In a climate of rising extremism, democratic capitalism must be seen to serve the people. It remains our best hope for humanity and against tyranny. 38th parallel between North Korea and South Korea. Political extremism threatens democratic capitalism from both sides. Capitalism needs the oxygen of popular support to flourish. The West must stand up to the alternatives advanced by China and Russia.
There is
an old political joke made by a self-described leftist class warrior who
disliked centrists, preferring his own position on the political extremes. His
joke, at the expense of those preferring not to identify with either the far
left or far right, was that “people who stand in the middle of roads get run
over.”
It
brought a quick-witted retort: “the gutters were to be found on either side of
that road.” Be that as it may, it has become more difficult to make the case
for democracy and capitalism in a climate today that is defined by extremism,
and in which the middle ground is sinking away.
The
demos in democracy
Extremism
prospers on grievance and exclusion: when people become alienated and no longer
believe that the political classes connect with them or their lives. It thrives
when democracy is hijacked by the former fringes; when its preoccupations range
from critical race theory to gender identity, rather than mainstream
challenges; when voices that demur are canceled or relegated; when populism,
amplified by frenetic social media activism, takes the place of respectful
debate; and when the self-absorbed are willing to paralyze legislatures instead
of seeking solutions or consensus.
Politics
and economics must be seen to serve the people, not the other way around. At
the very center of “democracy” – and, therefore, of democratic capitalism – is
the word “demos.” The term denoted the common people, the ordinary citizens, of
an ancient Greek state. It was and is again in our times, meant to be viewed as
a political entity.
Cicero
agreed with Aristotle that democracy, rather than dictatorship, was the best
basis for government, but added that governance of the people must be enriched
with a mixture of other elements. Perhaps this was to guard against what, in
the 19th century, Alexis de Tocqueville would describe as “tyranny of the
majority,” arguing that rationality could become a casualty if government “bases
its claim to rule upon numbers, not upon rightness or excellence.”
Democracy
is buttressed not simply by numbers but by a commitment to natural rights,
constitutional government under a higher law, and separation of powers – and,
at its best, by shared beliefs in human dignity. The things that make it strong
are despised as weak by dictators and authoritarians, from Chinese President Xi
Jinping to Russian President Vladimir Putin. They loathe democracy because it
rejects the empowerment of one man to rule over the people. When it works,
democracy utilizes capitalism and economics in the service of the demos. When
it fails to do so, the body politic turns to political extremes.
As for
the alternative: totalitarian systems dehumanize people, as brilliantly
portrayed in the dystopian Oceania of George Orwell’s “1984.” Today, fiction
has become reality in many parts of the world.
Responsibilities
beyond profits
For
capitalism to flourish, it needs the heady and stimulating oxygen that
democracy provides. When capitalism respects the intrinsic dignity of simply
being human, the demos is an exciting place to be: one where all can flourish.
If the captains of industry who give shape to democratic capitalism fail to
recognize that they have responsibilities beyond their profit margins, the
market becomes another weapon in the hands of extreme political elements –
especially communists.
In 1973,
the Conservative British Prime Minister Edward Heath coined the phrase “the
unacceptable face of capitalism” to describe the excesses being committed by
the British firm Lonrho, which violated the trust expected of major companies.
If democratic capitalism is to prosper, it must hold its face to the mirror and
reject practices that uphold neither human dignity nor the common good.
Lamentably,
for example, too many institutions and corporations ignore the origins of dirty
money or the use of slave labor in a place like Xinjiang province in China. The
same is true of the use of child labor in mining cobalt and lithium in the
Democratic Republic of the Congo (DRC), for use in our phones and computers. Or
of the lives of millions of children working in brick kilns in Pakistan or tea
plantations in India.
I say
this because I passionately believe in the market and its power to change
lives. The economist Ludwig von Mises was right when he insisted that the free
market has removed more people from absolute poverty than any other system
devised by men. Command economies – so beloved of the former European socialist
dictatorships as well as those in Asia, like North Korea – did not, and will
never, end the glaring anomalies between rich and poor.
The
challenge for democratic capitalism is how to temper the market’s excesses; how
to deal with selfish illiberalism; and how it interacts with governments to
tackle glaring inequalities.
For
example, one estimate of the 2022 profits of the five largest integrated
private oil and gas companies – Chevron, ExxonMobil, Shell, BP and
TotalEnergies – puts their combined total of $195 billion at nearly 120 percent
of the previous year’s, making for the industry’s highest-ever figures. Should
they (or we) be surprised that families caught in a cost-of-living crisis – one
precipitated by Vladimir Putin’s war – are outraged that corporations are now
seeing disproportionate profits?
This
issue is hardly straightforward; unlike Russian or Iranian competitors, these
companies pay taxes and are generally transparent. But the optics are not good,
playing into the hands of political extremists. The challenge is how to end the
irresponsible obscenities of greed and avarice; how to promote moral and
ethical capitalism; and how to cultivate more human values that promote social
solidarity, using the market to champion fairness and justice.
