Ganesh Wakes Up? — Sort of
Better late than never.
Isn’t that what we say?
Alternatively: it’s about time!
However we enter the discussion, whether we welcome latecomers, or we pour scorn on the naive, any addition to the ranks of the clear-eyed must be what we might call “a good thing”.
Today’s recruit is Janan Ganesh of the Financial Times. He says that he likes to change his mind on something important each year. I assume that’s his measure of learning. Something, perhaps more than one thing, crosses his path annually and causes him to alter his attitude and thinking.
Progress!
What might surprise you is his choice for that thing in 2025.
Apparently Ganesh has realized that:
“… democracy, far from being the natural twin of capitalism, has to watch it like a hawk. The problem is not just that people with great private fortunes can bend public life to their interests, as John Pierpoint Morgan did in the Gilded Age and as the tech barons do now … The larger problem is the attitude that business instils in people: that everyone is negotiable …”
Darn! So close. Yet so far.
I was right with him in the first sentence. Absolutely, democracy exists to mitigate the excesses of capitalism. That’s how it came into being. Democracy was created in its modern incarnation — please let’s all ignore diversions into the ancient Greeks — as a consequence of decades of struggle as ordinary folk fought, often literally, to bend capitalism onto a more benign path. That struggle was not easy. Nor was it quick. The more democratic a nation is, the less capitalist it is. The two are in contradiction. The one elevates the individual to excess. The other promotes the collective as a mitigant. The one produces egregious inequalities based upon the asymmetrical and personal control of assets. The other seeks to remedy that through redistribution.
Ultimately the two arrive at some sort of uncomfortable arrangement. The trade-off being that the capitalists can continue along their greedy and self-serving path as long as they don’t seek to control everyone’s lives and push their amoral approach into every corner of life. Meanwhile democracy seeks to carve out space for non-market activities and to limit the ability of capitalists to control everything. The goal being, between the two, to balance greed and profit with a social sensibility and cohesion. That cohesion being vital because it produces the stability and security within which greed can be expressed with sufficient confidence that it produces future profit.
And so on.
It is the development of this modernized form of democracy that prevented most western nations experiencing the political and social rupture that Marx foresaw as inevitable. His error was his underestimation of the willingness of capitalists to share just enough to purchase social peace. They are braggarts in the safety of their exclusives clubs. They are cowards when the mob is heading in their direction.
Back to Ganesh: I am willing to go along with him thus far. Yes, the two great twins of the liberal age are in contradiction. Yes, the work of democrats everywhere is to guard against excessive capitalism. That work is constant. It requires vigilance. It needs strength of purpose. And it needs us all to be immune to the siren song of the market. Because markets fail. They are easily twisted. They are extraordinarily ineffective. And they belong to capitalists. As Ganesh says: the overriding premiss of a market is that everything and everyone is negotiable. There are no morals or great beliefs in a market. Just greed and self-interest.
The problem, though, with Ganesh, is that he goes on to take this analysis and plonk it down in foreign policy rather than in domestic and economic policy. His revelation is not one that induces in him a more benevolent approach to social policy and things like income, wealth, or inheritance taxes. No. His concern is that what he calls a “business attitude” messes up foreign policy. By reducing everything to a simple matrix of price negotiation and profit or loss, business eliminates any aspect of morality. It gets rid of the great issues of ideology and religious strife. It rids us of what he refers to as “intense belief”. This he calls naive. It exposes the business person to exploitation by someone driven by those intense beliefs. One such being the notion of the “greater Russia” that so obsesses Putin. So, whereas Trump sees war as an expense, Putin sees it as a necessary cost of the imposition of his belief. Where Trump sees opportunity for profit, Putin sees a chance to manipulate. And so on. The two are operating in different domains. With the pragmatism of business being dumbfounded and confused by the righteousness of intense belief.
What amazes me in Ganesh’s revelation is that he is displaying that same naivety he criticizes in the likes of Trump. Has he not read the social and political history of the last couple of hundred years? Is his reading of Smith so shallow that he misses the moments where Smith warns us not to trust the commercial mind? Has he not paid attention to the past four decades of neoliberal attack on democracy? Does he imagine that democracy sprang fully-formed out of some philosopher’s mind and was instituted without any objection by this who held exclusive power previously?
Capitalism is an ongoing process. It is not a system. It is a natural outgrowth of individual freedom. It is a function of modern liberalism. But, like all things, when carried to excess it turns from benign to malign. And, in its early days there was no brake on that malignity. Hence the Marxist critique. The huge cost imposed on general society by the acquisition of individual freedom by those who owned capital assets turned traditional ways of life, and accepted practices, upside down. It destroyed history. It shortened lives. It created urban slums. It immiserated millions upon millions. It led to colonialism. But it also produced material abundance. The allure of which to the masses being exploited was sufficient for them to demand democracy and a share of it. The western masses preferred reform to revolution. They wanted a share. So they forced democracy into being. Much to the annoyance of Marxists everywhere.
Democracy has existed ever since, often tenuously, to cut the capitalists down to size. Why else does Ganesh think that our more extreme ideologues of “free markets” have all been so skeptical of democracy? Why does he think the likes of Hayek, von Mises, Stigler, Friedman, and so on, have all expressed deep dislike of the intrusion of the masses into politics? It’s because democracy is an alternative form of distribution. And all those ideologues held that there is only one “efficient” such method of distribution — the economic. So they denigrated the political. Indeed the history of economics as a discipline has been the steady elimination of politics from the study of distribution. Need I quote the famous words of Lucas, whose clarity on the value of the study of distribution are both legendary and absurd? The displacement of the political — i.e democratic — by the economic — i.e. capitalist — is part of the ongoing narrative of the development of economics.
Which, in the last analysis is also the story of the past few decades: dominated as they were by the counter-revolution by the capitalist class seeking to undo the democratic moment of the postwar years. It was in those years when, for a short time, the interests of labor held as much sway as those of business. Was it complacency or simply naivety that allowed that counter-revolution to succeed? Was it complicity on the part of the erstwhile left? Or was it simply the natural dominance of wealth at play in politics? In any case democracy was driven from the field. Globalization, financialization, outsourcing, offshoring, shareholder value and so on became the tools of capitalist dominance. Profits rose. Wages stagnated. Capital won.
And, apparently people like Ganesh missed that a battle was going on.
So let me remind him of the simplest possible message history delivers to us: rich people do not like sharing. They never have. They never will. They need to be forced into it. They need prodding. Sometimes they need a more determined kick. They need to fear loss. Only then, as history attests, will they consider sharing with “the mob”. Rich people are very good at inventing ways to hoard. They are addicted to accumulation and display. They are good at co-opting intellectuals willing to justify greed. They are excellent at purchasing power — with which they build moats, literal and metaphoric, around their ability to collect rents. And such rents are inevitably a cost borne by the masses, whose lifestyles are diminished thereby.
So, better late than never.
No. Capitalism and democracy are not happy co-inhabitants of modern liberal civilization. They are bitter enemies. It takes energy and constant supervision to stop each from destroying the other. That’s what the West forgot. And now has to remember.
We need a good dose of people power. Which will discomfort the rich mightily. They will whine and moan. They will give all sorts of specious arguments why the social undermines the efficacy and efficiency of individual enterprise. They will argue that the economy will suffer, that growth will be slower, and that the people will see lessened lifestyles.
Which is rubbish. What they are really saying is that their portfolios might go down in value. Oh my!
What they are really saying is they fear pitchforks. Good. They need a prodding. It’s time for some good old fashioned sharing.
People power.
/Demos Kratia
