Pluto, the ninth planet, is no longer a planet had declared the astronomers. Alan Greenspan had used this news to quip so in a meeting of the Federal Open Market Committee (FOMC) several years ago either as a cryptic metaphor for the wealthy or in humor. At the ‘End of History’ still stands democracy says Francis Fukuyama, but is it true also of free market capitalism?
In economic terms, the role of the government (and the Fed) is to enable the markets to clear at equilibrium prices for the various goods and services. It is, therefore, to ensure a market that is as perfect as is feasible, with many sellers for any product or service to ensure a fair price. It is to supervise and regulate the markets to ensure maximum public good because enlightened self interest of the invisible hand does not in reality govern the ways of the marketplace. Selfish behaviors predominate and are the norm rather than the exception. The quality that comes with enlightened self interest desired by all but only supplied by a few is boutique and thus commands a higher price. Lower prices are for the least common denominator goods and services. The better butchers and bakers of Adam Smith are few and they charge more for their meats and breads from those discerning few of good taste who are willing to pay. Quality of life is tiered and is for sale to the highest bidders. High skill is put to the service of the wealthy few but not the majority.
It is said that Americans (I am an American myself) do not begrudge the wealthy because they think that they are fortunate to live in a society that affords them the hope and chance to become wealthy themselves if skill and luck lean their way. My concern is that we no longer live in such an America or in such a world for that matter.
We live in a world where serving the wealthy is the way of life because the wealthy are also powerful but not in a world where serving the people is the way because in a true democracy people are powerful. Democratic Capitalism is an oxymoron because capitalism produces plutocrats, muffling the majority of the people’s voices.
They say in India that the countless poor are also happy (Hollywood best illustrated it in the Patrick Swayze film City of Joy). If poverty is the happiness Americans want to sell themselves into then indeed poverty and the growing uncertainties of the vast American middle class could also be construed as happiness founded increasingly on the mirage of the American Dream rather than the hope and opportunity that is the American Dream.
In a functioning democracy, government is of the people, for the people and by the people but not of the wealthy, for the wealthy and by the wealthy. Much as a benevolent dictator or a wise monarch would do, an enlightened de facto plutocracy in a capitalist society must keep the people happy in a de jure democracy. Otherwise, because of the norm of unenlightened conduct of the few holders of capital and skill that causes severe economic disparities in societies, free market capitalism – in reality unfree not because of the government but because of the market participants themselves – will die in the due course of history even as democracy will remain standing.
Pluto, said the astronomers, is no longer a planet. But Pluto – money – has become the sun around which the world revolves.