With their contrary visions of humanity’s relationship with power capitalism and democracy can be set up as dialectically opposing forces – thesis and antithesis. In Part I , we refined the ideologies of capitalism and democracy down to their units of value; money and the vote. Even though they are in opposition, these values are in a constant, systematic synthesis based on a set of rules or laws. The outcome or proxy of this synthesis is human political and economic life.
Due to the advent of networked digitisation we are currently undergoing a step change in the nature of their relationship. The digitised networks of the information age have performed an alchemical trick on the unitary values of capitalism and democracy that we have still not fully grasped the consequences of. Classical liberal democracy was forged in a time in which money and the vote were two vastly different mediums. Money was gold and silver specie, promissory notes, scrip. A vote was the ‘aye’ of a propertied man standing in a parliament or some other ornate chamber designated to count his voice. Now money and the vote are represented in the same digital medium and can therefore directly interoperate and be directly interchanged. To illustrate how radical this state of affairs is, imagine that the ‘aye’ of the propertied man standing in the ornate chamber was a magical spell, and caused a shower of gold coins to appear in mid air and clatter across the floor. Imagine if another man could then stand and state ‘nay’, and cause the gold coins to disappear. This is now the reality we live in and the context in which money and the vote must be considered.
Networked digitisation is not creating something new in terms of the dynamics of votes and money, but abstracting, compressing, proliferating and accelerating an existing process, that being our ability to use the power of the decisive word embodied in a vote – yes and no, for or against – to shape reality, by interacting with money which then drives the economy through real activity. The heating up of this process is so extreme that it represents a state change in the political economy, like solid to liquid, which in its impact seems like another state of existence.
As this new context is already real and not a hypothetical, it must follow that money and the vote’s new relationship is already in effect, and therefore we should be able to find real examples in the world from which we can draw axioms. Rather than working abstractly with the values of money and the vote to reach a synthesis through deductive reasoning, this inductive approach allows us to work backwards from the interoperation of money and the vote in the real world. The next few posts will examine the areas of Banking, Government, Law, Commerce, and Cryptocurrency, providing examples of the relationship between money and the votes in each and drawing a set of axioms, which will be identified in bold within each example. This will build towards a list we can then use in Part 3 to start devising a new political and economic paradigm that takes full account of the new state of reality that we find ourselves in.
Francis Fukuyama, in The End of History and the Last Man, considered liberal democracy to be the ultimate maturation of human political economy. Fukuyama stated that this victory marked “the endpoint of mankind’s ideological evolution”, an assertion that many have problems with but due to the ongoing resilience of capitalism and democracy no one has yet been able to fully dismiss. Although the realisation of capitalism and democracy in the world can be argued by any sensible person to be corrupt, broken, illusory, unattainable, dysfunctional, decrepit or in decline, together these two ideologies still represent the main political and economic forces driving the industry of our species, to various degrees, balances and levels of effectiveness across the globe. When crises happen, capitalism and democracy are resilient and adjust. Capitalism co-opts opposing forces and sells you their merchandise. Democracy caters for both stability and upset.
As ideologies democracy and capitalism present competing visions of humanity’s relationship with power. Democracy is the belief that power should be spread equally between people, to avoid its accrual and society’s corruption at the hands of disproportionately empowered individuals. Capitalism is the countervailing belief that power, in the form of property and money, accrues variously, and that the right of an individual to enjoy the privately owned property and money at their disposal is a result of their relative contribution to society via the invisible hand of the market. In each view, power is moving in different directions relative to the individual. In democracy, power moves away from the individual and towards the collective. In capitalism, power moves towards the individual from the collective. In democracy, the individual is a unique participant in order to be a co-recipient. In capitalism, the individual is co-producer in order to be a sole consumer.
