Democracy, market economies and capitalism

Most people nowadays have been trained to think that democracy, free market economies and capitalism are all inseparable parts of one package. Whoever questions the basic tenet of capitalism is seen as endangering the whole system – even to the extent of being branded as "red" and endangering democracy. In Germany half of the MPs of the leftist party "Die Linke" are under active surveillance of the Federal Office for the Protection of the Constitution.

In fact, these three concepts are particular answers to completely different questions:

1. Democracy is one possible answer to the question of how decisions regarding all aspects of society are made – ideally it should mean that all adult citizens have an equal say in the decisions that affect their lives.
2. Free market economies is one method for regulating the production and distribution of goods and services – supply and demand, so it says, are an optimal regulator to provide the best results.
3. Capitalism is one of many possible ways for organising an economic system; while a consensus on its exact definition is lacking, it implies private ownership of the means of production, wage labour, striving for profit and accumulation of wealth, and competition (survival of the fittest).

The headline of this page lists the three terms which are most common in defining the way life is organised in the western world. It's what we know, how we reply when asked to define how our nation or society is run. What is missing is a fourth question, which in practice has at least as much effect as the above three: Which sort of monetary system do we use? We have given some answers (and alternatives) to this question on the preceding pages on Legal tender and Fiat money.

So which answers serve whom?

	The many	The few
1. Making decisions	Democracy (or Anarchy)	Aristocracy (or Theocracy)
2. Goods and services	Free market economy	Planned (managed) economy
3. Economic system	???	Capitalism
4. Monetary system	Alternative currencies (demurrage)	Fiat money (compound interest)

Let's look very briefly at those answers one by one:

1. Democracy – and anarchy in its theoretical form – seek to involve citizens in the decisions which affect them. If there is a central institution, as in representative democracy, then it should reflect the will of those who elected it. The alternative model is when decsions are taken by one or a few people according to their own will. Aristocracy is a generic term which includes monarchy, oligarchy and technocracy. A theocracy means that the chosen representatives of a particular belief system run things, according to the tenets of their belief system.
2. Free market economies can be pictured in their origin as farmers bringing their surplus produce to market and exchanging it for goods which they themselves do not or cannot produce. If the people want red potatoes, then the farmers will supply them, in order to in turn be able to acquire the goods which they need – demand and supply regulate the market. The clear opposite of this idea is the planned or managed economy, where a higher or central instance (i.e. a few select people) decides what is needed and orders its production.
3. We decline to name any particular system as a counterpart to capitalism. Capitalism is hard to pin down, as it can be viewed economically, politically and historically; and beyond that can exist in a multiplicity of forms (e.g. mercantilism, free-market capitalism, corporate capitalism). Furthermore, terms like communism or socialism often have a bad taste – not neccessarily for their theoretical background but for the way they have (not) been practiced. The salient points of capitalism – as noted above private ownership, wage labour, striving for profit and accumulation of wealth, and competition – put it firmly on the side of "serving the few", as only a few can be the owners, requiring many as wage labourers, and a few become the wealthy winners while the many become the poor losers.
4. All monetary systems based on a compound-interest currency serve the few by pumping wealth from the poor and middle classes to the very rich. By contrast, a currency with demurrage encourages economic activity (serving the many) while discouraging its accretion (not allowing a few to become financially powerful).

Where we stand now, in theory and practice

• Serving the many: Democracy, free markets
• Serving the few: Capitalism, compound-interest money

Taken on face value, we have in total a system with warring facets – democracy and free markets intended to serve the many, capitalism and fiat money serving the few. If this were true as at face value, then we have what could psychologically be termed as a "multiple personality disorder", or "split personality" à la Jekyll and Hyde – two facets within one organism striving for different goals.

That in itself would be very frictious, like giving gas and braking at the same time. But it's not the complete story. We have representative democracies where citizens are in general hardly involved at all with decision-making processes – once every few years, if they even bother to vote at all. This has left the elected representatives open to lobbying for the interests of the powerful few. Due to economic and monetary systems which further the accretion of wealth by a few (private individuals and concerns), the privileged have the neccessary financial muscle. In 2011 3.27 Billion Dollars was spent on lobbying in Washington alone, while 30 major U.S. Companies spent more on lobbying than taxes.

So clearly, our democracy is compromised, especially so when we hear that all the billions required to bail out the banks are "without alternative". There are in fact many alternative fiscal systems, as we have shown, but they all require thinking "out of the box" and changing the system, not just tweaking a few parameters – and none of them maintain the status quo with its privileged few.

So let's move on to the "free" markets and ask ourselves how free they really are? It's true that hardly any extant system forces people to buy certain products. But we only need to mull briefly over the power of marketing and advertising to make products and brands desirable in order to conclude that they are very manipulated. Don't believe it? Try to send your teenager to school without EastPak, without Adidas, and with a battered old mobile phone (which works fine)...

Summing up: Our democracy is compromised, our markets manipulated, and we have capitalism and fiat money which both serve the few directly.

How to get societal structures to serve the many

1. In some way, we need to reinvigorate our democracy and free it from the influence of lobbying, to make it serve the interests of the people, and to increase direct participation by the people.
2. We need to curb the power of advertising and marketing which are almost solely concerned with making a profit and care little about the sustainability of the products, e.g. inbuilt obsolesence.
3. We need to find economic alternatives to capitalism beyond all dogma and traditional beliefs, which really work in practice.
4. We must successively replace national fiat currencies with regional and interregional currencies which are free of interest.

How can Regional Economic Communities help to achieve these goals?

1. Each ReeComm, normally founded as a cooperative, is a regional democratic structure in which people can know each other personally, and those elected to represent them can be held personally accountable. Beyond that we envisage that larger geographical areas will form councils including representatives from each of its ReeComms, e.g. the ReeComm Council of North Kent. These in turn would send delegates to the ReeComm Council of Kent, and so on to the Council of England, the UK, Europe and finally the World Council of ReeComms. Each would address matters appropriate to its geographical territory as a whole, and the delegates of one level would hold their representatives at the next higher level directly accountable to express their agreed opinions. So what comes out would be a delegational pyramid without the huge gaps of accountability contained in the current system.
2. The concept of Regional Economic Communities puts a clear emphasis on sustainable and regional products, a good educational counterweight to the often shortsighted actions of profit-oriented advertising.
3. The Community of Participation and Ownership (CPO) transfers the ownership of local firms step by step away from capitalists and banks to the local citizens themselves.
4. The more successfull a ReeComms Market Community becomes, i.e. the more goods and services are remunerated in Groks, the less national fiat currency will be required.

Is a free market economy neccessarily good for sustainability?

No, not by design. It is neither good nor bad for sustainability, it is simply a free market. Which sort of products and manufacturing methods are in demand is more a matter of education and awareness. Without the appropriate awareness for sustainability and future viability a planned economy could be no better than a free market. A planned economy which dictates sustainable products to its citizens would be lacking the innate respect which we feel is a major facet of the mentality required for true sustainability.

Finally, to reward you for having made it to here!

< Back