The ‘democracy problem’: introduction

‘We can have democracy or we can have great wealth concentrated in the hands of the few. We cannot have both’ – US Supreme Court Justice Louis Brandeis

‘Being in government is not the same as being in power’ – Enric Duran

What is the ‘democracy problem’?

The problem is that this system isn’t democratic. It delivers ultimate power to people who have never been elected, because wealth concentrates via giant banks and corporations, and then that concentrated wealth corrupts the political system.

1. How wealth concentrates

Our communities are full of corporate branches – supermarkets, banks, chain restaurants etc., that suck money out to pay shareholders. The same thing happens with online corporate retailers.

Independent businesses have to pay their fair share of taxes; why not corporations? There have been many protests outside corporate branches asking this question.

Plus, governments play a huge role in transferring wealth from ordinary people and small businesses. For example:

  • Starbucks (and other corporates) are allowed to avoid taxes, when the independent coffee shop across the road is not.
  • If they fall on hard times, then ‘too-big-to-fail’ corporations – notably banks – are bailed out with our money. Not the case with small businesses.
  • Governments spend taxpayers’ money on high-speed rail, motorways and airports that disproportionately benefit national and multinational corporations rather than local businesses.
  • It’s been shown many times that mixed smallholdings are more productive than large-scale monoculture. But large-scale, industrial agriculture gets all the subsidies.
  • The state grants monopoly control of the money supply to corporate banks, along with the right to create money from nothing, and to charge interest on it; and in return the banks buy government bonds to provide the funds they need to compete in the global game.
  • There are huge subsidies for oil companies to find more fossil fuels; and no tax on aviation fuel or VAT on flights etc.
  • Giant states will always prefer giant corporations when it comes to government contracts.
  • Spending on corporate weaponry hugely exceeds any ‘defence’ requirements.
  • and many more.

How political influence is bought in the US.

Why do governments do this? Well…..

2. How the political system is corrupted

The three main ways are:

  • Political donations: politics is awash with corporate money, and SuperPac legislation in the US allows unlimited, anonymous donations to political causes, mainly on TV ads.
  • The lobby industry: wealthy corporations can hire expensive lobbyists to approach politicians who regulate their sector, and ask them for favours, whilst helping them raise millions, or offering them a job, which brings us to…
  • The ‘revolving door’, when politicians leave office and move straight onto the board of a bank or corporation.
  • and many more.

Incredibly, these things are legal. But that’s because the corporate sector wants them to be legal, which in itself demonstrates that there’s a ‘democracy problem’.

[NB: many of the examples in this introduction are from the US. That’s because of the influence the US has in the world – what happens there affects everywhere.]

Source: Mimi & Eunice

3. Why voting won’t change this

The removal of the contstraints on the global movement of capital has created the conditions whereby states have to be very attentive to the needs of capital to ensure that it doesn’t move away from their country.

Ludovica Rogers of Co-ops UK puts it well:

“States are an integral part of the current system and therefore, the political parties who try to run them, even if with the best intent, end up obliged to follow the logic of “pragmatism” over the values they stand for, as they are called upon to run the state in a way that is efficient for the market economy and guarantees the competitive advantage of the country within the system. Political decisions of our governments have always been strongly influenced by capital, but in a world where finance capital has become the dominant factor, the rapidity with which it can flee a country that does not welcome it, means that it needs to be courted, just as the Tory government is explicitly doing, but also as the left wing parties across Europe, including Syriza, have been forced to do.”

So the global system is self-perpetuating, and even if it weren’t, governments whose remit covers only one country are obviously impotent when it comes to regulating multinational corporations – but there are no global institutions to effectively regulate them either. Those with teeth (for example the World Bank, World Trade Organisation and International Monetary Fund) are firmly in the corporate camp.

Imagine that voters ignored the corporate media, and elected an anti-corporate party in your country. In a globalised world, this party would scare off investors, bankrupt the country and lose the next election to a party that would reinstate corporate-friendly policies.

The insane antics of the lobby industry.

The punishment will be much harsher in poor countries. Corporate control of the US military via their control of the US political system will ensure a swift and violent regime change for governments that commit to an anti-corporate agenda. Corporations manufacture the weaponry used, and move in to rebuild infrastructure afterwards – conflict is extremely profitable for the corporate sector.

No matter who wins political power in your country – ultimate power remains corporate. Democracy only operates at the margins. It’s not allowed to challenge the rules of the game.

What are the consequences of the ‘democracy problem’?

The main consequence is that governments act on behalf of banks and corporations rather than ordinary people.

