Today’s political consensus insists stridently upon the affinity between capitalism and democracy. For ideologues of the free market, any substantial restrictions on the freedom of capital to do as it pleases must lead societies down the “road to serfdom,” as Friedrich Hayek famously called it. Liberals and social democrats who believe that markets can and should be regulated still concede that a system based on private ownership of economic resources is essential if freedom is to be preserved.
Yet the merest glance at the historical record shows that capitalists have been major backers for some of the most notoriously authoritarian regimes in history, from Hitler’s Third Reich to South African apartheid and the juntas of Latin America. Even if we define “democracy” in the most minimal sense, as a set of procedures for alternating government teams through formally peaceful methods, there is clearly no necessary link between capitalism and such a political framework; their coexistence is possible but by no means inevitable.
At a time when right-wing authoritarian forces are rearing their head once again, even in the most long-established capitalist democracies, a realistic assessment of where capitalists stand in relation to democracy is vital. Capitalist classes are neither irreducibly hostile to, nor invariably supportive of, democracy. Rather their political interests, like that of other classes, flow from their specific structural location within class relations and from the concrete circumstances of the class struggle.
We must start by clearly identifying the distinctive class interests of capitalists. Because capitalists as a group constitute a distinctive type of class, it is important to resist the use of categories that seem accessible but are in fact fatally imprecise to describe them, such as “the rich.” Capitalists are neither “the rich,” nor the “one percent,” nor “the corporate elite.” They are a group of agents that occupy a distinctive structural location in antagonistic relations of surplus extraction. Much of the character of politics in advanced capitalist societies flows from the distinctive political behavior of this group.
All of the major capitalist democracies are very far from being perfect examples of “competitive elitism” or “formal democracy.” They all contain major distortions — electoral colleges, first-past-the-post voting systems, supermajority awards — that create a gulf between representation and the real distribution of political views in society. But the remarks that follow would still apply to the most perfectly organized representative system.
How Capitalists Rule
Capitalists differ from all previous ruling classes because of the typical way in which they extract surplus from direct producers. Capitalists appropriate the fruits produced by workers by virtue of their legally backed claim to ownership of the major means of production in society. Capitalists do not, in contrast, typically extract surplus from producers through the direct use of political means (such as the threat or actual use of violence, or by relying on the state authorities to formally compel the production of surplus). Instead, capitalists extract surplus in the process of production after the formally free exchange of money for a worker’s ability to labor.
The central class relationship which defines capitalist society is therefore an economic relationship, not a directly political one. Because the social position of capitalists depends on the maintenance of this economic relationship, they have a particular relationship to political authority (or the state) in general.
The most important consequence of the position occupied by capitalists in relations of exploitation is that their fundamental class interests do not require them to control the government directly.
This has two important political consequences: first of all, capitalist exploitation is compatible with the alternation of governing teams in the state; secondly, the individuals who make up those teams need not themselves be capitalists. Indeed, as many theories of the capitalist state have argued, non-capitalists often perform much better as political managers of capitalism than capitalists would themselves.
In other words, the capitalist economic system is compatible with electoral or formal democracy. Of course, capitalism is also compatible with political forms other than liberal democracy, as the many examples of political authoritarianism existing alongside a capitalist economy show. But the truly distinctive thing about capitalism is that it is compatible with formal electoral democracy. No other surplus-appropriating class in history has permitted a political system which grants suffrage rights to at least a considerable portion of the direct producers. That capitalists have in many cases tolerated such a system results from their highly specific class interests.
The Specific Political Interests of Capitalists
Apart from this general compatibility, there is a more specific connection between capitalist class interests and liberal democracy. This connection arises from the particular sort of “intra-class” relations that are characteristic of capitalism. Since capitalists appropriate surplus through their private, individual ownership of the major means of production, they must realize that surplus through the sale of products on the market. As a consequence, capitalists compete with other capitalists over market share. Furthermore, capitalists seek to enter new lines of production within which competition occurs.
