The End of Democracy ?

from the book

Triumph of the Market

by Edward S. Herman

published by South End Press, 1995

Democracy is under siege throughout the globe, including in the United States. This of course runs exactly counter to the forecasts of the ideologues of Western triumphalism, who predicted a fairly rapid universalization of democracy in the post-Cold War era. But these analysts overrated the importance of elections as the basis (and proof) of democracy, and underrated the ability of dominant market forces to drain elections of democratic substance

Elections may be occurring more widely, but even more consistently than in the past they now have material consequences only when they serve the dominant interests of the global market. When they fail to do this, there is a policy stalemate, unless the newly elected leaders "see the light" (i.e., sell out), or until a new election brings "realists" to power. When voters reject a treaty supported by the dominant interests, a second vote may be taken. Thus, when the Maastricht agreement was defeated in Denmark in 1992, a further vote was held following an intensive "educational" campaign to bring the Danes around. It is interesting that nobody is suggesting another vote to see whether the Danes, upon further reflection and experience with the European Community's (EC's) failure to cope with the growing crisis of unemployment, might have changed their minds once more. Voting ended when the proper response was forthcoming.

"Realists" find no insurmountable obstacles to getting things done-tax changes advantageous to business and the wealthy can be enacted, public property can be sold off, labor unions can be dismantled or weakened, large-scale unemployment produced and maintained, and treaties can be passed that compromise the national sovereignty-irrespective of public opinion. In the United States and Great Britain, Reagan and Thatcher were able to carry out right-wing and business-supported agendas that involved drastic changes in income distribution, national spending priorities, and the role of central and local governments. Thatcher could "Break the Nation" with electoral minority support (41 percent). Following her rule, labor costs in Great Britain are now 25 percent lower than the EC average and only just above Spain and Ireland" (Financial Times, July 8, 1993). In Canada, Brian Mulroney was able to carry out regressive economic policies and get treaties enacted even when his public approval rating had dipped below 10 percent. The Wall Street Journal reported that at the moment the Tory-dominated Canadian Senate voted approval of the North American Free Trade Agreement (NAFTA) in dune 1993, by 47 to 30, the public opposed its enactment by 58 to 39. The dominant Canadian media, closely attuned to the preferences of the national financial and business elite, supported the treaty.

By contrast, Bob Rae, head of the liberal-left New Democratic Party (NDP) in Ontario, Canada, failed to implement most of his promised economic and social reforms following his electoral triumph in 1990. This was partly a result of political cowardice and failure to mobilize the social movements that had supported his candidacy to help him carry out reforms opposed by the powerful. But it was also a consequence of the fact that the corporate and media opposition "mounted an incredibly intemperate and even hysterical campaign" against labor and fiscal reforms, steadily assailing the government for increasing the deficit," and eventually cowing it into focusing on expenditure cuts and deficit control and largely abandoning its social democratic reform program. Bill Clinton, also, entering office in the United States with a painfully inadequate program of renewal, was under immediate business/media attack for fiscal extravagance, and quickly began a retreat toward conservative orthodoxy and dedication to deficit control. Here, as in Ontario, cowardice and a failure to mobilize a supportive popular constituency were conspicuous, but these seemingly regular failures and retreats are grounded in something deeper than personality defects.

When elected or revolutionary leaders in the Third World threaten to serve local majority interests, as in Jamaica in the first Manley term, Guatemala under Arbenz in the early 1950s, Nicaragua under the Sandinistas, and Haiti under Aristide, the governments may be subjected to simple economic warfare (Jamaica), foreign-organized terrorism (Nicaragua), proxy army invasion (Guatemala), or indigenous military coups and brutal repression carried out by U.S. trained security forces (Haiti). These interventions instruct Third World populations that reforms they may want are not permissible, according to higher authority, and that efforts to put them into practice even by democratic elections may be dangerous to their health and welfare (see further the discussion of Nicaragua and Haiti under "Elections in the Provinces," below).

Institutional Weakening of Democracy

Democracy is being weakened on a global scale by the strengthening of market forces and market interests. These have damaged the institutional basis of democracy and made elections and traditional political pressures incapable of meeting the demands of ordinary citizens. Greater size, diversification, and mobility and geographic spread of business firms has drastically altered the balance of power between capital and labor and increased capital's leverage over government. Corporations, now often global entities, can shift production rapidly to the most hospitable investment climes, and they have been able to make union members compete with one another even within a single country. This has been a cumulative and self-reinforcing process-as unions become less powerful they are less attractive to workers; their decline in membership (in the United States, by 25 percent in the 1980s alone) has weakened them in both the market and political arenas. Meanwhile governments, under increasing business influence, have stripped away union defenses against strike-breaking, organizational harassment, and decertification. This decline, rooted in the structural conditions of an evolving global market, represents a serious weakening of pluralism; the: primary organized oppositional barrier to capital's complete domination is receding into the shadows and shows no sign of imminent recovery.