Concentrated wealth gets to make all the major decisions about the direction that humanity moves in. And the decisions they make will be geared towards making sure that wealth, and therefore power, remains concentrated in their hands. Those with power don’t tend to give it up voluntarily.

So if, for example, for humanity to stop damaging nature, we need to introduce policies that the corporate sector don’t want, then they’re not going to allow them to be introduced.

Comparative military spending (billions of dollars): this absurd ‘defence’ budget is not about defence, it’s about punishing countries that step out of line.

So the current situation means that communities are weakened by wealth being drained out of them, small businesses are put at a huge disadvantage (‘economies of scale’ doesn’t work without state support), and individuals are underpaid and overworked.

Meanwhile the corporate media scares the public into believing that maintaining this system is the only way to protect jobs – even though an economy based on small businesses will employ many, many more people, in much more interesting jobs.

Wealth is deposited in tax havens, when it could be used to stimulate trade in communities, alleviate poverty or provide useful services.

Concentrated wealth and political corruption makes war profitable and therefore more likely.

What can I do?

Instead of having wealth sucked out of communities, then attempting (and failing) to claw it back via taxation, and re-distributing it to communities, let’s build infrastructure that doesn’t allow it to be sucked out in the first place.

This is called ‘community wealth building’, and is supported by a growing number of local authorities. But it’s something that we can do ourselves, by not supporting the institutions that are responsible for the concentrated wealth. Instead, we can support businesses and institutions that keep wealth in our communities, and help to build a new economy, that doesn’t lend itself to political corruption. So….

1. Buy from non-corporate sources

We can’t continue to support banks and corporations if we want to solve the democracy problem.

How the ‘revolving door’ – politicians leaving office to work for the organisations they used to regulate – is a perfectly legal democracy killer.

It might be difficult to avoid Amazon, Über, Microsoft and the like, but really, that’s the most important first task. If they keep getting bigger, they’ll make it harder and harder to introduce alternatives in the future. We have to find those alternatives now – all of us.

NonCorporate.org makes it easier to find non-corporate sources for the things we need. You can calculate how non-corporate your life already is, then use the site to improve your score.

This is a story of how communities might operate in a democratic, non-corporate world.

2. Leave the left vs right battle behind

This is not a left-wing or a right-wing position. Those labels are irrelevant to this issue. It suits banks & corporations for the population to be split into left and right, battling each other rather than challenging them. It’s not anti-American either – corporate power denies democracy to Americans just as it does everyone else; and it’s not against the ‘free market’ – in fact corporate power makes a truly free market impossible.

Whether you consider yourself left- or right-wing, you still don’t get to vote for where the real power is. This is a non-partisan position – it affects all of us.

Two men who have never stood for election, Ben Bernanke and Hank Paulson, were the architects of the bank bailouts in the US after the 2008 crash. It was the biggest transfer of wealth from ordinary people to an elite in history. Every other Western country was told to follow suit.

As David Harvey explains, Neoliberalism isn’t an ideology – it’s a project to concentrate power. And he locates that power in the state/bank nexus. He’s right – look what happened when it seemed that the neoliberal project was going to fall over in 2008/9. Many on the left and right said ‘let the banks die’. George Bush (obviously) had no idea what to do. It needed Ben Bernanke (Federal Reserve) and Hank Paulson (Treasury Secretary and ex-CEO of Goldman Sachs) – two men who have never been elected to anything – to step up and say ‘this is how it’s going to be – ordinary taxpayers all over the world are going to give their hard-earned money to bail out the banks’. And that’s exactly what happened. They rescued the neoliberal project, and no-one could stop them. Least of all presidents or prime ministers.

3. learn more about it and talk to more people.

To be obsessed with party politcs is to be stuck in a realm of superficial change. To believe that the party political system can bring about the changes required, you also need to believe that we live in true ‘liberal democracies’ in the West, and that concentrated wealth has no influence in the political process. We’re not saying don’t vote, we’re saying that we have to join, support and consume from grassroots institutions in our communities right now, rather than relying on politicians to initiate change from above, which may be a long time coming, if at all.

The story of super PACS and how corporations violate democracy, from the people who brought you ‘the story of stuff’.

Corporate tentacles reach your High Street (local branches), your homes (TV and internet advertising), your finances (mortgage and credit card debt) and your minds (branding). They suck money out of individuals and communities to ensure that they continue to have the most money (and therefore power). And they make you feel grateful for it, because ‘they bring jobs and choice’ (although small businesses provide more jobs, and the ‘choice’ they provide doesn’t include real democracy).

We don’t believe that the necessary change can come through voting, or through overthrowing anything, but by ‘transcending’ – building a new economy from our communities.

See also ‘40 ways that corporate power trumps political power.’


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