Part 4: Economic Democracy

In Parts 1 and 2, we saw that economic power allows the wealthy to control relatively mundane aspects of our lives, like where we go to the movies, and what I do at work. In part 3, we saw that the common justifications for allowing these decisions to be made by the wealthy for everyone else are not justified.

But when we talk about economic power, there is far more at stake than movies and bathroom breaks. Economic power brokers our most fundamental concerns, and secures -- or undermines -- our values most dear. In short, the political system may promise life, liberty, and the pursuit of happiness, but only the economic system can deliver it.

Over 200 years ago Thomas Jefferson in 1776 confidently proclaimedthree broad inalienable rights -- life, liberty, and the pursuit of happiness.

 

A more detailed account has since emerged. The United Nations Universal Declaration of Human Rights, for example, lists 30 fundamental human rights, including ights to privacy, leisure, an adequate standard of living, the right to participate in the cultural life of the community, and the right to fully develop one's personality.

 

The Universal Declaration defines the meaning of the words "fundamental freedoms" and "human rights" appearing in the United Nations Charter, which is binding on all member states. And, were there any doubt about the seriousness of this commitment, the political and economic rights enumerated in the Universal Declaration were subsequently embodied in two international treaties: The International Covenant on Civil and Political Rights, and the International Covenant on Economic, Social, and Cultural Rights, both of which are in effect and have the force of International Law. Over 160 countries have ratified the Covenants, so there is a very strong legally binding world consensus on these issues.

It is gratifying to see the force of International Law proclaiming a guaranty of all the things that people need to live a free and fulfilling life. People need not only Life, Liberty, and Property, but also Justice, Security, Health, Education, Opportunity, Respect, Meaning, Privacy, Moral Worth, Dignity, the opportunity to Love, the ability to Travel, and more. These are among the basic birth rights of all humans. No one should be denied any of these. We are quick, in fact, to denounce any political system that leads to such deprivations, be it monarchy, oligarchy, fascism, authoritarianism, totalitarianism, plutocracy, or any other kind of tyranny.

Despite the existence of the UN Covenant on Social, Economic, and Cultural Rights, it is by habit generally assumed that human rights are political rights that can and should be secured by political systems. However, as some examples will soon show, many of these rights are more fundamentally economic. And if the things to which I am entitled may be bought and sold freely, then it is the economic system, not the political system, that determines their availability and distribution.

 

In fact, a political right to Health, Education, or Dignity in theorymay be undermined in practice by an economic system that makes such things impossibly expensive, forces citizens to trade off one for another, or both allows these rights to be sold and creates enough deprivation to motivate such sales. Indeed, many of the rights enumerated above are primarily economic in nature -- they can be purchased by the wealthy, and may be available to the worse off only partially or not at all.

 

To be very specific, if the price of privacy, education, leisure, travel, and family time are such that only the wealthiest 10% can afford these things in reasonable abundance, then these rights are denied, rather than secured, and the blame lies not with the political system that makes the promise but with the economic system that fails to fulfill the promise . Indeed, a capitalist economic system requires wealth inequalities to function, and therefore ensures that a significant percentage of the population will always be denied their basic rights. As long as significant wealth inequalities persist, any of the worse off that manage to claw their way into the winners circle will do so at the expense of others, who will be displaced downward to that extent.

And regardless of whether it is the political or economic system that is rigged to deny some group their basic rights, the result is equally wrong. For this reason, democracy is necessary not only in the political sphere, but also in the economic sphere, and the scope of that economic democracy must be sufficient to secure human rights for all.

Whether wealth disparities be permitted in part, or only temporarily, or very significantly after all basic human rights are secured, might be decided differently by different societies. Indeed, what constitutes an adequate minimum in terms of housing, education, and health care may be the topic of great debate, and the answers will change over time.

However, there can be no doubt that the unfettered individualism typical of western capitalist democracies leaves great masses homeless, unemployed, uninsured, undernourished, and, at least in the United States, overworked, undereducated, and without adequate health care. There is no pretense that the basic rights almost universally agreed upon by nations, and mostly promised by the political system, are in fact delivered by the economic system.

Quite the contrary -- the economic system instead seems built on the "tournament" or "lottery" model, which provides that a few lucky winners receive more wealth than they could imaginably need or even use, and the remainder of the population go home empty-handed, or with meager consolation prizes.

 

It is asserted without evidence that this kind of system optimizes motivation and efficiency, and therefore productivity. But even that disprovable claim becomes irrelevant in the face of the obvious reality that the tournament is rigged in favor of the scions of prior winners: the next generation inherits a lifetime of wealth, thus winning without even having to play.

 

We see, then, that democracy is equally important, and equally justified, in both the political system and the economic system. The economic rights for which democratic accountability must be ensured extend at least to the basic human rights that are to be provided for everyone at some minimum level. This would mean that democratic systems must secure every right, and that neither the political nor economic systems allow anyone to unilaterally impair anyone else's basic rights.

The focus on individual rights alone is sufficient to justify significant democratic controls over the exercise of economic power. However, we recognize and protect people's collective rights, as well as their individual rights. Communities, associations, and political subdivisions all may express legitimate interests in the nature of the community and the opportunities available to its members, even when the interest of any individual member in any particular decision may be weak.

Therefore, a just economic democracy must reach not only actions that impair an individual's access to healthy food and safe work, but also anything that may affect the nature of a community or its core functions -- e.g., transportation, energy, opportunity, scenery, and quality of life, generally.

 

This is the point at which proponents of economic democracy usually face a dual challenge. It is alleged that individuals sacrifice too much freedom if they must cede some decision-making power to all those economically impacted by their actions. Second, it is argued that the administrative burden of extending democratic rights to the economic sphere would bring economic activity to a halt. Happily, common experience is sufficient to rebuff both challenges.

 

To make this concrete, it might seem that opening a gasoline station on a street corner would be a nearly impossible task if we had to consult every person who might be impacted by the traffic, noise, or environmental risk involved in the station. There are two obvious answers to this objection. First, most communities have zoning laws today that inject a significant public regulatory consideration into all land-use decisions, and yet development continues everywhere. Thus, the basic administrative burden is not unfamiliar, unmanageable, or untested.

But second, and deeper, the basic idea that one person might gain the profits of a gasoline station, while shifting to his or her neighbors the costs, in the form of environmental burdens and risk, is itself fundamentally unfair. If this were the model, then indeed it might be far easier to get a bike path approved, rather than a gasoline station, and that might be a reasonable outcome. But if the gasoline station is seen as a community project, rather than an individual undertaking, with everyone in the community gaining some benefits and bearing some burdens, then the merits of the project could be analyzed without much difficulty, and the sum weighed against competing projects.

The key would be to ensure that people's ability to influence the outcome roughly corresponded to their interest in the project. So, for example, those who lived near the proposed gasoline station might strenuously object to the development, but those concerns might be weighed against a much larger number of more distant residents who favored the gasoline station, and might or might not have good alternatives to the proposed location.

In practice, such equations are balanced all the time by the political system, and the logistical implications are not daunting. However, the actual weighting today heavily favors the wealthy who would benefit most from the development and can disproportionately influence the political process. In an economic democracy, all the impacted parties would have their fair say, and as a result the benefits of the development would likely be socialized to the extent that the burdens were, thus ensuring that individual goods do not create social ills, and that no one exercises unaccountable power over another.

In the next section we will consider the types of arrangements that might actually result in a functioning social democracy.