‘Money-making
mob’
As they
step from the platform onto the London underground train, passengers are told
over the Tannoy to “mind the gap.” In places where socioeconomic gaps have been
getting bigger, this is advice that governments and captains of industry need to
take to heart. The widening gap between the destitute and the very wealthy
risks social cohesion, as well as offending basic principles of justice,
fairness and decency.
In the
19th century, the English artist and polymath John Ruskin declared that “above
all, a nation cannot last as a money-making mob.” There was an echo of this in
the 1940s when men like the economist John Maynard Keynes, the social reformer
William Beveridge and William Temple, the Archbishop of Canterbury, warned
against the dangers of running an economy that ignored the poor or unthinkingly
widened the gap.
Keynes
once admonished London financiers: “I would like to warn the gentlemen of the
City and High Finance that if they do not listen in time to the voice of reason
their days may be numbered.”
“I speak
to this great city as Jonah spoke to Nineveh,” he continued. “I prophesy that
unless they embrace wisdom in good time, the system upon which they live will
work so very ill that they will be overwhelmed by irresistible things which
they will hate much more than the mild and limited remedies offered them now.
Beveridge
famously identified the five “giant evils” that the government must conquer:
“squalor, ignorance, want, idleness and disease.” Ignoring these ills would
lead, he said, to social breakdown and personal misery.
The same
is true today. E. F. Schumacher, the German-British statistician and economist,
was the author of “Small is Beautiful,” a book tellingly subtitled “A Study of
Economics As If People Mattered.” He insisted that “an attitude to life which
seeks fulfillment in the single-minded pursuit of wealth – in short,
materialism – does not fit into this world, because it contains within itself
no limiting principle.”
Keynes,
Beveridge and Schumacher all understood that irresponsible and unresponsive
capitalism feeds the flames of extremism and threatens the stability of
society. As residents of some of the world’s richest countries, we are the
principal beneficiaries of capitalism. But if the model is to thrive and not be
discredited, we must embrace capitalism with a conscience.
The mere
generation of capital does not guarantee social justice. When combined with
democracy, we have the means to tame it, channel it, harness it and use it for
the common good. Democracy leads to questions about how resources are
distributed and prioritized, about whether it is tolerable to live in
sharp-elbowed societies where “the devil takes the hindmost.”
Ralf
Dahrendorf, the German-British sociologist, philosopher and political
scientist, once told me that we would risk social cohesion if we did not
respond to the emergence of a new class of people: those who are workless,
broken, lost to ambition or social improvement and with no stake in society. He
called them “the underclass.”
The best
hope for the underclass, those who have fallen through the gap, remains a free
market economy: capitalism with a kindlier face. If capitalism accepts a
greater responsibility to foster more just societies, it will help dampen any
siren calls from the political extremes to pull down the liberal order. This
would be a capitalism that is just and fair; a capitalism that equitably
rewards merit and effort; a capitalism that strengthens democracy and resists
dictatorship.
The 38th
parallel
Where
might we go if we reject capitalism and democracy?
I began
puzzling over this essay while sitting at a table in a Korean restaurant in
Seoul. Over some kimchi and green tea, I found myself discussing with a Korean
academic the defining features of both democracy and capitalism, and the
relationship between the two.
What
better place to have that conversation (and enjoy that traditional Korean dish
of salted and fermented vegetables) than a few miles from the 38th parallel –
the popular name for latitude 38 degrees north that roughly separates North
Korea from South Korea, both of which I have visited and written about.
The 38th
parallel is the world’s ultimate fault line: standing between a vibrant and
thriving democracy and a dynastic, communist dictatorship with a pathological
hatred of both democracy and capitalism. The leaders in the North call it
“Paradise,” while a United Nations Commission of Inquiry says its mass
detention prison camps recall the Nazi regime, and that it is today “a state
without parallel.”
North
Korea’s brand of communism mixes Marxism with Kim Il-sung’s Juche ideology, a
self-reliant isolationism, and has delivered a contraction in gross domestic
product (GDP) almost every year for the past decade. In 2023, the country’s 25
million people enjoyed a per capita nominal GDP of $684, one of the lowest in
the world.
In a
survey of 164 economies, North Korea came out as the riskiest. Meanwhile,
Pyongyang devotes a quarter of its spending to the military, preferring nuclear
pretensions to feeding, educating or providing healthcare for its people and
infrastructure development for its future. Two million people died in the
“Arduous March” famine during the 1990s, while a persistent failure to feed its
own people has led to widespread malnutrition and stunted growth of its
children.
Its
currency, the North Korean won, is not traded. The regime’s difficulty in
servicing debt or trading without risk says it all about a country that hates
capitalism and incarcerates (or executes) anyone who dares extol the virtues of
the market or democracy.
I was
once told by a North Korean official that the “reason why we cannot permit
private capital is that it will undermine the foundations of the state.” Of
course, this hardly prevents the illegal use of the Chinese yuan or the
emergence of black markets.
