Friday, May 02, 2014

What is the relationship between capitalism and democracy?


Lindblom’s Politics and Markets highlights the relationship between capitalism and democracy. Writing in 1977, he makes a comparative analysis of the American system of government with other world political and economic systems. Particularly he is concerned with the privileged position of business in a democracy, its efforts towards growth and the indoctrination of Americans to incorporate a pro-business bias.

Lindblom divides the political economy into a government/people and business/market dichotomy. Suggesting that it is the will of the citizen voters who are both consumers of goods and policy. They make up the collective decision making in a polyarchy. Lindblom argues that decisions are more complex than rational choice economics suggest, particularly in the political realm. Therefore, politicians use persuasion to sway voters to believe in what would be good for them. This persuasion is often tainted due to the types of controls they might have, such as wealth, organization and access, etc.

Lindblom believes that businesspersons hold a privileged position within a democratic society. They exist in a market system where “…income and wealth, deference, prestige, influence and power, among other things…” define someone. (Lindblom, 175) Furthermore they are obligated to the American people because they are responsible for the wellbeing of our society to assist in its economic growth. An effort to build the economy helps businesses. “Urban renewal, for example, comes to the aid of retailers, banks, theaters, public utilities, brokers, and builders.” (Lindblom, 177)

This is in contrast to a communist system, which is led by strict government action of how to build and strengthen its economy. In a democracy, policy circles and interest groups make decisions. Businesspersons have the incentive to encourage development through their sectors and create interest groups to represent them. This lobbying would be unnecessary in a communist system and may provide waist for the actual development of a country. Lindblom is not only analyzing the US, but he is seeking to contrast it from other world powers of the time, like Russia and China and their levels of development and growth.

Lindblom suggests that liberal pluralism focuses on how interest groups shape policy. Yet, public policy should be dependent on the market/business decisions. People vote in representation and they may be pro-development or people-focused. These two areas polarize the American people’s vote. What molds their opinion is indoctrination, provided by education, to vote pro-business.

Finally, Lindblom highlights the efforts of public education and popular education to further disseminate this privileged position for the business community.  He argues that in a society there is three control methods: exchange through markets, authority by government or persuasion by preceptoral systems. The last item is what dominates in America. The role of the media is important in a democratic system. It helps with the indoctrination of the people to vote more pro-business. This inherently, promotes business to dominate and promote growth for the country.

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