Global Politcal Economy

POLITICAL ECONOMY 1

POLITICAL ECONOMY

Name:

Course:

Tutor:

Date:

POLITICAL ECONOMY 2

Abstract

Why has neoliberal capitalism continued to succeed while democracy continues to steadily

weaken? Democracy has become weakened due to the sheer fact that multinational corporations

continue to invest huge sums in public relations, lobbying, and to some extent bribing in a bid to

manipulate governments to enact laws that give them competitive advantage. Subsequently, this

has resulted in political influence that has, in turn, subdued the citizenry voice. The following

paper critically analyses how neoliberalism capitalism has undermined the pillars of democracy

evident by the raising inequalities, de-democratization of institutions aimed at promoting

democracy, and the rise in social injustice. Furthermore, the paper will also incorporate the

Marxist critique on neoliberal capitalism while also presenting an alternative to capitalism.

POLITICAL ECONOMY 3

Political Economy

Introduction

Perhaps one of the most dominating debates of the 21

century is whether or not

neoliberal capitalism is killing democracy. The logics of neoliberalism capitalism and democracy

are fundamentally distinctive which has led to substantial tension between the two variables.

Both democracy and capitalism have claimed legitimacy with one school of thought alluding

promotes capitalism while the other school of thought arguing that capitalism kills democracy.

Opponents of the debate contend that neoliberal capitalism promotes democracy based on the

sheer fact that the constraints of capitalism are promoted only when individuals and corporations

adhere to and reinforce the social structures upon which capitalism is founded. For instance, they

cite competition as one of the social structures that has always come under threat by a small

fraction of individuals and institutions whose primary goal is to cushion themselves against the

rigorous consequences as well as to acquire more than their due share. However, with neoliberal

capitalism, competition has enhanced the effectiveness of the global economy by ensuring that

the reward system is exclusively based on merit thereby ensuring that democracy prevails.

Proponents of the debate, however, argue that democracy is continuously being snuffed

out by the overzealous pursuit of profit. According to this school of thought, the free markets that

were initially supposed to drive free societies have now been replaced by a supercharged global

economy that erodes the very vital elements of democracy. As such, though these free markets

have been accompanied by unprecedented prosperity to a few elites, the end-result has been

widened inequalities within the public evident by high levels of interest rates, increased job

insecurities, and environmental hazards, such as global warming that threaten the general well-

POLITICAL ECONOMY 4

being of the society. The following paper critically analyzes and establishes the notion that

neoliberal capitalism is indeed killing democracy.

Neoliberalism Capitalism impact on economy

Although there is the huge debate about the negativities of neoliberalism, there still exist

positive influences that it has had on economies the world over. On the perspective of a

business person, the main agenda of any business is to make profit. This slogan has proven

true for numerous businesses who have exploited resources for their own benefit. The

economy of any nation is a vital component to their development. Neoliberalism is a school

of thought that suggests that the progress of a society may be achieved via economic

liberalism. This can be therefore loosely translated as handing over the economic control to

the private sector from the public sector which is the government. This school of thought

argues that the private sector is capable of handling the economy and therefore the control

of the economy should be left in their hands.

The private sector in any economy is seen to perform better as compared to the public

sector due to facts such as business ethics and efficiency in operations. The public sector

has greatly benefited from the private sector’s contribution to the economy in terms of

business practices, ideas on reduction in costs and efficiency in running a business. This has

led to healthy competition in any economy but handing the economy to the private sector

would be greatly disadvantageous to many of the affected parties. One of the problems

that may arise would be the elimination of competition and establishment of monopolies.

This is very existent in the world today as there are some businesses that outdo every

competitor and remain the only provider of a particular service or product. Since

POLITICAL ECONOMY 5

businesses are major contributors to economic growth, monopolies and elimination would

end up creating a stagnant economy and many people lacking jobs. Therefore, the economy

is affected and numerous businesses closed and society does not grow as expected. The

primary aim of any business is to make profit and the private sector is no different.

Neoliberalism Capitalism Influence on Inequality

The role of capitalism as an impediment to democracy is evident with the increasing

disparity in income and wealth in most of the capitalist state. One of the hallmarks of democracy

involves the equal distribution of resources regardless of the social class, religious affiliation or

the educational background. However, the rise of capitalism in the modern world has been

marked with the exploitation of the labor power which has brought prosperity to a few.

