Democracy and Market Economy

The economic crisis that affected the world in 2009 has highlighted the sore points of the social and economic structures developed in the Western world, particularly in the U.S., during the last decades of the 20th century. The minimal state, the blind trust in the capacity of self-regulation of the market, and the diminution of the public space in favor of the private one, have upset the fragile balance of the structures that secured a genuine economic democracy. The three decades following the Great Depression in the Thirties gave way to the Great Compression, an era which, although it has been less discussed in Romania than the Depression, actually formed the social basis for the American democracy. During those decades, the New Deal brought relief to tens of millions of Americans living in poverty. It was then that the American middle class appeared. The economic consequences of this development were huge. Afterwards, in the seventies and eighties, the social structure underwent a change that caused increasing economic inequality. The disparities grew to the point that, in 2006, before the peak of the economic crisis, America was as divided economically as it was in 1928, just before the Great Depression.

As the state became less involved in the economy and society – as it underwent, in fact, a process of privatization, or, as James K. Galbraith put it, became a “predator” state – trust in democracy collapsed. Maybe this is one of the reasons why the entire world anticipated Barack Obama’s health care reform in the U.S. so eagerly. In spite of all its problems, the United States remains a driving force in the world. Consequently, if the economic structure changes in America, it will trigger changes in Europe, and then all over the globe.

The economic well-being that China seemed to flaunt during the crisis not only defies the Western world and the U.S., but also gives one food for thought. All in all, there is no free market economy in China, although it is currently the most capitalist country in the world. The exuberance of Chinese communism is no longer convincing. The 2009 celebrations that marked six decades since the communists and Mao rose to power have only symbolic value. The role of the communist power in Beijing is that of maintaining political control and access to resources in a country with 1.3 billion inhabitants. Redistribution, on the other hand, can wait a few more centuries. In the meantime, the government intervenes in the economy; the Chinese policy of chronically undervaluing the yuan has not only boosted exports, but it has also created competitive advantages in comparison to the rest of the world. Nevertheless, the key to the Chinese 8 percent economic growth is the ruthless exploitation of the cheap and abundant work force.

The relationship between politics and economy, frequently discussed in theory, has also given rise to some practical developments. Democracy has often been seen as an obstacle to capitalist development. Yet the growth of capitalism gave a voice to millions of small manufacturers in the political sphere, and thus created the optimal functioning environment for a market economy. This economy could question the position of the upper classes and could open the path for social dynamics which, although incapable of obliterating privileges altogether, could at least make them relative. As there is a close relationship between economy and politics, the ensuing discussions start from the premise that this relationship is in fact asymmetrical: it is either the economy that influences politics, with the latter being only a consequence of the former, or the other way around, in which case the economy becomes a mere appendage to politics. Whichever the approach, at this point in time it is necessary to critically reexamine the economic structures and their social consequences. This reevaluation becomes invaluable, particularly in a country like Romania, which has seen electoral debates fail in 2009 because of their lack of vision and seems to expect things to return to the way they were before.