The growth of global money and capital markets has also weakened democracy in that money capital "votes" with its movements into and out of countries, based on fears and hopes of being badly or well treated. If there is a threat of higher taxes on capital or increased benefits to poor and middle-class people, money flees and interest rates tend to rise. This "natural" process sustained Reaganism and constrains those trying to serve ordinary citizens.

The slackened rate of economic growth, intensified global competition, and associated "restructuring" (local firings and speedup) and "delocalization" (plant and production relocations) has also had a devastating effect on government budgets. On the one hand, it has pressed governments to keep business and "investor" (i.e., wealthy people) taxes and inflation low to remain "competitive" with those in other areas trying to attract business; on the other hand, the increase in unemployment resulting from anti-inflation policies, business's actions, and unrelenting demands for government services to meet infrastructure needs and cope with environmental damage have enlarged government outlays. The fiscal crunch and deficits have, of course, made it difficult to meet the needs of ordinary citizens. The irony is that business policies, and tax benefits to the elite provided by governments super friendly to business, are major causes of the fiscal crisis, but in accord with market necessities the solution must still come out of the hides of ordinary citizens. Thus throughout the West the pressure is on to reduce outlays for the unemployed and disadvantaged, as there is No Other Option in a market dominated system; "we" must all sacrifice in order that "we" can be "competitive."

One temporary expedient that fits well the market's imperatives is "privatization," which generates sales commissions for the business elite and allows them to acquire public property at bargain prices, while it provides revenue to government without tax increases. It will reduce government income in the future, but that is hardly the concern of private parties striving to increase their net worth right now. Privatization also has the merit of reducing the government's power, simultaneously enhancing the power of the private sector. This is a plus for those who fear the power of government to serve a democratic constituency, although these same "anti-government" forces are not averse to the opportunistic mobilization of government for elite service in military boondoggles, nuclear energy subsidies, forcing open markets abroad, etc.

The market and its government agents have also erected an institutional apparatus of supra-governmental bodies, such as the IMF and World Bank with powers that go beyond and sometimes supersede those of elected governments. By attaching rules and conditions to their loans, these bodies are able to impose policy regimes on the borrowers that conform to the interests of the transnational corporate community. EC, GATT, Maastricht, the Canadian-U.S. trade agreement of 1988, and the NAFTA treaty are high-level arrangements with associated bureaucratic structures that negotiate economic policy over the heads of the voters. These accords permit the overriding of economic and environmental decisions of national and local authorities. These institutions and agreements thus provide a kind of international government representing the interests of the truly elect-namely, the leaders of the global corporations-whose aims they can pursue without having to undergo any electoral test.

Electoral Processes in the Developed Countries

In the economically developed countries, with the increased cost and importance of TV and other mass media, money has assumed overwhelming importance in electoral campaigns. The decline of organized labor has added to the financial dominance of property interests in elections. Parties and candidates must appeal to "investors" for campaign sustenance-mainly business leaders, the wealthy, and political action committees closely related to them-so that deals, promises and commitments to election funders preclude social democratic (let alone socialist) programs. The "left wing" of the property party will make vague promises of service to the majority during the election campaign, and even the purer business party will speak of "bringing us together" in a "kinder, gentler" country. But these promises will not be kept-partly because of the contrary commitments to the funder-investors, but also because the monied interests can make any attempts to serve the majority very costly. They have the power to stalemate programs by mobilizing friendly legislators to obstruct, lobbyists to bargain and threaten, the corporate mass media to denigrate, and the financial markets to punish deviations from their interests.

When elections bring in nominally populist governments, they will be prevented from taking any significant actions; they will be quickly discredited as having "veered to the left" and created an atmosphere discouraging to business. They will have to reassure capital that they are investor friendly and that they understand that, in an age of deficits and austerity, social spending must be constrained and investment encouraged. If a leader decided to resist-to tell capital to go to hell-and to carry out vigorous expansionary and redistributive policies, he or she would run into a firestorm of opposition and would almost surely not be able to implement such policies in the existing political economy. For this reason political leaders not only will not embark on such bold ventures, they even announce in advance policies designed to placate capital-which contradict their promises of renewal and service to their democratic constituencies. Clinton's 1992 deficit reduction-plus-stimulus plan, even if fully enacted, would have had a net deflationary impact on the stagnant U.S. economy; his proposed welfare-workfare approach was little improvement over Reagan-Bush policies; and his tax reforms-his most progressive endeavor-were only a very partial offset to the Reagan-Bush era redistribution upward.