Subsequently, this has led to increased job insecurity as a vast majority of multinational

corporations have undermined governments’ ability to respond to the concerns of the citizenry.

Well, it is worth noting that one of the primary roles of democracy is to create an avenue through

which the citizenry can be able to address issues, such as inequality, in a constructive manner.

And yet a sense of political subjection continues to rise among citizens of most of the capitalist

states in Europe as well as the United States (Roccu, 2016, p.184; Foster and Bellamy, 2010,

p.73).

Marx thought on neoliberalism was not only in regards to political emancipation but also

the emancipation of human. Political emancipation, in this case, refers to the upholding of

fundamental rights and freedoms such as the freedom of speech while human emancipation, on

the other end, included the fundamental rights of an individual such as security, liberty, equality,

and property. Marx further claims that neoliberalism capitalism plays an integral role in

POLITICAL ECONOMY 6

consolidating the interests of the elites in the society in determining societal dominant ideas

thereby limiting the political and human emancipation of the citizenry. Hence, it is without doubt

that neoliberal capitalism impedes democracy (Gonzalez and Carroll, 2017, p.54; Rodrick, 2016,

p.45).

Branko Milanovic in his book, Global Inequality, talks about inequality globally in the

current century and the next century. In matters economic performance and growth, prediction is

mostly based on the current economic trends at a particular time period. Most predictions fail to

see the change in specific variables that greatly affect an economy. Trends easily come and go

and basing arguments while considering trends is wrong. The world as seen in history through

books fails to make correct economic predictions and the predictions in most instances are not

correct. Technological development and future expectations of further development made the

United States and the USSR become powerhouses due to the technological requirements. This

resulted in the countries noting that complex systems would be required to manage the new

progress and the systems were to be manned by smart and well educated individuals. Technology

brought about with it specific requirement which must be fulfilled in order to create an

environment of growth. This brings to light the Marxist view of how socialism and capitalism

converge.

Milanovic notes that there exists a major encouraging fact to the concept of neoliberal

capitalism. Within most nations across the world, inequality is increasing especially in the high

income countries. This inequality is through the different levels of income but the inequality has

been subsiding. This has been the case and has seen economies such as China propel to become

an economic powerhouse globally. The progress made by China in terms inequality will stagnate

when the national income per citizen reaches slightly above the global average. Other reductions

POLITICAL ECONOMY 7

in the global inequality will depend on the growth made by the big developing economies of the

world such as India (Milanovic, 2016, p.166).

Simon Kuznets, an economist has his claims refuted and disapproved by Branko

Milanovic. According to Kuzents hypothesis, development is said to increase inequalities in

terms of income in a country then later on reduces the inequalities. Milanovic puts a twist on

Kuzents hypothesis and claims that instead of Kuzents curve, there should be Kuzents waves

(Milanovic B, 2016, p.116). The waves are much more realistic as they result in the different

levels of inequality, that is, there is a continuous cycle whereby it rises and falls repeatedly.

Neoliberalism capitalism can therefore be said to be a contributor to the inequalities of income

within a country.

The general idea that globalization is making the world a better place to live in due to

equalization worldwide especially in high-income nations raises the question, is this a positive

development? Milanovic notes that when the poor and middle class of the world are doing well,

this is a positive impact of globalization. The middle class can be considered as a driving force

within an economy of a developing nation as this is a group of people who are striving to close

the gap between themselves and the wealthy. The better they do results in an overall betterment

of the economy. Just like the middle class, the poor are also struggling and striving to reach an

income level better than what they have. Their progress is a positive one as the overall GDP of a

nation increases. The success and operations of globalization have produced both positive and

negative outcomes. Of the negative outcomes, numerous challenges have risen such as

inequalities within countries. The best solution to this problem is the redistribution of wealth and

also redistribution of income form capital. This would go a long way in mitigating a nation from

income inequalities within a nation but the implementation of such a policy is very difficult.

POLITICAL ECONOMY 8

In his commentary entitled ‘Neoliberal Globalization Is Not the Problem’, Rick Wolf, an

economics professor at the University of Massachusetts, affirms that the awful results being

witnessed today can be attributed to 20 years of neoliberal capitalism dominance in the world.

