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Is Democracy Compatible with Extreme Inequality?

In 1831, Alexis de Tocqueville took a 10-month trip to the United States to study the American penal system. In the resulting book—Democracy in Americahe singled out one noteworthy feature: “Amongst the novel objects that attracted my attention during my stay in the United States, nothing struck me more forcibly than the general equality of conditions.” Although he ignored the fact of slavery, his reference to economic equality among white Americans was, at the time, accurate. According to economic historians Peter H. Lindert and Jeffrey G. Williamson, the share of national income going to the top one percent was less than 10 percent.

Today, the share of national income going to the top one percent has doubled, while median wages have remained largely stagnant. In the last 40 years, CEO wages have grown nearly 100 times the rate of wages for average workers. The popularity of left-wing candidates like Elizabeth Warren and Bernie Sanders—both with significant redistributive policies at the core of their platform—reflects the moral concerns many have about high levels of income inequality.

But no moral case for economic equality will convince those on the Right. What is at stake is an idea of fairness. It is unfair, so the thought goes, for others to live off one’s labor without making an equally productive contribution to society. This appeal to fairness trumps any moral case for income redistribution. There is, however, another case for relative equality of conditions that appeals to the same idea of fairness that’s appealed to by the opponents of redistribution. This view, which has largely been neglected since Tocqueville’s meditations on the subject, argues that a certain degree of economic equality is necessary for fair participation in political life.

For a long time, economists, politicians, and philosophers alike have operated under the assumption that economic inequalities, though far from ideal, do not inhibit the process of democratic politics. Whatever the necessary components of a democracy are, they do not include the equality of conditions that obtained among white Americans during Tocqueville’s era. Democracies can exist even within societies with extreme wealth disparities.

But this may only be true under a very simplistic notion of democracy. If we take democracy to be a system of collective self-government—where all citizens have the opportunity to influence politics even if some citizens have much more influence—then inequalities of conditions may not matter. But throughout the 20th century, progressive movements like the women’s and civil rights movements have put forth a more demanding ideal of democracy. On this view, democracies require citizens to not only have the ability to influence government, but to do so on equal terms. 

In A Theory of Justice, the political philosopher John Rawls refers to this requirement as the “fair value of the political liberties” or what some might call “political equality.” Simply stated, political equality demands that citizens who are similarly talented and motivated should have an equal shake when it comes to influencing the direction of government.

We should regard this ideal as a more attractive vision of democracy. Imagine a society that enables some wealthier citizens to cast more votes than others, or one that bars some citizens from holding political office without good reason. Would we be comfortable calling such a society a “democracy”? The idea that another citizen might have a systematic advantage over us when it comes to influencing politics feels not only unfair but disrespectful. That is why America’s existing institutions already embody an idea of political equality to some degree. The Equal Protection Clause of the 14th Amendment requires that citizens be equally protected under the law. Similarly, the electoral college was initially designed to ensure that smaller states do not constantly lose out to larger states. This measure exemplified the belief that democracy is a shared political endeavor and no one group should be able to monopolize control of government.

Can a relatively unregulated capitalist economy (which allows for extreme inequalities) coexist with this ideal of democracy? I do not think so. But my argument here is not to advocate for a more aggressive redistributive policy as a consequence. Narrowly stated, the claim is that those who do not object to wealth inequality may be implicitly abandoning a commitment to political equality in all but name. The result is that anyone who opposes significant economic redistribution may need to temper their vision of democracy (opting for the less idealistic conception) or abandon it altogether.

Let’s begin with John Rawls, the father of liberal political philosophy, who shares a similar view. “Welfare-state capitalism,” he writes:

rejects the fair value of the political liberties, and while it has some concern for equality of opportunity, the policies necessary to achieve that are not followed. It permits very large inequalities in the ownership of real property (productive assets and natural resources) so that the control of the economy and much of political life rests in a few hands.

Rawls believes that inequalities in the ownership of property, which includes any system that keeps private property mostly undisturbed, will ultimately inhibit citizens as a whole from enjoying political equality. In other words, he equates “control of the economy” with control of “political life.” Why might Rawls think that extreme economic inequality will inevitably “spill over” into politics, affecting the “fair value” of the political liberties?

