Democracy, distribution and power: A response to Mark Chou

Posted on September 3rd, 2014 by Scott Lavery

In the first of our Understanding Politics blog series, Mark Chou argued we should understand the contemporary ‘crisis of democracy’ as an opportunity for fundamental political change. In the first response to his post, Scott Lavery from the Sheffield Political Economy Research Institute (SPERI) says we need to understand why crises so often do not lead to change.

Mark Chou argues that the concept of ‘crisis’ is commonly misunderstood.

For Mark, crises are not simply periods of breakdown. They also are periods of opportunity, where citizens can actively intervene so as to place their societies onto new – potentially progressive – trajectories. In this sense, he argues that crises are ‘creative moments’ which can open up a space for democratic renewal.

Mark’s account is perhaps more interesting for the questions which it raises than for the rather uncontroversial definition of crisis which it advances.

A more pressing question surely must be: given that crises are moments of potential change, why is it that crises so often reinforce, rather than reshape, dominant power structures in society?

To answer this question, we must move beyond the abstract sphere of etymology and ‘crisis definition’ and think instead about power.

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Photo Credit: archer10 (Dennis) via Compfight cc

Crisis and Power

A cursory look at the recent ‘Great Recession’ – alluded to in the piece – underlines this point. The economic crisis of 2008 might have provided the perfect opportunity to re-shape the organising logic of our economic system. After all, the crash undermined a whole series of ideas which had achieved the status of ‘common sense’ amongst policy-making elites – in particular the belief that unencumbered financial markets would ‘self-regulate’ and promote stable, long-term growth.

Nevertheless, market liberal ideas and practice remain incredibly resilient in the post-crisis context. Inequality continues to increase. Wealthy asset-holders have entrenched their positions within the international order, whilst workers’ pay and conditions have been eroded across the advanced economies.

For all the abstract ‘possibility’ of change that the term ‘crisis’ might imply, neoliberalism has been strengthened, not transformed, over recent years.

Why has this come to pass and what implications does this have for our understanding of the relationship between crisis and democracy?

A Limited Concept of Democracy?

We need to be clear about what we mean by ‘democracy’.

If democracy is understood simply as the formal capacity of citizens to vote in parliamentary elections, then perhaps this has been a ‘good’ crisis for democracy. After all, unlike with the depression of the 1930s, the political systems of the West have retained their broadly liberal democratic mould.

However, this conception of democracy is limited and ahistorical.

A more substantive definition of modern democracy would take into account the way that popular enfranchisement emerged as a response to the growing demands of those who had been excluded from the benefits of capitalist expansion.

On this understanding, democracy is about more than intermittent participation in the electoral process.

Democracy also requires the creation of conditions under which social justice can be pursued and inequalities of power – particularly in the marketplace – can be challenged.

This more substantive conception of democracy was institutionalised in the post-war period. National governments pursued policies of full employment, extensive welfare provision and income redistribution within the ‘embedded liberalism’ of the Bretton Woods framework.

It is the institutional legacies of this second form of democracy which are increasingly threatened today by developments in the global economic order.

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By Lee Jordan CC-BY-SA-2.0, via Wikimedia Commons

Democracy and economic crisis

Wolfgang Streeck has recently provided a compelling analysis in this vein. Streeck argues that since the 1970s the ‘forced marriage’ between democracy and capitalism has been placed under increasing strain. One key reason for this is that what he terms the marktvolk – international creditor institutions – have secured effective dominance over the staatsvolk – nationally-rooted citizens and their governments.

The interests of these two groups are often at odds. The principal goal of international creditors is to protect and expand the value of their assets. They therefore fear tax rises, budget deficits and policies which might provoke inflation. On the other hand, citizens of national states tend to favour policies which protect social welfare and allow for rising living standards.

Streeck argues that with the rise of global finance and the decline of organised labour, a project has emerged which seeks to insulate markets from democratic control. A whole series of institutional innovations have been implemented in pursuit of this goal. For example, macroeconomic policy has been increasingly delegated away from national governments and electorates – ‘upwards’ to transnational bodies such as the EU or ‘outwards’ to formally independent agencies.

The effect of these reforms has been to institutionalise the principles of ‘sound finance’ – low inflation, price stability and balanced budgets – at a level which is increasingly placed at one remove from popular contestation.

In a period of growth and relative stability, this might appear to be unproblematic.

But in a recession, the disciplinary and non-neutral nature of this framework becomes ever more apparent.

Take the Eurozone crisis, for example. The principal aim of the IMF, ECB and European Commission’s post-crisis economic policy has been to ensure that Southern European states reduce their deficit and debt levels whilst improving their economic ‘competitiveness’. However, this is to be achieved through rapid cuts in public expenditure and deepening labour market flexibilisation. Alternative policies – such as devaluation or fiscal transfer – are ruled-out by the Eurozone framework. This has resulted in the systematic pursuit of ‘internal devaluation’: cutting into workers’ pay and conditions whilst dismantling entitlements to social welfare. The result of this has been rocketing unemployment, massive cuts to social services and a coordinated assault on workers’ rights in the European periphery.

Key Eurozone states are consequently locked into a deflationary spiral, whilst the capacity of national governments to contest this logic is effectively curtailed. As a result, Eurozone crisis has further insulated market forces from democratic control.

How does this relate to Mark’s argument? It suggests that focusing on crisis as a moment of potentially transformative agency somewhat misses the point.

Critical scholarship which aims to defend and enhance our substantive conception of democracy needs to move beyond the realm of etymology. We need to conceive of democracy as a space of social struggle and contestation.

Once we take this position, it becomes clearer why the most recent economic crisis has not resulted in the kind of democratic renewal and economic transformation which might have been hoped for.

Bio

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Scott Lavery is a Doctoral researcher at the Sheffield Political Economy Research Institute. His work focuses on the political economy of devolution, and welfare state retrenchment in the United Kingdom.

Note: this article gives the views of the author, and not the position of the Crick Centre, or the Understanding Politics blog series. For more follow our twitter discussion #understandingpolitics.

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