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Do economics and politics have a common ancestry?

Posted By Robin Jourdan, Wednesday, November 20, 2019

Robin Jourdan considers the origination point of Democracy and Capitalism in her tenth blog post for our Emerging Fellows program. The views expressed are those of the author and not necessarily those of the APF or its other members.


No straightforward origination point of capitalism can be teased out of history. Of any of the origin stories, one thread is common: capitalism's goal is benefit of the one, the owner. Thus, Democracy and Capitalism are at odds. Each depends on an ideal of equality: everybody may share in political decision-making, and everyone to do the best they can in the market, respectively. Conflicts between the two systems often rub where property rights and workplace conditions are involved.


Politics is local in its intentions; while capitalism is essentially global. Democratic politics is founded on the equality of its citizens; capitalism cares little about the distribution of riches. Democracy says all citizens have a voice; capitalism gives the rich by far the loudest. From the 1940s to the 1970s, when the government in the US was most reliable and allied with business, the stakeholder age, it seemed everybody won. Earlier, the Great (global) Depression of the 1930s brought the policies of laissez-faire (noninterference by the states in economic matters) to an end in most countries..


Technology is creating a whole new class of the worker today; the machine, robot, AI workforce. Will today's working-class become the new "useless" class? For sure, machine learning and robotics will change what work will be in the latter half of this century. As AI eliminates dependence on people or physical resources, the current global economy based on traditional capitalism could give way to 5th Industrial Revolution practices. The phase-in of a smart Digital Europe may ultimately lead to a highly automated market economy by mid-century. However, the problem is transnational. Businesses often answer to more than one government.


Looking back from 2050, what economic and political conditions were essential to prosperity? Markets will continue to rely on continual growth. The emerging connection, information, and sharing economy will bring a new pulse to bend markets.  These will require a new set of business rules. Growth comes to those who take full advantage of opportunities. Local agencies will lead efforts for economic development, welfare policy, and citizen engagement strategies.


A feature distinguishing capitalism from previous systems was the use of accumulated capital to enlarge productive capacity rather than to invest in economically unproductive enterprises, such as pyramids and cathedrals. Shifting from the Industrial to the Information Revolution as we are today globally won't follow yesterday's recipe for success.


Democratic politics depends on solidarity; capitalists do not prioritize nationality. Electorates desire economic security; capitalism is susceptible to boom and bust. Capitalism seeks the benefit of the one, winner take all; a benevolent and strong political governance system seeks the benefit of the many; we're best when we're together. It is naïve to ask capitalists to change capitalism from inside. Context matters. Its conflation with Democracy as a governance system shortchanges governance. Rather, it is economics that needs to be re-thought and reinvented.


Though bits and components existed in different locations since ancient times, these two ideals together caught fire with the advent of the Industrial Revolution and the Age of Enlightenment in the 18th century. Capitalism was born at the same time that the phrase "I want more" came into our collective consciousness. Do they have a common ancestry? The simple answer is no.


© Robin Jourdan 2019

Tags:  capitalism  democracy 

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