Throughout the past two centuries, capitalism and democracy have proven themselves to be the most successful systems of economic and political order. Following the demise of Soviet-style socialism and the transformations of China’s economy, capitalism has become predominant across the world. The success of democracy in the last quarter of the twentieth century was equally impressive. Compared to capitalism, however, its success is much less complete. 123 countries can be now called “electoral democracies”, but only around 60 can be classified as functioning democracies based on rule of law. The impressive advances of democracy across the world coincide with the often cited malaise of established democracies. Since the turn of the millennium more and more scholars define the mature democracies on the lines of “post-democracies” (Crouch) or “façade democracies”. Capitalism is often blamed for this development.
The Breakup of the peaceful coexistence
Since the 1970s the nature of capitalism changed. It shifted from a socially “embedded capitalism” (Polanyi) towards “neoliberalism”, “deregulation”, “globalization and “financialisation”. The balance between markets and the state shifted to the disadvantage of democratic institutions. The increasing “denationalization” of the economy and of political decision-making went hand in hand with the dominance of (financial) markets over politics. Democratic decision making shifted from parliaments to executives and, even worse, to only scarcely legitimated and monitored supranational bodies such as the WTO, the IMF, and the European Central Bank. The democratic state lost power to deregulated globalized markets. The shift of power accelerated the increase of socioeconomic inequalities within OECD countries, leaving a negative impact on the quality of their democracies.
Declining voter turnout
During the last 30 years, a steady decline of electoral participation could be observed throughout the OECD. In the US less than 50% of voters turn out to elections. US democracy shows strong characteristics of an electoral apartheid regime, where the lower half of society is excluded from political participation. It may show the mirror to the other established democracy where they can see their own future development. Only countries with obligatory voting – such as Australia or Belgium – withstood the trend of declining turnout. The actual problem that current democracies are facing is not only declining turnout in itself, but the social selectivity that it implies. The lower the electoral turnout is, the higher is social exclusion. There is undeniable evidence that the lower social classes are the ones taking the political exit. Middle and upper classes are the ones that keep on voting. In the US, 80 percent of people with a disposable annual household income of more than 100,000 US-Dollars state that they are voting. Among those citizens that have a household income of 15,000 US-Dollars or less, only one third declare their intention to vote. The dominance of the upper and middle classes is increasing; participation of the lower classes is constantly decreasing. Voting tilts politics and policies in favor of top incomes.
Why do democratic elections not stop inequality?
Considering the idea of economic voting it could be argued that all voters with an income below the median should vote for political parties that fight for redistribution. But why did this mechanism fail in the past decades? The lower classes are, much more so than middle and upper classes, increasingly staying at home on Election Day. Social democratic and other left-wing catch all parties are sometimes still claiming to represent the interests of those classes in their party programs. This can be seen, however, more as a move to save the image of being a ‘social justice’ party and not as an attempt to mobilize the politically apathetic and indifferent lower socioeconomic classes. Conservative, liberal and right-wing parties do not have an interest in active top-down redistribution, for both ideological and electoral reasons.
However, left-wing parties, when in office, face a veritable dilemma. If they engage in redistributive policies such as minimum wages, maintenance of the welfare state and taxation of higher incomes, they are confronted with threats by investors to move capital and investments abroad. This quickly results in a conflict of interest for left-wing parties. If investors actually began to shift investments abroad, this would costs jobs, result in less economic growth, less public revenue, less social investment and, as a result, less votes. In capitalist democracies, governments depend on the confidence of their voters. But to maintain this confidence they also depend on the performance of their real economies and, increasingly, on the confidence of financial markets. It is hence less risky for rational center-left parties to mobilize the middle instead of the lower
Economic voting is, however, not the only explanation for why elections did not stop the increase of social inequality. Socioeconomic conflicts are running along the lines of cultural conflicts. The latter can be religious or ethnic in nature, but can also be seen in the attitudes on a scale of libertarianism-authoritarianism (Kitschelt). Particularly the lower and the lower middle classes (mainly men) are receptive for authoritarian and ethnocentric policies. Examples can be found in the right-wing populist parties of Scandinavia, Austria and Switzerland, which are often also neoliberal parties. In these countries the lower class electorate partially voted for authoritarian, xenophobic and neoliberal parties.
Throughout the first three quarters of the twentieth century, the right to vote became the “paper stones” of the lower classes (Przeworski). They were used to tame and socially entrench capitalism by electing left-wing (mostly reformist social democratic) parties and by successfully establishing worker’s rights, a redistributive tax system and an expanding welfare state. This long period of social expansion actually witnessed a top-bottom redistribution in most of the industrially advanced countries, especially after 1945. This trend was turned around in the 1970s. The paper stones lost their effectiveness and turned into paper tigers. Since then democratic election do no longer stop newly increasing social inequality. The rich become richer and the poor and lower classes got stuck in socially-upward immobility. But the story does not end here.
The cultural turn within the Left
Since the late-1970s protest movements began to focus more on cultural than on economic issues. The importance of trade Unions declined. Today, in countries like France or Spain they organize less than 10% of the work force. New political NGOs emerged, from environmental organizations to Amnesty International or Transparency International. As important as they are for monitoring those in power: these organizations do not care about distributional issues and are staffed and supported almost entirely by young members of the middle and upper classes.
Representative democracy has not yet found effective antidotes against the disease of socioeconomic and political inequality. The countermeasures discussed in democratic theory, from referenda to deliberative assemblies and monitoring or counter democracy, may save the whales and endangered species, they may limit corruption and human rights violations. This is a lot, but it has little relevance for the re-regulation of markets, for restoring social welfare, and stopping the progressing inequality. The cultural turn of progressive democratic politics has forgotten the problem of economic redistribution and now does not have a cure for democracy’s most obvious disease: social, economic, and political inequality.