In one sense, it’s obvious. America’s current system is nowhere near reaching political equality. A 2014 study by Martin Gilens and Ben Page demonstrated that the American government is more responsive to upper-class elites and organized interest groups, and largely unresponsive to everyone else. The Supreme Court decision in Citizens United v. FEC (2010) allowed corporations to inject unlimited amounts of money into political advertising on the grounds of free speech. Today, some of the most influential names in politics are multi-billionaires: the Koch family, George Soros, Tom Steyer, Donald Trump, and Michael Bloomberg.

Nevertheless, some might think no redistribution is necessary to achieve political equality. We can, so the thought goes, create a just regime of laws and regulations such that wealth inequalities do not “spill over” into politics. But consider what money can buy. If you have large sums of money, you can certainly buy name recognition—putting your name on buildings (e.g. Trump Tower), creating your own brand, and appearing frequently on television. You can influence public opinion by simply buying millions of dollars in advertising (and Citizens United has demonstrated how difficult it is to distinguish between political and private speech). While there are some limits on personal donations to politicians, when you’re wealthy enough you can circumvent these limits via external bodies: for example, by creating your own political organization or non-profit to support your favored political party or candidate. In our current economy, who truly believes that politics is an area wholly separated from all those other aspects of life that money can already buy? Material benefits can always be translated into political power because the political world has always been interwoven with the cultural world. As some conservatives are fond of reminding us, politics is downstream from culture.

Even if one could separate the economic and political spheres, the bureaucratic apparatus necessary to adequately achieve such a task would be so massive it would be as oppressive as the power it was intended to curtail. Any kind of regulation necessarily requires a group of regulators who are granted some discretionary power. If we regulated the flow of money to truly prevent all kinds of “spill overs” into politics, the regulatory bodies would be so invasive as to have a chilling effect on the economy.

Furthermore, excessive bureaucracy—a significant area of concern for many on the Right—is itself a kind of political inequality that affords some members of society disproportionate influence. Thus, using regulation to prevent the wealthy from buying into politics would just substitute one form of political inequality for another. If conservatives truly care about the political inequality inherent in the bureaucratization of democracies, then they should also care about the political inequality resulting from income inequality.

The lack of political equality in America was captured in a recent presidential debate. When asked his thoughts about being the only candidate of color left in the race, entrepreneur Andrew Yang offered a witty, yet incisive remark: “fewer than five percent of Americans donate to political campaigns. Do you know what you need to donate to political campaigns? Disposable income.” His answer was a set-up to his flagship policy of Universal Basic Income. But it was also a veiled criticism of the illusion that the economic and political spheres can be separated. Yang’s point was that poor political representation originates from poor economic conditions. When citizens do not have significant economic freedom, they have a harder time donating to campaigns, running for office, protesting, and participating in government on an equal footing.

What does Rawls suggest as an alternative? Rejecting welfare capitalism. He proposes a “property-owning democracy,” a market system where state institutions enable not only a fair distribution of income (which welfare state capitalism hypothetically achieves) but also a fair distribution of productive assets and resources (such as property, oil, gas, and minerals). Under welfare capitalism, some monopolies can continue to exist as long as welfare programs exist, but they cannot in a property-owning democracy. It is a testament to the dominance of free-market thinking that such a system is practically unknown in public discourse. Perhaps it’s time that we re-examined our assumptions about the role of economics in politics. Economic inequalities may not only be unintended byproducts of capitalism; they may also be serious obstacles to the realisation of true democracy.

 

Chang Che is a master’s student in political theory at Oxford. You can read more from him on his website and you can follow him on Twitter @changxche

Comments

  1. One might actually take a look at what is required to properly reduce inequalities. There is a great book on the subject, which I cannot remember the name of at the moment. One of the things they point out is that there are very powerful levelers of wealth inequality in a country. Famine, plague, Civil War, World War, These are the equalizers.

    One of the things that has been noted about regimes that try to equalize income By Distributing resources in a supposedly equal manner is that everyone ends up equal, in that they are equally oppressed by the state. I think most Russians and people who lived under the wonderfully enlightened rule of the despots in the Iron Curtain could tell you that.

    A cost-benefit analysis seems in order here.

  2. Author appears to be anti-wealth accumulation, which is the true death of democracy- it creates class mobility, which guards against oligarchy.

    The only issue with wealth inequality is complete enfranchisement creating vote farms/plantations out of the public purse. Even Thucidydes discusses the problem with the public voting itself funds from the public purse.

    The original idea behind voting was that only property owning white males of age 21+ could vote.

    The white part was due to slaveholding racism.

