Marketizing democracy
Mar 25, 2012
5 minute read

The Boston Review published a symposium on inequality. It features a lead essay by David Grusky and responses by several commentators. The Internet has assigned me to reply to Mike Konczal’s response, which I am happy to do.

Mike agrees with David’s point that there is an awful lot of “corruption, bottlenecks, and sweetheart deals” in our highly politicized economy, and that these generate inequality. However, he disagrees with David’s prescription:

But Grusky also thinks that a program to reduce inequality should embrace an authentic commitment to a competitive market economy, as if there were such a thing as a pure, competitive market economy, apart from law and regulation. Instead, we need to acknowledge that markets always depend on legal and regulatory choices, that different choices of laws and regulations lead to different outcomes, and that part of the point of democracy is to make those legal and regulatory choices well. We cannot take refuge in the abstraction of a competitive market economy. (emphasis mine)

Mike’s solution is “democratizing markets.” He wants us to make different legal and regulatory choices, especially about corporate personhood, debt and foreclosure, basic services, and labor policies. I don’t agree with his policy recommendations, but given our respective ideological commitments that is not much of a surprise. Instead of rehearsing familiar (and boring) arguments against these, I want to try to challenge Mike at a more fundamental level.

On Mike’s view, (part of) “the point of democracy” is to make good collective choices. If the same collective choices are made by plutocrats instead of by the median voter, they will not turn out as well for everyone. This is a common view.

To me, it is not an attractive one. This is not because I think that plutocrats should be making our collective choices for us (I don’t), or even because the median voter does such a terrible job (she does). It is because the point both of democracy and of reducing inequality should be to foster self-governance.

Let’s take the latter point first. A number of conservatives and right-leaning libertarians have argued that inequality per se does not matter; what matters is absolute poverty. This is not my view. Relative inequality matters to me insofar as it leads to some people being socially marginalized, even if material conditions are quite good. It seems to me that it is difficult to flourish if you are isolated; there is little for your autonomy to be about. Therefore, to whatever extent inequality causes social marginalization, I am against it. On the other hand, we can in principle imagine a social change which creates more material inequality but nevertheless decreases social marginalization; I would be in favor of this change. For instance, the increase in professional opportunities for women since the 1970s has dramatically reduced their social marginalization even as it increased material inequality through assortative mating, and on the whole this was a good change.

Our political institutions should also foster self-governance, and democracy as it is popularly conceived—majority rule—does not do this. It is a system in which we are all subject to an anonymous deciding vote, the median voter. If the median voter says I must give $1000 to Bill, it does not matter whether Bill is homeless or married to Melinda Gates: Bill and I are not relating to each other as free persons, and our relationship is not self-governing. Nor is our relationship truly self-governing if the median voter merely declines to intervene in it; she always hangs around like the sword of Damocles.

What would political institutions that foster self-governance—true democracy—look like? For one, the median voter would have no more power than anybody else merely in virtue of being at the center of an ideological spectrum. Instead of dealing with value pluralism through voting, true democracy would accommodate it by allowing people to self-select into one or more like-minded communities. These communities could develop their own collective decision-making methods, but they would at every moment be subject to each person’s willingness to remain in the community. Collective decisions, therefore, would be undertaken not for a fixed polity, but for a coalition of the willing. Communities, too, could relate to each other on whatever terms they both agree on, or they could choose to ignore each other entirely.

In its better moments, the Occupy movement thinks in terms similar to these. At less clearheaded times, it contradicts these ideas by making demands of people outside its coalition of the willing. Despite these contradictions, there is much to admire about Occupy’s voluntary efforts to supply basic services to the poor and marginalized. Mike points out that these services were made “universally and unconditionally available, rather than distributed through market logic.” The ironic punchline of this story is that at a deeper level, it is precisely market logic that distributed these resources. The logic of the market is like the logic of true democracy as I’ve described it above. At its core is accommodating value pluralism through freedom of association, rather than by forcing dissenters to submit. And as the Occupiers have shown, to whatever extent meeting the needs of the marginalized is an important part of our values, we can do it through voluntary association rather than through the conscription of unwilling participants.

So whereas Mike wants to democratize markets, I want to marketize democracy. I want to find ways for us to live together that create rather than restrict autonomy for each of us, and for our communities. I don’t think that such an arrangement would result in a utopia, and I can’t promise a particular outcome, such as a massive reduction in inequality, with certainty; when we relate to each other as free persons, by definition the outcome is open to surprise. But when I think about the litany of outrages that majority-rule democracy has wrought—the prison-industrial complex, immigration restrictions, the war on drugs, urban public schools, agricultural subsidies, and corporate bailouts to start—I am grateful that we have more markets and less democracy than Mike desires.