For instance, Wolf notes that the amendments in taxation laws and the privatization of the

welfare instruments have inhibited millions of poor Americans from achieving the American

Dream. It is worth noting that the American Dream is founded on a set of democracy ideals, such

as equality to all that were coined out from the Declaration of Independence. In other

words, Wolf affirms that these neoliberal policies have been used as tools of wealth transfer by

the top classes at the expense of the poor. He further notes that these policies have been

implemented by those having financial resources as well as the ability to limit the democratic

mechanisms in the country. Wolf concludes with a sensational remark when he states that while

the United States is supposedly a democratic nation, it is founded on a hereditary system that

ensures that the rich continue becoming rich while the poor continue becoming poor. This can

be summarized by the recent statistics by the United States Census Bureau as shown below.

POLITICAL ECONOMY 9

Source: https://inequality.org/facts/income-inequality/

On a similar note, increasing evidence have pointed that the American symptoms of

lower class marginalization have become more pertinent in the recent decades. There has been

increased domination of the middle class while that of the lower class has continuously

decreased. In relation to turn out, the vast majority of OECD states that constitute the two-third

democracies of the world, have largely excluded the lower class from participation in any form

of political (Abdelal, 2006, p.23). The policies in most of these nations have tended to favor

those of higher classes thereby tilting the voting pattern. Hence, the equality principle has been

severely undermined. Similarly, the decline in electoral participation as well as social exclusion

of the low class citizens has also become more rampant in Western Europe over the last two

decades. As noted, the underlying cause for this can be found in the increase of socioeconomic

inequality between the classes.

The negativities of globalization are well laid out by Dani Rodrik in his article where

capitalism is highlighted as a contributor to the curtailment of democratic efforts. A nation such

as China has excelled globally economic wise due to its ingenuity of combining capitalism and

specific components of globalism. This was directed at protecting the nation’s interest and for

the benefit of the common good. China and other nations like Japan have seen a great growth in

its economy and their dominance in the technological sphere is evidence of this. The Chinese

government made policies that ensured that they ended up with more exports than imports. This

was a move to ensure that local businesses thrived and foreign investors continue to invest in the

country due to factors like availability of labor and technological capabilities (Rodrik D. 2016).

A point to remember is that China implemented certain policies back in the 1980’s that led to the

growth of the nation as a whole. These policies led to approximately seven hundred million

POLITICAL ECONOMY 10

citizens alleviated from extreme poverty. China as a nation can be said to be the largest

beneficiary of globalization. This shows a capitalistic way that safeguards the benefits of the

common people and in this case, Chinese citizens.

On the other hand, western nations received globalization with open arms and forgot

about protecting their local businesses and working towards the good of the whole country.

Many nations relied on globalization and supported capitalism but forgot about safeguarding

their people’s interests. Management of globalization globally is necessary as failure to do so

will continue to damage democracy. The governments of these nations concentrated on ease of

doing business and forgot about necessary safeguards for its citizens (Rodrik D. 2016). The state

is always focused on democratic politics while the bodies and institutions that govern global

policies seem nonexistent. Just like technology is a double edged sword with both benefits and

negativities, capitalism is the same. Capitalism contributes to the growth and expansion of an

economy while at the same time, the democracy in that region is curtailed. Democracy should be

safeguarded at all costs and the benefits brought about by globalization managed in order to

ensure democracy is not infringed upon.

Neoliberalism Capitalism and the De-Democratization of Institutions

In his critique of neoliberalism, Chomsky contends that neoliberalism capitalism

configures human conduct based on the model of a firm. According to his analogy, neoliberalism

capitalism radically transforms the nation into a firm; the government into a manager whiles the

working class into a human capital. This means that every human activity such as

entrepreneurship becomes rationalized. In essence, Chomsky affirms that the neoliberalism

POLITICAL ECONOMY 11

capitalism is a form of governmentalization, which he defines as the transformation of the

administrative and legislative role of the state into a business model that is state-owned. This can

be termed as de-democratization as the principles and institution that are aimed at instituting

democracy as well as the culture that is required to nurture it becomes displaced by neoliberal

capitalism. Thus, the end-result of the de-democratization process results in the government

reducing subsidies of certain fundamental social services such as education, evident by the recent

student loan crisis. The reduction of subsidies by the government is done with the main intention

of profit maximization.

On a similar note, the finacialization of capitalism has increased the dependence of

governments and investors to banks. Hieres and Nolke (2013, p.324) refer finacialization as the

process by which financial institutions demand for financial markets deregulation and the

elimination of financial borders. One of the central features of finacializationof capitalismhas

been the inception of financial products e.g. debt obligations as well as derivatives which have

led to the rise of what can be termed as institutional investors. Hence, the process of

finacialization has made the ideology of shareholder value as he key criterion in investment

decisions.