In brief, markets, money, and the media now work in tandem to allow substantial change in institutional arrangements and policies only where this will serve the larger corporate interest (now called the "national interest"), but quickly quash threats to those interests posed by political leaders responsive to popular demands (i.e., the "special interests"). A massive propaganda campaign has successfully inculcated the idea that Big Government is the source of our problems, with spending for social reform a pernicious manifestation of out-of-control government-an ideological/propaganda coup that discredits government actions that benefit ordinary citizens. With reform, let alone necessary radical change, stalemated ideologically and in electoral political processes, ordinary citizens will gradually lose interest in the election game, cynically write off politics and politicians, and withdraw from the political arena. They are disillusioned and angry, but they seem to have lost in a fair electoral fight (at least this is the impression conveyed by the mainstream media). Thus, although ordinary citizens exit because of the absence of real options, this has no political consequence in constructive action. Real options not being mentioned let alone debated, do not enter public consciousness. And with the elite beneficiaries of the existing system disproportionately finding political participation worthwhile, the power of capital in election processes is further enhanced.

Elections in the Provinces

Third World elections have become even more grotesque parodies of democratic order than those in the technologically advanced states. For one thing, inequalities tend to be greater in the less developed countries, increasing the bias in favor of property interests stemming from differential resources and media control. Second, the great powers and global market forces and institutions have a very potent impact on Third World countries because of their poverty and financial dependence. Caught in the web of the international financial system, the poor countries depend on borrowing from private commercial banks, the IMF and World Bank, and on aid money from the rich countries. They have No Other Option than to comply with their lenders' demands on budget and monetary policy, and their people are not "free to choose." As a recent illustration, Ramiro de Leon Carpio, the former human rights ombudsman of Guatemala, who became president in June 1993 following the failed coup of Serrano, initially promised to give top priority to overcoming the poverty that afflicts 87 percent of the Guatemalan people. Within a month, de Leon had shunted this objective into the background in the face of IMF demands for austerity, stating that Guatemala's macro-economic policy "has complied with IMF demands, and we need to continue that way, otherwise we'll destabilize the country and cause a loss of confidence. But we need to give it a human face wherever possible."

The "market" does not like anything approaching real democracy, which invariably imposes higher taxes on those who can afford to pay and supports worker rights and benefits, and thus threatens profitability (but is euphemistically said to jeopardize "competitiveness," the "climate of investment," or "stability"). The historic record points quite clearly to the market preference for authoritarian government in the Third World, and it is sometimes acknowledged by bankers and the media. Morgan Stanley and Company managing director Madhav Dhar told Business Week (April 23, 1993) that "there is a saying on Wall Street that you buy when there is blood on the streets" (the article was about India's instability and its effects on financial market attitudes); and the Wall Street Journal ran an article shortly thereafter entitled "Why Global Investors Bet on Autocrats, Not Democrats" (Jan. 12, 1993). But such facts are not allowed to interfere with the ideological truth that the West supports democracy everywhere.

In a number of Third World countries "demonstration elections" have been staged by the United States to put a positive gloss on terror regimes and justify U.S. aid, as in Vietnam in 1966-67 and El Salvador in 1982 and 1984. Although none of the basic conditions of a free election were met in these cases, the U.S. mass media found them legitimating. Salinas's electoral victories in Mexico have been characterized by blatant fraud, serious human rights violations, and attacks on oppositional forces, as well as vast electoral corruption in using state money and business kickbacks to finance electoral campaigns. Salinas even won in 1988 on a semi-populist program, which he immediately abandoned. But because he is the perfect Third World comprador-politician, servant of the global corporate order, and sellout of his own majority, the U.S. mainstream media have generously overlooked or downplayed his violations of the democratic rules of the game. He is a statesman and leader by rule of comprador service.

In contrast with these approved elections, which ratify rule by those who will pursue policies serviceable to the truly elect, are elections won by governments threatening to provide unnecessary food, medical care, and education to the human "oxen" (Somoza). Nicaragua under the Sandinistas and Aristide's election victory and ouster in Haiti provide instructive examples. Somoza's rule in Nicaragua had been accepted and treated kindly by the United States for decades, despite its rapaciously undemocratic character. Even before the Sandinistas took power, the Carter government was bargaining hard to keep in place the murderous National Guard, which would presumably have served to preserve "Western values" from the Somoza era. U.S. hostility to the new government was immediate, and Nicaragua was under armed attack by the United States from 1981 until the Sandinista ouster in 1990. Their election victory in 1984 did them no good. Only an election that they lost ended subversion and terror designed to overturn them by any available means. They did not meet the U.S. and market standard of legitimacy, which called for subservience and the pursuit of the "logic of the minority."

