaan Maass points out:

The state did own the means of production in the USSR. But the real question is: Who owns the state? If the answer is anything other than the mass of people, exercising their “ownership” through some system of grassroots democracy—if there is an elite, however well- or ill-intentioned, exercising power over how society is run—then that’s a society that violates the most basic definition of socialism.

According to Marta Harnecker, the role of political institutions must be to “facilitate, not to supersede. We have to fight to eliminate any sign of verticalism which cancels out people’s initiative because popular participation is not something that can be decreed from above.” Similarly, Michael Lebowitz suggests that in a participatory democracy “the creation of communal institutions that democratically identify communal needs and coordinate productive activity to satisfy those needs is at the center of the new socialist common sense.”

In conclusion, the democratic objectives of many of those participating in the Arab Spring, the Occupy Wall Street Movement and other struggles for democracy cannot be fully achieved unless participatory democratic processes are established that provide everyone with a meaningful voice in all of the major decisions that impact their lives. A liberal democracy that enshrines the right to private property, and by extension the right to private ownership of the means of production, cannot by definition provide the necessary space for participatory democratic engagement. Therefore, all of us engaged in the struggle to establish participatory democracy must at some point inevitably address the elephant in the room: the incompatibility of capitalism and participatory democracy.

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