Both democracy and capitalism are fundamentally concerned with the act of ordering the world itself, as opposed to starting off with a desired order or state and then working backwards. They are protean, pursuant to other ideas and ends, concerned with determining and maintaining abstract systems to answer the practical questions of what should be done, how it should be done, with what and by whom, rather than being ideals to be achieved purely for their own sake. At the same time the outcomes of capitalism through market activity and democracy through the democratic process must be respected because these outcomes are indirectly the respect of the ideologies in themselves. If outcomes are not respected because they are seen as unfair, unjust or poor value, democracy and capitalism have feedback mechanisms through which they can change how they operate in order to provide what are hoped to be fairer, more just and more valuable outcomes. Capitalism has the feedback mechanism of the market. Democracy can involve voting through bills to extend voting and property rights to groups who previously did not hold them, or bills protecting investors and consumers from rogue actors in the market. Establishing how these bills are raised and passed into law involves a meta-level of rules and laws, for example the Westminster parliamentary procedures followed in the United Kingdom and other Commonwealth representative democracies. The feedback mechanisms of democracy through voting and of capitalism through market forces subject to democratically derived laws and their application through a judiciary form what could be thought of as the operative core of liberal democracy.
The means by which this feedback system works highlights a unique characteristic of both ideologies. Feedback is made possible by individuals directly interacting with capitalism and democracy via interfacing units of value that they use for their own benefit and according to their own beliefs. For capitalism the interfacing value unit is money; for democracy it is the vote. The various ideologies and systems of capitalism and democracy can be reduced down to and expressed in the ways in which the unitary values of money and the vote move around and determine outcomes based on the rules around their collective use. These value units and by extension the systems they inhabit are, by the nature of their ideologically competing visions of power, both symbiotic and in constant tension.
Although the refinement of democracy down to the vote is relatively straightforward, capitalism’s refinement down to money needs further elaboration in order to distinguish it from mere trade. Features of capitalism such as the division of society into capitalists and workers, free markets and the establishment of private property can be further reduced to money without dissolving capitalism’s essential characteristics. The Enlightenment philosopher and father of liberalism John Locke argued persuasively that private property is a natural right, obtained by an individual mixing their labour with nature and ordering it, therefore improving it towards the individual’s ends and entitling them to its produce. In a state of nature, unopposed by writs of law, our ancestors worked directly with the land to improve it and lay claim to the territory and its produce. Across the animal kingdom, animals claim and defend territory if intruded on by a rival. Money can be reduced to both an abstraction and representation of property that allows for control and exchange to occur in a more complex and large scale society without relying on unwieldy bartering or a contest of force and is therefore of mutual benefit to all. Holding money, even temporarily, is a form of private property ownership or at the very least stewardship, and an individual may choose to dispose of the money they hold as they wish. The spending of money in microcosm is itself an enactment of class relations within the free market. The capitalist is the holder of money, the worker is the receiver, exchanging their labour and its products for money in a voluntary and mutually beneficial exchange, however unequal or exploitative the wider social relations may be. As money is a principal fuel for the operation of the means of production and an individual in themselves is the primary means of production in the world, it follows that we are all simultaneously both capitalists and workers. Although this is a highly reductive and simplified view, we can nevertheless see that key features of capitalism are latent or inherent in the nature of money itself. This is why we live in a state of Capitalist Realism, in which it is impossible to imagine a world beyond capitalism. It is equally impossible to think of a world without money and without exchange. If money was abolished, some other unit of value with money-like properties would have to be invented in order to assign value and enable exchange.
Having extracted the abstract values of money and the vote from their ideological structures we are now in a position to examine capitalism and democracy through a microscope, in their most reduced states. By asking what makes a vote a vote and what makes money money we can begin to identify their shared and distinct qualities and look to establish a set of axioms describing their relationship. With these axioms we can then start to build up an entirely new political economy in the form of a single system in which money and the vote operate dialectically on a unitary value level. The political economy that arises from this axiomatic approach will be distinguished from liberal democracy, which is a historically derived ideological dialectic of representative democracy and free market capitalism. The approach this series of essays takes is to step through Fukuyama’s conclusion in that, rather than being ideological or based on historicism, it is focused instead on systems thinking, re-engineering how money and the vote interoperate. The formation of a new set of basic principles from which a new political and economic system can be developed will be the focus of Part 2, and is, despite its basis in established principles, a radical departure from the liberal democracy that has emerged raw from ideological struggle.