In the case of Haiti, Aristide, like the Sandinistas, represented the majority of unimportant people and threatened to pursue their interests. Although he won a crushing electoral victory in 1991 with 67 percent of the vote, his ouster by the notoriously corrupt and brutal military, followed by a reign of terror unleashed against his supporters, did not cause the United States to view the matter as urgent and calling for decisive action (not even an early freezing of the assets of the government and elite, or imposing a rigorous blockade, let alone sponsoring a proxy army, as with Nicaragua). U.S. officials even expressed concern over Aristide's human rights abuses, and they negotiated for Aristide's return with the military establishment still in place (reminiscent of Carter's effort to keep the Nicaraguan National Guard intact). There was also a call for Aristide to "broaden his base" (67 percent did not suffice) and to choose a "moderate" for Prime Minister (i.e., someone who will oppose his reforms that serve ordinary citizens).

The contrast with Nicaragua is enlightening: after Chamorro's 1990 victory the United States pressured her to exclude the Sandinistas entirely from government and to try to undermine their power base by actions that threatened civil war, although the Sandinistas had received 41 percent of the vote (in an election held under U.S. blackmail threat and direct intervention). The United States also pressed the government to dismantle the Sandinista army, although it was not a thoroughly corrupt and murderous one like the Haitian. The lack of respect for democratic processes where they threaten to serve ordinary citizens rather than the elite and market could hardly be more obvious.

In a number of Latin American states, including Chile, Argentina, Brazil, and Uruguay, elections were held after a period of army rule during which many left and social democratic leaders were tortured and murdered, labor and peasant groups destroyed or weakened, and the economy restructured and opened up in ways favored by the IMF and global rulers. The armies that carried out these terrorist operations were built up and trained by the United States to serve larger (i.e., U.S. and market) interests, and they did this with energy during the periods of direct military rule. With the fall of the military regimes, the murderers and torturers were never punished and were allowed to remain in place as enforcers in case social democratic forces pursuing the logic of the majority" get out of hand once again. Although this immunity from the rule of law and the very presence and threat of these armies badly compromises the democratic integrity of the new "democracies," U.S. pressure to demobilize Latin armed forces has been confined to Nicaragua.

The Prospect Before Us

Back in the 1970s, when the Brazilian military was dismantling the protective institutions of the majority, representatives of the Catholic Church repeatedly and bitterly complained that the New Order was deliberately atomizing the population in the service of the transnational corporation (TNC - one document was entitled "The Marginalization of the People." The Church contended that the National Security State and its use of terror were integral to the new corporate order, as its economic and social policies "in effect provoke a revolution that did not exist." The intensified exploitation would have led to a quick removal of the government under democratic conditions. Only the army could enforce the new economic order, as was openly acknowledged in 1976 by Martinez de Hoz, the top financial administrator of the Argentine military government: "We enjoy the economic stability that the Armed Forces guarantee us. This plan can be fulfilled despite its lack of popular support. It has sufficient political support...that provided by the Armed Forces."

In the New World Order taking shape today we can see the same economic forces described by the Brazilian Bishops at work on a global scale. It is the very purpose and historic role of the TNC to take advantage of its new global mobility to engage in an arbitrage that depresses wages, working conditions, and benefits toward a lowest common global denominator. In the advanced countries, there is a steady migration of firms to jurisdictions that have low wages and benefits and few environmental restrictions. Unions have been weakened and destroyed by market forces and complementary state action in a further atomization process. Structural unemployment and part-time and temporary work have risen steadily and wage and benefit concessions have been exacted from the work force. Social programs that have protected the majority are under increasing pressure, with John Major and "socialist" Felipe Gonzalez of Spain urging further European moves toward a "deregulated labor market" (i.e., a removal of support for unions and collective bargaining and reduced unemployment benefits).

In short, the rulers of the world, the TNCs and the leaders of the dominant states and new supra-national organizations, have successfully achieved the goal of limiting the organizational and policy options of the world's leaders and peoples to a private enterprise system and actions that serve its interests. To paraphrase the sardonic remark of Canadian economist Mel Watkins: in the West we have "freedom of choice" among 51 lite beers, but only one choice in the way we can organize our economic life. As Bernard Cassen has pointed out, however, the rules of international behavior and policy under EC, GATT, and IMF don't pretend to serve a human community (despite the phrase European "Community"); a human community has complex and variable human needs, whereas the new arrangements are confined to mechanical rules for serving an economic model and an ideology of the powerful, a sure recipe for disaster.

Z magazine, September 1993

Triumph of the Market