The
democratic path
There is
a certain irony that countries like North Korea, the DRC, Laos and Algeria
insist on describing themselves as the “Democratic Republic of…” when they are
anything but. North Korea goes further in calling itself a Democratic People’s
Republic – like its only ally, the People’s Republic of China – even as its
people have no say in electing their “Supreme Leader” or choosing between
competing parties.
This
takes us back to the Korean peninsula. To the south of the 38th parallel, there
is another Korea that has no need for the word “Democratic” in its name.
Democracy is in its DNA.
To be
sure, the Republic of Korea (ROK) was born only with great sacrifice and loss
of life. The oft-forgotten Korean War (1950-53) saw millions of fatalities,
including one million South Koreans. About 40,000 Americans died in action, and
60,000 British troops fought (with some 1,000 dying). In the postwar South, a
far-from-democratic military dictatorship came to power.
It would
take more than 30 years before democracy began to emerge, a period marked by
the imprisonment of, and assassination attempts on opposition leader (and later
Nobel Laureate) Kim Dae-jung. Not only did he demonstrate that power could
change between political parties; he was known as a “neoliberal revolutionist” for
insisting on market economics and international accounting practices,
transparency and recognized standards, bringing ROK’s economy into global
alignment. His administration paid off International Monetary Fund loans, built
up foreign exchange reserves, introduced labor reforms and refused to bail out
companies who failed to adapt. He said that a democratic, capitalistic Korea
“must realize by all means a society where people who live honestly succeed and
those who do not, fail.”
Farsightedly,
his administration laid the foundations for high-speed information and
communications technologies, nurtured the IT space and saw start-up tech
companies as the country’s future. In his 1998 inaugural address, President Kim
said that his vision for ROK was to advance from “the ranks of industrial
societies…into the ranks of the knowledge and information-based societies where
intangible knowledge and information will be the driving power for economic
development.”
He
combined a passion for market economics with the democratic ideal that elected
representatives of the demos are there “to serve” and called to a spiritual
revolution: “By a spiritual revolution, I mean respect for each person and
adherence to justice as the highest value…. We must share not only pain but
rewards and joys. We must shed sweat together and reap fruit together. I will
take the lead and devote my all to realizing such a spiritual revolution and
righteous society.”
Closed
societies
At
lunch, my South Korean friend drew other contrasts between the two Koreas, and
the two Kims who have defined their respective countries. Along with the
ability to change leaders and parties is the celebration of human rights by
one, and the denial of those rights by the other; the elimination of religion
by one and its centrality to the life of the other; and a recognition that the
rule of law shapes both democracy and capitalism, while a communist
dictatorship despises both.
The ROK
isn’t perfect. The imprisonment in 2018 of South Korean President Park Geun-hye
for abuse of power and coercion is a gentle reminder of human venality.
But paradoxically, it is also an
affirmation of a system of governance with accountability. Unsurprisingly, Ms.
Park’s court case was little reported in North Korea – where the UN has found
the regime guilty of “crimes against humanity,” and whose leaders believe they
are above the law and may behave as they please.
Closed
societies do not want people to know that things can be different. On one visit
to North Korea, I heard a young woman extolling the virtues of former Romanian
leader Nicolai Ceausescu and his regime. “You know what happened to him?” I
asked. “Is he not well?” she replied.
She
burst into tears when I informed her that there had been a revolution and that
he had been deposed and executed in 1989. At the time, North Korea watched in
alarm as the former Soviet Union and its satellite states abandoned Marxism. In
Poland, Czechoslovakia, East Germany, Hungary and elsewhere, they saw leaders
fall and doors open to democracy and free market economies.
***Lord
David Alton of Liverpool, David Alton was a Member of the House of Commons (MP)
in the United Kingdom for 18 years and is now an Independent Crossbench Life
Peer.
He began
his career as a teacher but, in 1972, was elected to Liverpool City Council as
Britain’s youngest city councillor. He became the youngest member of the House
of Commons in 1979 and, in 1997, he was made a Life Peer of the House of Lords.
He was
the Liberal Party’s spokesman on Home Affairs, Northern Ireland, Overseas
Development and the Environment, and served as Chief Whip, chairman of the
party’s Policy Committee and President of the National League of Young
Liberals.
He stood
down from the House of Commons and from party politics in 1997 and was
nominated by the prime minister, Sir John Major, to the House of Lords, where
he sits as an Independent Life Peer, speaking regularly on human rights issues.
He was
appointed as professor of citizenship at Liverpool John Moores University in
1997 and established the hugely successful Roscoe Foundation for Citizenship
and is a visiting fellow at St Andrew’s University in Scotland.
Lord
Alton is a member of several All Party Parliamentary Groups and is Chairman of
the All Party Group on North Korea.
His
publications include “What Kind of Country?”, published in 1987 – the first of
10 books. He has also authored several reports on human rights in countries
such as North Korea, Burma, the Democratic Republic of the Congo, Brazil,
Sudan/Darfur, Tibet and Rwanda – all of which he has visited.
Details
of his reports and speeches on human rights and religious liberties are
available on his web site: www.davidalton.net
https://www.gisreportsonline.com/r/democratic-capitalism/