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Can the Internet Democratize Capitalism?

Posted on Feb 22, 2014

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By Yanis Varoufakis

This piece first appeared at the blog of University of Texas, Austin economics professor Yanis Varoufakis.

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Technological fixes to time-honoured problems are all the rage these days. Bitcoin is meant to fix money, social media are seen as an antidote to Rupert Murdoch and assorted tyrants, networked robots are to help countries like Japan deal with demographic declines etc. Perhaps the largest claim is that the Internet has helped (or is about to help) democratise capitalism. Ten years ago that claim struck me as both fascinating and dubious. So, I sat down and wrote an article about it (circa 2004). Its gist: The Internet is a wonderful leveller. But democracy requires a great deal more than mere ‘levelling’. Primarily, it requires political institutions that enable the economically weak to have a decisive say on policy against the interests of the rich and powerful. Ten years later, I am re-visiting this question, under the shadow of a global crisis that made it even harder to convert an e’Demos into genuine e’Democracy. What follows is an updated version of the original paper. (Click here for a pdf version or just read on.)

1.  The Internet’s toughest assignment: To put Demos back into Democracy

As soon as computers were linked to form a mass communication medium, the notion of e’democracy was bound to surface. Hobbling at least a decade behind e’mail, e’porn and e’trade, the idea of putting Internet-based technologies in the service of democratic institutions finally emerged. “And not one moment too soon,” add those who see it as one of democracy’s last lines of defence.

We live in an era of heightened fears that democracy is an empty shell. The young feel the democratic game is not worth the candle. Older generations despair, rightly, that the 0.1% have cornered the ‘democracy market’ while the banksters’ bailouts have all but destroyed the legitimacy of our democracy’s institutions. More generally, we live in a world where consumer sovereignty trumps democratic ideals and where the fear of the ‘other’ overrules the pleasures of tolerance. It would not be far fetched to claim that too large a segment of the population would happily sell their right ever to vote again (or to stand in an election) for a depressingly small sum. Is it any wonder that voter participation is in free fall across all ages and social classes everywhere?


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Younger people, reliant as they are on the Internet and in a permanent state of optimism regarding the possibilities offered by technology, tend to think that the solution lies in finding suitable… apps. They harbour the hope that the failures of our representative democracies can be compensated for by new participatory decision making processes that we can refer to, generally, as E’democracy.

What can E’democracy do to help empower a networked Demos (nb. Demos is the Greek word for ‘the people’)? One (widespread) answer is: Present people with the opportunity to be part of a deliberative process which will turn them into active participants in the debates unfolding within the existing chambers of power. Once there (even virtually), they will (hopefully) become ‘hooked’ on democracy, realising what they have been missing, and, through their presence, reinvigorate our stale democracies.

E’democracy’s indisputable appeal is not in the least dented by the realisation that no one seems to know quite what e’democracy entails. In fact its indeterminate meaning gives novices the opportunity to participate in defining it. In so doing it might give them cause to re-think democracy, and thus reinvigorate it. Judging by the large retinue of definitions in the emergent literature on E’democracy, the safest route to defining it is through the successive elimination of that which we do not want it to be: According to Coleman and Gotze (2003), it ought to be irreducible to e’government (as it is possible to imagine a dictatorship deploying highly efficient e’government systems); to pose no threat to representative democracy (i.e. it need not be a Trojan Horse for direct or plebiscitary democratic alternatives); to have little to do with technology as such and a great deal to do with re-conceptualising the ‘space’ between the ‘people’ and their ‘political rulers’… Though this elimination does not home in on a definition of Aristotelian precision, it does give us enough to go by and inspire the thought that e’democracy has significant potential for reversing democracy’s decline.

Optimism is a fine and useful sentiment as long as it is built on a solid analysis of the problem at hand. The ambition described in the previous paragraphs implies that democracy’s current troubles, although systemic, are the result of a steady degeneration which can be reversed through greater engagement and participation (facilitated by the Internet and related ICTs). I hope this turns out to be so. But I fear that, as things stand, E’democracy is unprepared for the larger than life enemy at which it is asked to tilt.

If we look closely at the world around us, we shall note disturbing evidence that democracy’s predicament gets worse in countries where it has already succeeded in establishing mechanisms for effective citizenship participation and fostering affluence (see The Norwegian Study of Power and Democracy, discussed in Ringen, 2004). If this is right, and liberal democracies somehow fall prey to their own ‘success’, how can their degeneration be checked?

The hunch underpinning this paper is that, behind voter apathy and the low participation in politics, lays a powerful social force, buried deeply in the institutions of our liberal democracies and working inexorably toward undermining democratic politics. If this hunch is right, it will take a great deal more to re-vitalise democracy than a brilliant Internet-based network linking legislators, executive and voters.

Of course this is not an argument against Internet applications for the purposes of deliberation or promoting citizen participation. It is, rather, an argument for examining carefully the history and present state of our democratic life before designing technology’s contribution to it or, crucially, before developing too many hopes that will then be crushed by a merciless reality. 

2. An empowered Demos: The Athenians’ audacious experiment

Democracy, as we all know, was born in Athens. Are there lessons for e’democrats to be learnt from that relatively short-lived experiment? The most profound one is that an empowered Demos does not get easily bored with politics. Through good times and ill, Athenians never missed a chance to partake of assemblies; to argue away briskly, disagree furiously, reluctantly (and, on the odd occasion, enthusiastically) converge on commonly agreed courses of action. Those who stayed at home or concentrated on making money were famously labelled… ‘idiots’.

It is, however, easy to dismiss Athenian democracy on two grounds: Its hypocrisy and its irrelevance for the modern world. Regarding the former, one might argue plausibly that, since the Athenian economy (public, private and domestic) engaged slave labour, and women along with resident aliens (the metics) enjoyed no citizenship, their democracy was a sham. And as for the charge of irrelevance, there is the obvious fact that modern industrial societies are too large and complex to be run by means of direct democracy.

Be that as it may, classical Athens must be the first port of call for aspiring e’democrats. The reason is that Athens allows us an intriguing glimpse of democracy’s major inter-temporal contradiction; the same contradiction which e’democracy is being called upon to deal with today. The best place to start looking for that glimpse is the charge of hypocrisy.

The Athenians invented neither slavery nor sexism. What they did invent, however, was the notion of a citizen who enjoys not only free speech but also isigoria (equal say in the final formulation of policy) independently of whether he was rich, comfortably off, or indeed a pauper eking a modest existence out of manual labour. In this reading, the key figure was not Pericles, or orators of stunning talent like Demosthenes, but, rather, the anonymous landless peasant who, despite his propertylessness, had a voice in the Assembly of equal weight to that of the great and the good. This was the remarkable novelty of Athenian society which has probably never been replicated since.

If e’democracy is to give voice to the voiceless, it is interesting to ask: What was it that endowed the labouring Athenian citizen with isigoria? Is there room for re-introducing whatever that was into contemporary democracies? Can e’democracy bring it about?

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