    The other three parts had reasons that weren’t -isms, despite feminist lies.

    1. The restriction to males was 1 vote/household, on the assumption wives would vote with their husbands, making these men “worth more” in terms of the vote
    2. There was only property tax, not income tax. This restricted the franchise to taxpayers, who were paying for everything.
    3. The age was a callback to Roman sensibilities, a man below 25 could hold no office, and a man below what, 36 could not be consul- because young men were seen as impetuous, hot headed, and therefore reckless.

    With what we now know of the brain and what we see in the youth vote, the Romans were correct. They should have raised the draft age to 21.

  3. Can a relatively unregulated capitalist economy (which allows for extreme inequalities) coexist with this ideal of democracy?

    I think not.

    Can the assertion of the capitalist economy being relatively unregulated be made without it dawning on the writer that s/he ought to pause, put on his/her thinking cap, and substantiate this?

    I think so.

    How does this occur? Probably laziness. Simulated thinking. And I reckon the all too frequent yet utterly false claim of “unregulated capitalism” existing in the US plays an influential role. I suspect the writer has never owned a business.

    At the federal level the government regulates advertising, product labeling, testing and approval of many products, labour, finance (issuing of debt, debt collection, bankruptcy, etc.), health and safety of both workplaces and products, privacy, intellectual property, interstate and international trade, and environmental impact as well as the wildlife trade. And I haven’t even mentioned the tax code. Now I have. If an employer wants to hire someone from overseas there are regulations covering that.

    The Code of Laws of the United States of America has 53 titles. The following certainly are heavily involved with the economy and commerce.

    Title 7 Agriculture
    Title 8 Aliens and Nationality
    Title 9 Arbitration
    Title 11 Bankruptcy
    Title 12 Banks and Banking
    Title 15 Commerce and Trade
    Title 16 Conservation
    Title 17 Copyrights
    Title 19 Customs Duties
    Title 21 Food and Drugs
    Title 22 Foreign Relations and Intercourse
    Title 23 Highways
    Title 24 Hospitals and Asylums
    Title 26 Internal Revenue Code
    Title 27 Intoxicating Liquors
    Title 29 Labor
    Title 30 Mineral Lands and Mining
    Title 31 Money and Finance
    Title 41 Public Contracts
    Title 42 The Public Health and Welfare
    Title 43 Public Lands
    Title 44 Public Printing and Documents
    Title 45 Railroads
    Title 46 Shipping
    Title 47 Telecommunications
    Title 51 National and Commercial Space Programs

    The others I didn’t list, for example Armed Services, likely include aspects involving business.

    There are also regulations at the state, county, and city levels too.

    Perhaps the problem is an over regulated economy, one that increases the cost of entrepreneurship and expansion and as a consequence favours those already with capital, established business networks, etc.

  4. The US produced about 12.5 million barrels of oil per day in 2019. That’s 4.56 billion barrels per annum. Divide by 330,000,000 people and each American gets 13.8 barrels. Store those beside the fairly distributed piles of coal, lumber, cement, potash, wheat, sugar, bricks, and uranium you have scattered in your homes. Next, we redistribute all the machines, tools, and robots from the factories.

  5. I recall reading articles by this author that weren’t so alarming. The author seems to be getting radicalized. Is Oxford’s department of political science in the business of pushing a repackaged communist ideology?

    First, we are told the US is a democracy (it is not). Then we are told we ought to embrace the more “idealistic” democracy women and minorities want (an argument against enfranchisement if ever I heard one). Apparently this “idealistic” democracy requires “political equality,” which in turn requires economic equality. How is this distinguishable from Marxism?

    I reject the notion that political equality as the author describes is desirable. Like all human endeavors, politics work best when impact is correlated with ability and inclination. We see in this primary season how these factors, not wealth, decide elections: Bernie Sanders, a useless communist who appeals to the greed of the Democratic base, is vastly out-performing billionaires like Bloomberg and Steyer. The claim that only 5% of Americans donate to political campaigns because of a lack of disposable income is absurd. Donating $10 is achievable for virtually everyone, the only thing lacking is motivation.

    The author lets the cat out of the bag in the last paragraph, where he argues that democracy requires common ownership of vast swaths of industry. It never seems to occur to him that democracy typically does not survive in any form at all once such a change is implemented.

    My principle takeaway from this article is that Oxford is a breeding ground for communism and we ought to distrust anyone coming out of there.

