Sunday 8 January 2012

What is democratic market society?

Democratic market society is the end point of the massive revolution that the world had been going through for the last four hundred years. It is a new form of society that has only existed for about the last 50 years. Prior to World War II, the United States could be called a proto-democratic market society, or it could be called an oligarchic society, but it was not the same as the most modern kind of society that exists today.

After the Great Depression began in 1929, the American president, Herbert Hoover, said that it was not his job to ensure a prosperous economy. In those days and in earlier times, there is no record of a society where the government believed that it was responsible for the wellbeing and prosperity of all its citizens.

According to the definition used here, modern nations are truly democratic only when the government accepts that it represents all citizens and is successful in establishing the conditions that are necessary for most of the population to prosper. This is a very difficult and exacting standard for any government to meet. At least half of the national governments in the world today do not even come close. Something less than half seem to be making an effort to move in that direction. So far, about thirty countries meet the standards required to be democratic market societies.

To give you an idea of what I am talking about, the following is a partial list of the kinds of things that I believe are minimum requirements for a government to claim that it is a democratic market society. It does not matter what level of government—national, regional, or local—that is responsible for these things. It only matters that they are accomplished successfully.

  1. Does the government make a major and successful effort to ensure that nearly all citizens have access to clean water?

  2. Does the government work hard to maintain and improve the overall health of nearly all citizens?

  3. Does the government make a major effort to provide quality education to nearly all citizens so that they can become successful in a modern market economy?

  4. Does the government work very hard to maintain the kind of law and order that is necessary for a successful market economy?

  5. Does the government work hard and successfully to prevent corruption within its own ranks which is detrimental to the success of the market economy?

  6. Is the government successful in maintaining a stable currency so that the market economy is able to flourish and provide jobs and incomes for nearly all citizens?

  7. Is the government successful in regulating the economy in a way that promotes free enterprise so that nearly all citizens have a chance to become successful capitalists and business owners, thereby creating more jobs and increasing the general prosperity of the entire population?

  8. Does the government work closely with the leaders of small and large businesses to identify, promote, and enforce the best rules and regulations that are needed to encourage a successful market economy?

  9. Does the government support workers’ rights and work closely with labor leaders to identify, promote, and enforce the best rules and regulations which are needed to protect workers’ safety, paychecks, and general wellbeing?

  10. Does the government work closely with citizens and environmentalists to protect a healthy environment, which is necessary for a successful market economy and for the wellbeing of all God’s creatures both today and for future generations to come?

For most Americans born since the end of World War II, these principles seem obvious and self-explanatory, but that was not always the case. The idea that the government is responsible for overseeing the development of a political, social, and economic environment that is capable of generating prosperity for everyone, would never have occurred to George Washington or Abraham Lincoln. It is a new concept that originated only since the end of World War II. Even then it still took a while for the United States to accept that the term everyone must include African-Americans.

It was inevitable that it would take a great deal of time and a slow evolutionary process for these principles to develop. They are nearly inconceivable to the class-conscious societies that dominated the world as recently as the first half of the 20th century. This new kind of society was pioneered primarily in the United States and Western Europe, who deserve and generally receive a great deal of credit for this momentous achievement.

We are indeed talking about a new kind of society. When the government realizes that it can and should accept responsibility for public health, public education, fair and just enforcement of the rule of law, and economic prosperity for everyone, it opens the door to an entirely new world. Economists call it a virtuous circle. As more healthy, well-educated people become prosperous, they become consumers. As more people buy more goods and services factories, stores, and service providers grow larger and hire more employees. As these new employees prosper, they become consumers and demand increases again. Businesses grow still larger and hire more employees, who become consumers. This virtuous circle goes on and on until everyone is a consumer. Business keeps growing and expanding to meet the demand. Sure the rich get richer, but so does nearly everyone else.

How does this virtuous circle get started? Many people believe that modern technology is the key. Yes, it takes a certain level of technology to set this virtuous circle in motion, but the ancient Egyptians, Greeks, Romans, and Chinese probably had the minimum technology needed to get started. What they lacked was the necessary social technology, the idea that the entire population must be included. Even at the height of Ancient Athenian Democracy, one third of the population were slaves, and a small group of rich and powerful families looked down on ordinary people as inferiors. It was not real democracy as defined here. It was oligarchic society.