These two processes — competition within branches of production, and entrance into new lines — mean that the specific economic interests of capitalists are highly differentiated, in contrast with other dominant classes in history, even though they also have a common class interest. For example, the interests of oil companies, photovoltaic cell producers, and windmill manufacturers differ from one another. The Hobbesian war that rages among these different capitalists gives them all a shared interest in the maintenance of an impersonal legal order; and preserving such an order requires the rotation of different governmental teams in and out of the state.
Simply, capitalists are not only potentially tolerant of electoral democracy, they also have a positive interest in electoral democracy.
The Limits to Capitalist Toleration of Democracy
The toleration of electoral democracy by capitalists has two well-defined limits: one derives from class struggle, and the other derives from the structural conditions of capitalist economies.
Consider the first set of limits. During periods of economic growth, capitalists may accept the emergence of working-class organizations that press for a redistribution of the social surplus toward wages. However, this attitude is strictly conditional. The only examples of capitalists tolerating organized mass labor movements and political parties have come when those parties have either toned down, or jettisoned altogether, the goal of transcending private property through the seizure and deployment of state power.
To put the point another way, there are no historical examples of capitalist classes, even in the short-term, tolerating mass parties based on the working class that seek the abolition of capitalist property relations through the seizure of state power. In those cases where mass working-class parties have existed within capitalism, they have always had to basically abandon or euphemize their socialist aims: this was as true of Scandinavian social democracy as it was of Italian communism.
This has a crucial implication for socialists. When a self-conscious working-class movement struggling for socialism appears to be anywhere near achieving victory, capitalists will rapidly abandon any residual commitment to democracy and resort to emergency measures. As a result, no transition to socialism will occur without the suppression of the capitalist class enemy. This cannot occur within the framework of electoral democracy.
In other words, the establishment of democratic socialism cannot itself be democratic in a strictly electoral sense; at the same time, it must be vastly more democratic in a participatory sense.
The second limit derives from structural features of the capitalist economy. Capitalists, as I have suggested above, can tolerate the mobilization of workers for material concessions in an environment of economic growth. Under these circumstances, capitalists can share the gains of an expanding pie with a working class that has moderated its political demands. However, when growth slows, the competition over that pie between capital and labor increasingly takes on a zero-sum character. At the same time, conflict also becomes harsher among capitalists themselves.
In this environment, “winner take all” strategies emerge, in which capitalists become more and more reluctant to share the meager gains from growth.
Moreover, when growth slows down, capitalists begin to shift from a strategy of investing in means of production to one of using political means to increase their share of the surplus. This alternative strategy can take on many different forms, from the deployment of police powers to evict residents for not paying their rent, to the use of legislation to enforce the interests of financial capital against debtors, or to secure monopolistic control over intellectual property rights.
Both of these developments — the increasingly zero-sum character of distribution between classes, and within the capitalist class itself — are profoundly damaging to the liberal-democratic mechanism, which requires “tolerance” and a willingness to accept the aleatory results of elections as legitimate.
What It All Means
Capitalists are the only surplus-appropriating class in history to tolerate electoral democracy based on a broad franchise that embraces a significant proportion of the exploited class. Because of their peculiar position in relations of surplus extraction, capitalists can tolerate both an alternation of governing teams, and the presence of non-capitalists in the state. However, their tolerance of electoral democracy is strictly limited and conditional.
There are no historical cases of capitalists tolerating the outcome of elections that might threaten capitalist property relations. What’s more, as the world economy becomes increasingly stagnant, and as rates of investment in plant and equipment decline across the board, a zero-sum struggle is beginning to emerge, both among capitalists and between capitalists and producers.
Whatever else might be implied by a resurgent democratic socialism and a capitalism in crisis, they do not augur well for the future of competitive elitism. Whether they might lead to the establishment of a socialist democracy beyond capitalism is an entirely different matter.