  6. It seems you’re using “representative democracy” as a synonym for “republic,” in which case I’d suggest using the word preferred by the founders.

    It is important to emphasize the “constitutional” qualifier because leftists want to read rights into the constitution that aren’t there and do away with rights that are explicitly there. Calling the US a democracy is a ploy to establish the majority-rule of the left’s intersectionality coalition.

  7. It is fairly obvious the person who wrote this article is unfamiliar with American politics except from a theoretical perspective. What is missing from this article is what the author believes would be the consequences of “more inclusion” in American democracy. Higher taxes? Universal income? The implicit assumption is always a more left-wing, socialist agenda; but if he actually ever spoke to voters he would find this is fantasy. Nearly every American, apart from a vocal fringe, agrees in the basic concept of “keeping what you earn”. We can, and will, always debate about what is and what is not legitimately earned, but as to keeping the money you earn there is a broad a solid consensus that transcends both parties. In short, people do not agree to income redistribution in principle. Many believe there are illegitimately gotten fortunes, and that paying your “fair share” of the tax burden means that wealthy people pay a higher tax rate, but this is a far cry from supporting redistribution.

  8. True Stephanie but the author is using the term democracy deceptively. When the author uses the term democracy, he is referring to elections not the government structure. This is a commonly used technique among the left.

    Use a benign term that is universally favorable but vague in a given context then use it as a springboard for their radical ideology. After that if someone disagrees with you go back to the original term and accuse them of being against the general meaning. For example use “Equality” or “Human Rights” everyone likes these ideas and terms, however it is vague as how to enact these terms into societal reforms. They then say that we should raise taxes and remove individual liberties to pursue said terms. If you take exception to their diagnosis then they declare you of being against “Equality” and “Human Rights” to the masses. It’s a fairly clever but scurrilous way of attacking your ideological enemies.

  9. Not a very convincing essay, in my opinion. The literature I’ve seen on the subject is fairly conclusive that money doesn’t have much effect on the outcome of elections, so I’m not sure we need to remake our entire economic system because some people have more money than others. But even if it does, if the billionaire class that is funding (which is not necessarily the same thing as controlling!) our politics holds views and opinions that are more or less consistent with the public at large, then this isn’t really a problem, then is it? Which seems largely true, to me. If you think of prominent wealthy political donors, how many of them seem to be significantly outside the political mainstream? Not many.

    But then, if Bryan Caplan is to be believed, it really is true that our political system is somewhat more responsive to billionaires than the average person, but this is a very much a feature, rather than a bug, because billionaires as a group are much more educated and informed on subjects of public policy, law, economics, and so forth, than the average person is, and the quality of political decision-making and the quality of our elected politicians would likely decline substantially under a system where the wealthy had less influence.

    That’s one of the problems here, generally, with this essay, in that the author simply assumes that political equality is a desirable end, when I would argue that, generally speaking, it probably isn’t. What we want is effective, stable governance that delivers on the services it has promised to provide. Political equality is merely a means to that end, not an end in itself, and if one is familiar with the term ‘rational ignorance,’ then one can easily imagine systems that produce better ends with less equality than more. After all, I might be a shareholder in Amazon, but in no way shape or form would it be good for me or Amazon if somehow my votes on a proxy statement counted the same as Jeff Bezos’.

    Lastly, I think the author unwittingly refutes his own case here towards the end, noting that only 5% of Americans donate to political campaigns. That’s a lot smaller fraction of Americans than could realistically afford to do so! After all, over half of American households donated to charity last year, based on a quick Google search. Pair that with the fact that election turnouts in this country consistently hover around a mere 55% of eligible voters, and what I see is a system that people are broadly happy with, and thus barely half of them can be bothered to show up to vote even once every four years, because they simply don’t care to devote their time to the political process and they’re even less willing to devote money to it. It seems likely to me that redistributing money is just going to lead to more spending on consumer goods, so maybe let’s hold off on a top to bottom reboot of our economy and political system, no?

  10. This line of thinking represents a misunderstanding of the wisdom behind the United States’ system of government.

    The unfortunate presumption, widely advanced by people looking to exploit it, is that democracy is a great and noble good; a high virtue to be pursued for its own sake.

    It is not.

    Democracy has great flaws, but as Winston Churchill famously opined, alternatives to democracy are worse. Therefore, the founders of the United States started with democracy, then built a constitution around it in an effort to mitigate its flaws. Among the mitigation efforts was the Bill of Rights as well as the distinct branches of government and the checks and balances between them.