In oligarchic societies the rich and powerful do not understand the incredible amount of wealth that can be made possible by the virtuous circle. Oligarchs generally believe that there is nothing to be gained by paying workers more than a subsistence wage. Historically, they have had the idea that workers would use the extra money to get drunk, or take time off from work. We now know that is not true. Workers use the extra money to go shopping, or invest in their family’s future.

How did the United States, Western Europe, and Japan develop this new kind of society? It would be nice to report that some government figured out what reforms are necessary and found a way to break the class-consciousness that dominates oligarchic society. Unfortunately, that is not what happened. Democratic market society evolved in response to a series of tragic events that should never be repeated.

At the beginning of the 20th century, Western Europe, the United States, and Japan were solidly oligarchic societies. A small percent of wealthy families controlled most of the economy and the government. What changed that was not a revolution or a program of reform? What happened was the series of events that included World War I, the Great Depression, and World War II.

In World War I massive numbers of ordinary people were drafted into the military. Tens of millions of average citizens fought a titanic struggle in the trenches of France, Gallipoli, and Eastern Europe. When the massive war of attrition was over, everyone new that it was the ordinary soldiers and citizens who were the primary strength of modern nations. The oligarchic generals on all sides had performed poorly. The courage and perseverance of the common soldier was the decisive factor. When the soldiers returned home they were hailed as heroes. This was not yet enough for their countries to realize that ordinary citizens were much more important than any handful of oligarchs, but it was a start.

Ten years later came the Great Depression. This massive economic calamity mobilized thousands of economists to study how market economies work. They rapidly increased the understanding of how important the government role is in regulating, protecting, and encouraging a market economy. They worked out mechanisms for stimulating an economy and laid the basic groundwork for the kind of interventionist role that is universal in democratic market societies today.

World War II ended the Great Depression. This proved that government spending could stimulate the economy and return it to full employment. The new war also reinforced the lessons of World War I but on a much larger scale. Eighty million average citizens from Europe, the United States, Japan, Canada, Australia, China, and many other countries went to war. Two hundred million ordinary citizens, men and women, went to work in the factories, producing weapons and ammunition. They proved beyond a shadow of a doubt that it is the courage and hard work of ordinary people that is the strength and salvation of the modern nation-state.

This time the lesson was learned and understood. Wealthy oligarchs do not make a nation strong. Ordinary average citizens are gigantically more important. Oligarchs have no right to monopolize the government and economy of a modern nation. The destiny of the nation is in the hands of all its citizens, rich and poor alike. Wealth does not matter; gender does not matter; religion does not matter, and race does not matter. When the chips are down and the country is in real trouble, it is the unity, the courage, and the hard work of all citizens that are required to see the nation through.

When this lesson was learned and understood in Western Europe, North America, and Japan, democratic market society came into being. The same lesson was learned in the Soviet Union, but they did not have a market economy to make use of it. The lesson about national unity and the primacy of ordinary citizens was also learned in China, but they were at the very beginning of the long transformation from aristocrat peasant society to democratic market society. After two generations of intense revolution the Chinese are now starting to get the virtuous circle into motion.

Democratic market society is capable of producing gigantic amounts of wealth, and there are only two requirements for this kind of society. It must have a market economy, and it must have a truly democratic government that is able to regulate, protect, and encourage the market economy and help all citizens to participate. If it is really that easy, why isn’t everybody rich? Why don’t all countries have a democratic market society?

It seems clear that in the future all nations will have a prosperous democratic market form of society. It is also clear that the development of this kind of society is more difficult than it should be. It could be that part of the problem is a basic lack of understanding about what is happening. One source of confusion is the term capitalism. For many generations there has been a gigantic worldwide argument about the merits of capitalism. What is missing is the understanding that there are two different kinds of capitalist societies. There is oligarchic society, where a small wealthy ruling class dominates the government and the economy. And there is democratic market society, where the nation is governed for the benefit of everyone.

In oligarchic society the government is weak; the economy is weak, and most people are poor. In democratic market society the government is strong; the economy is strong, and most people are prosperous consumers. The world has not yet developed a rational and reliable method for a nation to progress from oligarchic society to democratic market society. This change should not have to require large amounts of revolutionary violence or a massive war. Perhaps when the world has a better understanding of the entire revolutionary process, it will be possible for the transition to be made through a series of peaceful political and economic reforms. Until that day comes war, rebellion, revolution, anarchy, civil war, dictators, and strange ideologies will remain a fixture in world events.

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