In light of this vote on Syria, today I’ve been thinking a lot about democracy.
A famous definition of democracy is:
Government of the people, by the people, for the people.
What I think we actually have today in the UK (and probably the USA) is:
Government of the people, by the elite, for the elite.
Indeed, governing in the interests of the wealthy elite is a stated objective of neoliberal capitalism. The theory being that by creating wealth the wealthy serve us all. i.e. wealthy people buy objects and services that provide us all with jobs and by paying taxes they pay for collective goods such as the NHS. This is of course called the ‘trickle down’ theory of economics and is the moral justifion for the actions of all British governments since 1979 – by serving the wealthy elite they are serving us all.
Setting aside the issue of how much tax the wealthy actually pay, and even if wealth creation as capitalists define it, is nescessarry, this still leaves the question of how that wealth is distributed. No wealth creation can happen without the labour of human beings so as Marx pointed out over a century ago the workers are the creators of this wealth just as much, even not more so, than the capitalist owners.
Even if we were to accept capitalism as an effective economic model this current version of neoliberal turbo-capitalism is not working according to the theory. And it’s not rocket science to work out why.
If a billion = 1000 million. How many cars will your average billionaire own? 5? 10? 20? Let’s go for 20 and say it take 5 people to make each car. So the billionaires 20 cars generate 100 jobs. But if instead of 1 billionaire you had 1000 millionaires each buying 2 cars you’d sell 2000 cars and create 10,000 jobs. If you had 2,000 half millionaires (£500k) buying 2 cars you’d sell 4,000 cars and create 20,000 jobs. If you have 10,000 people with £100k buying 1 car you’d sell 10,000 cars and create 50,000 jobs. So you still have £1 billion of wealth but by distributing it more equally you have create many times the number of jobs. And these people employed making the cars might themselves earn enough to buy a car each. So that’s another 100,000 cars and another 5000,000 jobs created. Those 500,000 in turn buy a car creating yet more jobs… And so on and so on. So by distributing wealth more equally – although not completely equaly – we get exponential growth in the economy.
Neoliberal capitalism however concentrates wealth in fewer and fewer hands. Bill Gates is reputedly worth $80 billion. You do the maths on my model above. It’s staggering how much of an economic crisis this extreme concentration of wealth is creating. This concentration of wealth is for example the principle cause of the U.K. Housing crisis. Global billionaires with nowhere to put their money have identified London property as a safe long-term investment. Thus London property is being bought by billionaires at ridiculousy high prices and much of it is simply left empty. In turn this forces people out of London and thus the housing crisis and housing inflation spreads throughout the country.
By ruling in the interests of the elite our elite rulers have harmed us all. And only by government of the people, by the people, for the people can we overcome these problems.
Senior management wages have to be cut drastically. Everyone else’s wages need to rise dramatically. Uber-wealthy individuals need to be taxed effectively so that their wealth can be redistributed through public works thus generating growth.