The Capitalist Alliance Against Democracy

Herzog begins by cataloging the deep problems with the US economy today. For many years, it was thought that the dreamy union of capitalist markets and democracy was the “formula for the success of the West.” But since then, this marriage has looked increasingly toxic.

Inequality has skyrocketed since the 1970s, such that the “ratio of CEO pay to average pay in big US companies is now almost 300:1,” Herzog notes. “The gaps that are opening up between different tiers of the economic spectrum are even wider for wealth than for income, with the rich getting faster than anyone else.” Largely fueled by declining rates of unionization, workers also spend way more time laboring than they want to. In the United States, “full-time employment means an average of forty-seven hours per week, around ten hours more than in most European countries,” she observes. “Part-time options are scarcer, and for many, they are simply not affordable.”

One reason for these tragic circumstances is workers have very little democratic control over the places where they spend much (if not most) of their waking lives. Corporate structures are resolutely hierarchical and illiberal, meaning that workers have little capacity to agitate on their behalf even where warranted. As Karl Marx himself remarked in Capital, Vol. I, in the workplace “capital formulates, like a private legislator, and at his own good will, his autocracy over his workpeople.” The same is true of the vast majority of enterprises today, in the factory and beyond.

Finally, self-government by the people, for the people is itself increasingly threatened by capitalism. Describing an “alliance” of markets and corporations against democracy, Herzog charts how large corporations have translated their economic power into political might. Herzog argues, citing economist Thomas Philippon, that the “US-American economy has become less competitive in recent decades due to levels of industry concentration that have created oligopolies in many sectors. In these markets dominated by a few companies, profits are higher and customer benefits lower; this holds, for example, for telecommunications and airline services.”

The reason, Herzog claims, again following Philippon, is that corporations have lobbied to limit regulation to ensure they can better suck value from workers and consumers. As a result of declining corporate competition due to oligopolistic practices, Philippon estimates that US citizens have been “deprived of $1.5 trillion of values that would have been created if US industry had remained as competitive as it was previously.”

In other words, the alliance of markets and corporations against democracy has won great victories. The losers are democracy and ordinary working people.

What Do the Critics Say?

To her credit, Herzog is aware of the most plausible responses to her criticisms of contemporary capitalism and sets out to carefully rebut them. Some of the most engaging sections of The Democratic Marketplace are those where she systematically deflates pro-capitalist pieties.

For instance, Herzog anticipates an objection to her claims about our limited free time. For anyone who has ever imagined themselves unchained after getting home from work, more free time might seem like a kind of freedom. But of course, many contend that it is in fact our choice whether we want to work a job with long hours or whether we want more leisure time (and therefore less money).

Herzog offers several responses to this line of argument. First, she points out that labor markets always

contain an element of force, at least in societies lacking unconditional welfare systems. In these societies, unless you are independently rich, you have to work to avoid destitution. And depending on the costs of living, and the rights people have vis-à-vis their employers, their choice about how many hours to work can be very limited.

Herzog notes that polls frequently show that people would prefer to work less than they do, if they could afford to do so. The main reason we are compelled to work more is that the free time many of us would rather enjoy is not considered economically “productive” — a case where broader human needs contradict the narrow demands of capitalist profitability.

Moreover, Herzog argues, it doesn’t have to be this way. Experiments with a four-day workweek in the UK and Iceland have shown promise, with employees reporting “feeling less stressed and depleted as they gained more time for family, friends, hobbies and exercise.” She speculates further that more free time might be able to help shore up America’s declining sociability and sense of community, since people will have more time to meaningfully spend with one another.

One of the weaker sections of the book is her response to meritocratic arguments that capitalism rewards the virtuous while punishing the lazy and imprudent (the idle twenty-somethings, say, wasting the day on Discord).

Herzog draws attention to the fact that the “more market logic pervades a society, the more personally we take it: we misread success in markets for a proof of virtue, and failure as a sign of vice.” Even Friedrich Hayek saw that this was nonsense, Herzog observes; markets at best reward those who gratify subjective human desires and often just reward them for winning the lottery and being born rich.

Elsewhere she argues against the social Darwinian “myth” that the economy needs to be a competition where the winners are “somehow better moral beings.” She writes, “A completely unrealistic account of individual achievement — mixing up a misguided understanding of meritocracy with wrong ideas about markets — seems to spring from the highly unequal social contexts in which such achievements take place.” Replacing this social Darwinian myth ought to be a realization that our economy is based on a “complementarity of different tasks.” (Perhaps something like an attitude of “from each according to their ability, to each according to their needs.”)

While I largely agree with Herzog here, her arguments on this score are pretty thin gruel as a response to one of the most powerful ideological conceits used to defend economic inequality and workplace hierarchies. She doesn’t spend much time addressing meritocracy-based arguments for capitalism in The Democratic Marketplace, mostly relegating discussions to two pages where she describes it as “nonsensical” for the reasons just mentioned.

Among academic philosophers, meritocratic arguments have been in decline for decades, with even pro-capitalist thinkers like Hayek and Robert Nozick generally eschewing them. But they continue to play an important role in popular discourse, with arch-defenders of the yacht class like Ben Shapiro publishing entire books dividing the world into productive “lions” and do-nothing “scavengers.” The continued mainstream appeal of these ideas means they deserve more than a passing mention.

Fortunately, there are some swings being taken. One of the most incisive critiques of contemporary meritocratic arguments comes from philosopher Michael Sandel’s 2020 book, The Tyranny of Merit. Sandel argues that meritocratic ideals are not just based on faulty premises but have destructive social consequences. Our contemporary ruling class is in many respects the most toxic in history, Sandel points out; at least earlier elites imagined their position was owed to God, and that they in turn had obligations to the lower orders (noblesse oblige).

The “winners” in today’s capitalist marketplace are the first elites in history to imagine they are where they are because of their own insight and hard work (inheriting a couple million dollars from mom and dad aside, of course) and consequently owe nothing to the people at the bottom. The inverse cultural tendency is that the lower classes often internalize the view that their own subjugation is due to a moral failing on their part. The perverse cultural logic is unsustainable — predictably generating social distrust and widespread resentment. The Democratic Marketplace would have benefited from paying more attention to this destructive meritocratic ethos.

Democracy, Capitalism, and Socialism

One of the oddities of The Democratic Marketplace is how rarely the history of socialist thought appears. In many respects, it comes across as the tradition that cannot speak its name. Herzog is taciturn about socialism, stating that whether her book is a call to abolish capitalism or not “depends on what one means by capitalism, and what one sees as alternatives.” She rejects the binary between “capitalism versus socialism” as an unhelpful relic of the Cold War, stressing that capitalism and socialism can mean many different things.

While it is true that socialism is said in many ways, to appropriate Aristotle, it is socialist and social democratic thinkers who have long drawn attention to the problems Herzog diagnoses, and the (often willful) neglect of this tradition in the Anglosphere has contributed to the lack of intellectual resources needed to solve those problems.

Philosopher Elizabeth Anderson has rightly stressed the need for academics to retrieve the history of social democratic and democratic socialist thought in response to the spread of neoliberalism. That tradition includes a wellspring of thought about what alternatives to capitalism might look like — as well as rich strategic thinking about the obstacles to realizing a more just society. As long as critics of contemporary capitalism neglect these insights, it’s hard to imagine that they will be able to come up with compelling solutions for what ails our society today.

These issues aside, The Democratic Workplace is a useful short polemic against the spread of illiberal and undemocratic private government. It condenses important arguments, data, and historical wisdom into a tight package that is well written and quietly passionate — a good intellectual starting point for those starting to doubt whether capitalist democracies are working as promised.