Inequality - the Achilles Heel of Free Market Democracy

Fifteen months before she became Prime Minister in May 1979, Margaret Thatcher gave a speech in which she laid out her vision of democracy. Unsurprisingly, she suggested that democracy flourishes only if there is a free market economy:. the democracy of the ballot box, important though it is, is only one form of democracy. In a truly free society, and a society of truly free men, it must be reinforced by the democracy of the market, in which people can cast their vote, not once every four years or so, but every day as they go about their daily business, making their own decisions about how to spend - or save - their own money (Thatcher, 1978). According to Margaret Thatcher, democracy is based not just on political freedom, that is, the right of the people to elect their own government ("the democracy of the ballot box"), but also on economic freedom, defined as the absence of "government interference" with property ownership and the decision-making of economic actors ("the democracy of the market"). She suggests that state interventionism is an authoritarian mode of government at odds with the ideal of "rule of the people". Inherent in this conception of democracy is a specific take on equality: government should not intervene to redress economic inequality, as government interventions compromise democracy even if they are the result of democratic decision-making. In other words, democracy is best served if political equality, symbolized by the ballot box ("one man, one vote"), exists alongside the economic inequality produced by the free market. Correspondingly, it is up to individual citizens to act "responsibly" when they vote by supporting politicians prepared to defend the free market. Capturing this line of thinking, from the late 1980s Thatcher started to speak of "free market democracy" (ibid., 1989). Obviously, this perspective on democracy was and continues to be very influential: it informed US foreign policy and the New Labour governments in the United Kingdom, and informs management of the Eurozone crisis by Angela Merkel, who is credited by the German media with coining the term "market-conforming democracy". In our view, the Achilles heel of this neoliberal conception of democracy is economic inequality. Capitalism is characterized by systemic inequality in the form of specific class relations, which stem from the commodification of labour power and the division between owners of capital and workers: competitive pressures create a strong incentive for reinvestment, resulting in the accumulation of capital, while workers tend to remain in a situation of wage dependency. If governments (and trade unions) refrain from interfering with market results, inequality tends to increase. This dynamic has far-reaching economic and political consequences for individuals: not only does inequality seriously constrain or widen the choices they can make in the market, depending on their wealth; it also compromises political equality and thus democracy. In situations of extreme wealth disparity, those at the top find it relatively easy to influence political decision-makers, while those at the bottom struggle to make themselves heard.In this article, we briefly discuss (1) the most important drivers of economic inequality in the last 20 years; (2) the mechanisms whereby this rise in inequality has compromised the quality of democracy; (3) the aggravation of this development in the course of the global financial and economic crisis; (4) some of the challenges faced by political forces trying to address inequality; and (5) recent campaigns with union involvement in Germany, Namibia and South Africa that have addressed the issue of inequality and have thus made a positive contribution to revitalizing democracy. We believe that these campaigns resonate with experiences in other countries around the world and thus address issues whose political significance transcends national boundaries. Building on our analysis of the campaigns, we end with some reflections on strategic lessons for the labour movement, which concern ways of deepening democracy. …