Friday, February 21, 2014

Yanis Varoufakis — Can the Internet democratise capitalism?

Technological fixes to time-honoured problems are all the rage these days. Bitcoin is meant to fix money, social media are seen as an antidote to Rupert Murdoch and assorted tyrants, networked robots are to help countries like Japan deal with demographic declines etc. Perhaps the largest claim is that the Internet has helped (or is about to help) democratise capitalism. Ten years ago that claim struck me as both fascinating and dubious. So, I sat down and wrote an article about it (circa 2004). Its gist: The Internet is a wonderful leveller. But democracy requires a great deal more than mere ‘levelling’.
Primarily, it requires political institutions that enable the economically weak to have a decisive say on policy against the interests of the rich and powerful. Ten years later, I am re-visiting this question, under the shadow of a global crisis that made it even harder to convert an e’Demos into genuine e’Democracy. What follows is an updated version of the original paper.[1] (Click here for a pdf version or just read on.)
Can the Internet democratise capitalism?
Yanis Varoufakis

Read the notes, too.

Capitalism and democracy are antithetical. There is no "democratizing capitalism." Capitalism is inherently oligarchical, and modern "democracies" are republics through which an established power structure functions.

Democratizing capitalism is either some from of socialism, either public or worker ownership of the means of production, or a mixed economy that is not controlled by the rich and powerful.


10 comments:

Unknown said...
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Clonal said...

Some body needs to introduce MMT to Danae Ringelmann Indiegogo founder Danae Ringelmann: ‘We will never lose sight of our vision to democratize finance’

Jure Jordan said...

Yanis is asking for democracy at work type of solution to the voting apathy.
I agree with it, since as people are spending most of the waking life at work where is no democratic decision making, we are trained not to participate at democracy and then with such training it is expected to actively participate in democracy.

Since belonging to a Union was a type of democracy at work, providing a good training and also a point of comingling of elites and demos, people felt as if participating in a desicion making process.

Destruction of Unions where people were trained in pracitcing of democracy also led to voting apathy and failure of governance.

Dan Kervick said...

Democratizing finance is not the same thing as liberalizing finance. Opening up the credit markets so to put ordinary borrowers and lenders in direct contact, with less reliance on banks and other middle men, is a laissez faire financial innovation. Whether it is good or bad, it has little to do with democracy.

Democracy is a system of government, and democratizing finance would mean giving the public and democratic institutions of governance more decision-making control over the financial sector, including control over crowd sourcers, microfinancers, etc.

By the way, you could get bubbles from crowd sourcing just as easily as you can get them with conventional financial institutions. In fact, you might get them more easily if crowd sourcing becomes a big part of the economy, since P2P private investment arrangements are probably more subject to fads and wild popular enthusiasms than are businesses.

Unknown said...
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Clonal said...

Dan I agree with your assessment. Danae's views also show little appreciation for macro issues in the economy. It is also a meme that bankers collect money and then invest it - this happens to a certain extent in investment banking. However, the money to invest often comes from the "money creating" entities primarily commercial banks, and secondarily from Government Spending. This can often be in the form of second mortgages, or other loans against assets. Primary savings can also result from the net over expenditures from government grants, contracts, and "entitlement" spending. These savings are often leveraged into "investments" and this leveraging will inevitably lead to asset bubbles.

Tom Hickey said...

The way I generally see the terms "liberalizing" and "democratizing" used economically are:

"Liberalizing" = getting government out of the way, usually through reducing or eliminating government regulation and by privatizing public assets.

"Democratizing" in economics = peer to peer and consensual v. hierarchical and through intermediaries.

Tom Hickey said...

In the US economy the supposed saving-investment chain operates chiefly through banks funding mortgages chiefly with deposits.

Firm investment is mostly from retained earnings and sale of equity from what I have read, and commercial lending is used chiefly for working capital.

Please correct me if I don't have that right.

Dan Kervick said...

Tom, democracy is a way of governing things, ideally a system in which the entire body of the people being governed are at the same time equal participants in the work of governance. It seems to me that a democratic economic system is one that is governed by the entire people who constitute that economy. What specific economic institutions and regulations they then choose to institute, how much private property vs. public property, how much private enterprise vs. public enterprise, is a matter for democratic choice. If the people are wise, they will establish and seek to preserve institutions that prevent massive economic power from falling into a few hands, because economic power tends to convert itself into political power. I don't see that P2P has much to do with it. There is nothing inherently democratic about barter.

Tom Hickey said...

Dan, I am just saying that this is how I am seeing the world "democracies" used these days. It is also being used in "democratize the workplace" in addition to P2P.

I think that there is more to governance than "government." It's found especially in the state versus the people versus the people as the state. In the former case, the state is the means of controlling the people by an elite and the former is "government of the people, by the people and for the people." Of course, most governments have been and are of the former type.

To have government of the people, by the people, and for the people, governance must pervade all aspects of life in a participatory "popular" democracy rather than a republic as representative "democracy," which is democracy exists in name only.