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Wednesday, June 20, 2012

A Brief Defense of Economic Democracy

My case for economic democracy rests on two straightforward propositions.  First, those who participate in, or are affected by, a particular activity ought to have a say in how that activity is performed.  For simplicity’s sake, I will call these “activity-relevant people”.  Take the example of a socially considerate smoker who only smokes when alone and at a safe distance from those who’d otherwise be affected by the second-hand smoke.  Since there’s only one activity-relevant person in this case (i.e., the smoker), no one other than the smoker has the right to make decisions regarding this activity.

The second proposition addresses the procedural question of how these decisions are to be made.  It’s the basic principle that all men (and women) are of equal worth, which implies that all activity-relevant people are to have an equal say in how that activity is performed.  In other words, these decisions are to be made democratically (of course, in cases where there’s only activity-relevant person, he is both the “dictator” and the “democratic majority”), and the justice of any activity is measured by the degree to which they are.

The sort of activity I’m concerned with in this essay – macroeconomic activity –involves, by definition, the participation of many people, from the wage laborer struggling to make ends meet to the owners of productive property.  Since many in our ruling class recognize the intuitiveness of the first proposition, they are keen on perpetuating the myth that our economy’s fate depends entirely upon them (i.e., the “job creators”).  Yet as Abraham Lincoln famously remarked, “Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.” 

Now, labor forms the vast (and therefore the democratic) majority of our society, and they are certainly not given the higher consideration.  If public opinion research is any indicator, then we appear to be subconscious social democrats, although public policy clearly doesn't reflect public support for, among other things, a more equitable distribution of wealth. Indeed, it has been statistically shown that politicians respond only to the policy preferences of the proverbial 1%(see pp. 110-114 of Hacker & Pierson's "Winner-Take-All-Politics"), not those of the average activity-relevant person.

What’s the solution?  Am I calling for a socialist takeover of our economy?  I’m arguing over decision-making procedures, not the content of those decisions.  If a democratic society were to organize its economy along libertarian lines, it wouldn’t contradict my argument in the slightest…although I would certainly be a minority there.