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Dogma Premise # 41

Capitalism is a manifestation of economic democracy, because people “vote” with their dollars.

Economists use the analogy of "dollar voting" to explain how consumer purchases impact businesses decision to supply products. In theory, the product with the largest number of dollar votes is the most profitable, and availability will continue or even increase. A product that gets few dollar votes is not profitable and will be removed from the market. The purpose of the analogy is to convey that consumers control economic activity in much the same way that voters control political activity. Implicit in that message is the idea that capitalism creates an economic democracy of free choice that provides economic freedom analogous to political freedom.

But capitalism is not at all democratic.

One weakness of the analogy is that profitability depends on many more things than the number of dollars spent. For example, a sturdy product that will last a long time might be preferred by consumers, but a product that is designed to be obsolete or non-functional after a time will be more profitable, and therefore will be favored even if consumers attempt to vote with their dollars for something else.

Also, in capitalism, information asymmetry is a bigger problem than in politics. Political candidates must answer questions about their past and their intentions, and they can expect extensive fact checking by the public and political opponents. Getting information about where products come from and how they are made is dramatically more difficult. Manufacturers will exert every kind of privacy right to keep unsavory information confidential, to the point of advocating laws that make it illegal to document factory conditions. The value and effectiveness of "voting with dollars" is significantly reduced if you don't know much about what you are voting for.

Then there is the problem of candidate choice. In a democracy, most any citizen can run for most offices. However, the decision of which products and services are to be offered lies solely with the capitalists. I might want to "vote with my dollars" for an electric car, but if the capitalists choose not to offer one, I cannot realistically offer my own by going into business and building my own vehicle factory.

But the main problem with the "voting with dollars" analogy is that not everyone has the same number of dollars, so not everyone has the same number of votes. It would be unthinkable in a political democracy to give any group of people more votes based on whether they were old, young, black, white, rich, or poor, but that is exactly what capitalism's "dollar voting" does. The economy makes whatever people vote for, but wealthy people have hundreds or thousands of times more votes than others. As a result, the economy is drastically skewed towards the kinds of things that wealthy people like, such as golf courses, luxury cars, boats, jewelry, antiques, and fine dining.

Capitalism makes sure that the nation's economic resources are directed not toward what all the people vote for, but mostly toward what the wealthy vote for, and in precise proportion to their wealth.

If everyone had the same amount of money, how would spending patterns change, and how would the nation's productive resources be realigned? Probably we'd see fewer extreme luxury items (like yachts and mansions), and fewer really crappy products that people only get because they can't afford anything better, and a much bigger variety of the things most people want.

The effect of Dogma Premise 41 is to hide the fact that capitalism aligns the economy to serve the wealthy, and give the impression that everyone gets a vote. You wouldn't think it was a democracy if the wealthy got more votes for President. Giving the wealthy extra votes for what goods and services should be available is undemocratic in the same way.

Dogma Premise 42

All Dogma Premises

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