Democracy against capitalism

One of my rare excursions from games blog to political blog, in this case caused by me reading too many anglo-saxon newspapers and magazines.

If you read the more serious British and US newspapers for a while, you will find two major themes when reporting on world events: A) Many corners of the world don't have enough democracy. B) Many democratically elected governments have problems moving their countries towards a more anglo-saxon economic model, against the protest of their population. After hearing these two things often enough, I wonder why nobody ever notices the conflict between these two notions. What if the population does not want to have a "capitalism pure" economic model? When democracy does not equal capitalism, and you have to decide which one of the two you want, what is the higher value?

In my opinion, democracy is more important than capitalism. What the majority of people in many European, South American, or Asian countries want is "capitalism light", in which the harsher sides of capitalismn are softened by safety nets and welfare. Many of the reforms which stall in these countries are designed to take away those safety nets, to make the economies more "competitive". And if people go on the street to stop those reforms, or vote for parties that oppose them, that is democracy in action, a good thing. Economists can calculate how much a reform would add to the GDP of a country, but that doesn't automatically make that reform the best possible option.

The problem with pure capitalism is that while it maximizes productivity and GDP, the added wealth is not necessarily well distributed. People generally support the move from autocratic economic systems to more capitalist systems, but not all the way to pure capitalism. You only need to look at the USA, one of the most capitalist nations on earth (but still not pure), to see the possible disadvantages of going too far in that direction. For example 0.5% of U.S. residents (including 5% of all U.S. resident black males) are in prison, while European countries with a lot more welfare only lock up less than 0.1%. There is also a lot more poverty clearly visible in the U.S. than in many European countries, in spite of the GDP per person being higher in the USA. The recent hurricane Katrina natural disaster got a lot of this poverty in front of TV cameras, but usually Americans don't talk about the downsides of their economic model. The typical European welfare state might be less productive, but there are a lot less people left behind, to a life of poverty or crime.

I don't claim to know which degree of capitalism is the ideal one. But I believe in democracy, so I believe that voters have a right to decide the details of that. And the best compromise might not be the same for every country. It is not right for the press of one country to complain about the democratic decisions of another country, even if that democratic decision was to stop a reform to dismantle the welfare state.
- posted by Tobold @ 3:11 PM Permanent Link