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Can the Internet Democratize Capitalism?

Posted on Feb 22, 2014

jumpinjimmyjava (CC BY 2.0)

By Yanis Varoufakis

(Page 4)

By the time the American Colonies rebelled against the English Crown, and the notion of a sovereign American People became the touchstone of the Republic, commercial society had already won many victories against the idle aristocracy. The protestant ethic had entrenched the glorification of work in general and of trading for the common good in particular. The man who does not have to work for others (see previous paragraph) gave his place on the Republican Pantheon to the merchant. In this light, the fledgling republic was to be built up through the hard work of the multitude, legitimised by their consent, and ruled by the merchants (that is, by those whose social location allowed them to sell more than just their own labour).

In ancient Athens, many working citizens (e.g. free peasants) were free not only in the sense that they were not slaves but also in that they were not obliged to enter specific labour markets (i.e. free from having to work for someone else, courtesy of their small plots of land which provided them with the basics of life). Even those who did work for others had an equal say in matters of State in the Assembly. This ‘say’ (their citizenship) equipped them with a powerful shield with which they could protect themselves from the rich and powerful (and which was the object of much aristocratic consternation).

In contrast, in the loci of early liberal societies (e.g. the US and Britain) the working multitude had no alternative but to work for others unprotected by direct access to decision-making. The Enclosures denied British peasants access to any means of reproducing their lives unless they went through some merchant (who also enjoyed privileged access to Parliament). In the US, the labouring classes found themselves attached to a rapidly shifting set of property rules which led to increasing concentration of land and capital in the hands of a specific social class comprising inspired merchants and, famously, the so-called Robber Barons.

The modern era was arguably marked by this great transformation: Labourers became formally free to choose whom they worked for, free from all access to arable land, but unfree not to work for someone. Simultaneously merchants became free from labourers (e.g. they did not have to house them, as feudal lords had to do in the past) and could simply rent out their labour.


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In this new context, it became suddenly possible to extend citizenship rights (including the franchise) to the many without changing anything. The fact that the peasants no longer had conventional rights to land-access meant that there was no longer a socio-economic need to maintain a sharp juridical and political division between rulers and peasants. It became possible (and therefore inevitable, in view of the great legitimising effect of such a change) to extend citizenship rights to them all (at least to all white men). Had such an extension to juridical rights occurred under feudalism, the feudal lords would lose all their power over the peasantry. The key to understanding how liberal democracies surfaced is to see that, while citizenship was no longer restricted (to the few), the scope of citizenship rights (and democratic power) was severely circumscribed. On the one hand, the economic sphere steadily gained effective independence from political power. And on the other hand, whatever political power was left over economic life, it was practised by office holders who rose through the merchant and professional classes.

The historical tone of the above may strike the modern reader as an irrelevance regarding the problems facing representative democracy (and e’democrats) today. This would be, I submit, a mistake. Take for instance modern South Africa. After the glorious defeat of Apartheid, the hopes that the black majority had invested in the democratic process (for greater prosperity for the vast majority who were, courtesy of Apartheid, caught in the clutches of poverty and disease) began to fizzle out. Blacks fought tooth and nail against Apartheid, hoping that full citizenship would empower them not only politically but also economically. They are currently finding out (in a cruel manner) that citizenship, for all its undeniable moral and psychological worth, means little in a socio-economic system where asymmetrical economic power has replaced political and juridical privileges.

The South African experience is quite vivid because the extension of citizenship rights to all is so recent. However the underlying argument is pertinent all over the globe. Singaporean workers have no real political freedoms (e.g. no free press). Their citizenship is curtailed by an oppressive regime which promotes energetically a buzzing commercial society, while at the same time denying its citizens political rights. Compared to India, where liberal democratic rights abound, it is unclear whether the average Singaporean has less control over matters of State (affecting daily life) than the average Indian.

In conclusion, the ‘free world’, a term we often use interchangeably with ‘Western Liberal Democracies’, is free only in a limited sense: Citizenship (including formal liberties) is distributed liberally to all citizens but its reach is confined to a small political sphere; a sphere which is increasingly losing out to a separate economic sphere where all the capacities to change people’s lives (for better or for worse) congregate but where citizenship is irrelevant.

If the above is not wrong, the reason for growing apathy has been rationalised: Labouring citizens are coming to the conclusion, in ever greater numbers, that

a)  political institutions were designed for and by employers (i.e. merchants who did not have to labour for someone else), and

b)  wrestling political institutions from employers’ hands is a Pyrhic victory, and thus not worth the trouble, since power has shifted elsewhere.

The repercussion for e’democracy is clear: So far the debate is focussing on (A); that is, on how political institutions can be opened up to the multitude. This is, naturally, a legitimate objective for e’democrats which can be met fairly easily through the deployment of appropriate technologies. The preceding analysis adds two wrinkles to received wisdom.

First, (the point made earlier in Section 4 above) the exclusion of the multitude from political debates and institutions may be more than a failure; it may well be a design feature of our system of government (in which case resistance to e’democracy’s attempts to bring the masses into these debates and institutions will be much fiercer than expected).

Secondly, e’democracy ought to aim at much more than simply to enable citizens to enter the political sphere: It should aim at helping the political sphere to wrestle importance and power away from the economic sphere. And this is the rub. For what I am suggesting here is that e’democracy’s work will have been done only if (and when) it succeeds at elevating the status of the labouring citizen for the first time to a level comparable with the free-labourers of ancient Athens. In short, e’democracy cannot do without a framework for producing goods and services along the lines of participatory, self-managed enterprises.

6. Conclusion: The prospects of Demos-rule in our post-2008 world

David Hume was intrigued by the ease with which a small minority manage to control the majority. He attributed that feat to ‘opinion’. Extensive citizenship and the notion of popular sovereignty was the ‘opinion’ which legitimised liberal democracies and sustained the right of elites to monopolise decision making in the context of a parliamentary oligarchy. However, as the economic sphere (the social relations of production of goods and services) became increasingly autonomous from politics (and the latter exercised decreasing power over the former), political goods (including the worth of the right to vote) were devalued. A crisis of legitimacy ensued of which low voter turnouts are mere symptoms.

In large, complex societies where citizenship rights are widespread, representative democracy (inter-mediated by Internet-based means) is inevitable. But for people-rule to make a comeback, we need to subvert ‘opinions’ which maintain the rule of the few and cultivate, instead, opinion-forming systems which permit the rule-of-the-many. With economic power largely residing outside the sphere of politics, and immune to the democratic process, this was always a tall order for liberal democracies. Since 2008, when the financial collapse triggered a sequence of political interventions in the name of The People but for the benefit of the financiers whose behaviour had triggered the collapse, economic power shifted further away from the realm of political decision-making. In this sense, our post-2008 world is typified by a stark contradiction: Never before has democracy been needed more to stabilise financialised capitalism while, simultaneouly, being less possible given the success of the masters’ of the economic sphere to keep it outside the realm of political control.

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