    These modern efforts to “improve democracy” are simply a discarding of the protections mentioned above.

    Changes in policy are dangerous, partly because of the unknown implications of the change, and partly because rocking the boat is itself harmful; society functions best when people can expect the system to remain stable. Thus, to be enacted, a proposed change must be approved in the House, where representation is democratic, the Senate, where each state has equal clout (and originally senators were selected by state legislators), and the president, who is selected via a hybrid approach (the Electoral College). The legislation must also survive legal challenge in the courts.

    Reducing one of these checkpoints to mere clone of another, as would be done if all elections were pure democracy, would weaken our system of government.

  11. When de Tocqueville wrote, the economy was virtually deregulated. Relative equality existed. Today, the assertion that the economy is unregulated (or largely so) is a regular leftist trope and extremely lazy. There are thousands and thousands of Federal regulations in addition to laws, plus their state and local counterparts. The economy is massively politicized. To claim it is unregulated is flat out wrong. What’s interesting, though, is that those screaming about inequality from the left miss or ignore the fact that those on the right who are in favor of actual capitalism made this very point: politicize the economy and only the largest companies and richest actors will have the financial clout to influence politics - and they do - to their own benefit. Meanwhile, the cost of the regulations and the entitlement programs and the taxes fall disproportionately on the middle class, who are then squeezed and their numbers reduced. Hence, greater inequality. The author should reconsider her premises.

    I’d add the other point, that de Tocqueville addressed, was that a mania for equality actually threatened freedom, and that the United States was not intended to be an actual democracy, but a republic whose government had limited scope.

  12. Today, the share of national income going to the top one percent has doubled, while median wages have remained largely stagnant. In the last 40 years, CEO wages have grown nearly 100 times the rate of wages for average workers

    I kind of stopped reading this statement. If my friend and I each start out with $1.00 and then I go on to earn $100.00 my friend does not have any less money, and unless I am illegally keeping him from tools and other resources he needs to earn his $100.00 he has no reason to complain about my ‘wealth’.

    Now, if you want to talk about economic mobility and getting as many people educated and working at jobs that allow them to live above bare subsistence levels and have control over their circumstances I am all ears.

  13. The socialist Romans built public roads and aqueducts.

    The problem is that public services have been conflated to mean socialism, a dishonest claim by the far left to hoodwink the people. “You like snow ploughed from the streets in winter, don’t you? That’s socialism.” It isn’t.

    Socialist countries did provide public services such as education, fire fighting, and the like in the same way capitalist ones do. The principal difference, which I think most here know, is socialist countries decided to seize the means of production from their owners and to control the allocation of resources to those productive enterprises. That they produced good quality items was immaterial to the planners and flunky managers. And innovation rarely happened because the spur to that is most often competition in the marketplace. The socialist countries replaced competition for consumers with competition to meet the state’s production targets.

    Much like a person who receives a windfall, say by winning the lottery or robbing a bank, the socialist state was able to marshall these seized assets to expand factories, mines, oil rigs, and other productive enterprises as well as build new ones. It was able to sustain mismanagement, corruption, and even inflict outright violence over a period through the harsh control of the people, those who it purportedly sought to elevate.

    For a few years North Korea’s economy grew faster than the South’s; its per capita income was greater than the South’s until 1972 when both were at parity, with a setback for the South due to the oil shock, then South Korea surpassed it in '74, and it hasn’t looked back. From 1953 to 1992 the South’s GNP increased 200-fold vice the North’s 48-fold increase during the same period. From '80 to '92 South Korea’s economy grew by 9% each year whilst the North’s shrank an average of 1.3% per annum.

    More importantly, because the South was participating in the global economy as an OEM and OED producer, starting with shoes and garments and moving up the value-added chain, it was learning the many lessons of the marketplace. Today, many South Korean products enjoy a well-earnt reputation, often due to Korean innovation and not merely using someone else’s technology. The Korean products of 1960s and 1970s were of much lower quality. But it didn’t stay that way.

    Today South Koreans enjoy a life of both prosperity and freedom that’s inconceivable to most in the North. Socialism is the cause of one of those outcomes, and it isn’t the South’s.

  14. What is your point?

    While being subject to a 70% tax rate isn’t great

    No shit, Sherlock.

    it probably beats execution by guillotine or by a revolutionary firing squad

    Ah, it is a protection scam. This is at least straight talk.

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