As the only criterion in investment decision making, the financial sector plays a dominant

role in most of the global economies as it profits continues to surpass even those of the

manufacturing sector. This has caused a vast majority of manufacturers in the industrial sector to

rely on the speculation of financial products offered by these financial institutions rather than

their core activity. Thus, there has been increased overdependence by the manufacturing sector

on the industrial sector. The governments’ decision to deregulate the financial sector also

explicitly shows that they have also not been spared from the impacts of finacialization (Pradella,

POLITICAL ECONOMY 12

2015, p.64). Hence, government and political parties whose manifesto suggested economic

growth and development are at an increased threat of being displaced from power thereby

prompting them to become reliant financial institutions or foreign creditor’s decisions. The

finacialization process, therefore, regresses the authoritative power of the government as the law

maker and enforcer to that of a policy taker (Varoufakis, 2015, p.30). Hence, the deregulation of

markets has placed a strain on the link between democracy and capitalism making their

incompatibilities more apparent.

Neoliberalism and Social Injustice

Social justice is also another integral pillar of democracy. Social democracy essentially

refers to the fair and just association of an individual and the society he or she lives. The de-

democratization brought about by neoliberalism capitalism does not only cover its impact to the

economic framework but also man him. For the past three decades, the reign of neoliberalism

capitalism has commoditized self, meaning it has reduced an individual self-worth into a price.

For instance, the reduction of the self-worth into a price is evident career choices are now mainly

influenced by neoliberalism capitalism order. High academic achievers nor prefer going into the

financial sector while science students are increasingly becoming interested in patenting their

invention so as to maximize profitability rather than benefiting their entire communities. The

concept of neoliberalism capitalism has, therefore, overhauled the importance of self as a

sovereign individual to become a self-investing human capital.

Increasing evidence has suggested that the lower class social exclusion witnessed in

America is more profound than never before in history. This evidence suggests that American

middle classes are increasingly involving themselves in political participation while the lower

POLITICAL ECONOMY 13

class continues to be excluded. As such, the end-result is the implementation of policy scales that

favor top classes at the expense of lower classes. MacAfee and Brynjolfsson (2014,p.45)affirms

that the decline in voter turnout as well as social selectivity can be attributed to some of the

precarious factors that the lower class has been subjected to on the labor market along with the

decline of labor unions that played an instrumental role in representing the lower classes during

the 19

century. Neoliberalism capitalism is one of the primary factors that contributed

immensely to the decline of these labor institutions that had been tasked with the representation

of the poor. Currently, in most of the OECD countries, the gap between participation and

representation has continued to widen in the last decade meaning their interest in parliament

continue to be less represented (Gill, 2017, p.645).

The unfavorable conditions that the citizenry been exposed has led to the increase in

opposition movements in the vast majority of nations that apply neoliberalism capitalism order.

The working class roles, in particular, have been immensely affected by the new order. For

instance, as producers, workers have taken their plight to the trade unions with some resorting to

take political action due to exacerbation in both employment and living standards (Locke, 2013,

p.59). Hence, the worker classes as well as other popular groups have to protest against the

cutbacks in subsidies that have resulted in substandard quality of collective essential services

such as health and education. It is without doubt that neoliberalism capitalism has weakened and

excluded some of the institutions whose main objective was to offer voice and concentrate power

to the vulnerable in the society. Instead, the power of these institutions is now controlled by

multinational corporations resulting in continued exploitation of the working class.

Neoliberalism Capitalism and Economy Democracy.

POLITICAL ECONOMY 14

Economic democracy refers to a socioeconomic philosophy that shifts decision-making

powers from corporate managers to the public including the suppliers, workers, and consumers.

Proponents of economic democracy have widely criticized neoliberalism capitalism as one of the

impediments of full economic democracy. Buck (2007, p.68) affirms that corporate monopoly is

just among many examples of how capitalism has hindered the development of economic

democracy. He further goes ahead to state the monopoly of common resources has led to the

artificial shortage (hoarding) of product (Wolf, 2017, p.56). Subsequently, this has resulted in

imbalances of socio-economic aspects that have restricted the working class from being able to

access some of the economic opportunities thereby resulting also in decreased purchasing power

of the consumer. Proponents of economy democracy have also argued that the global economic

growth rates of the neoliberal era have lagged far much behind as compared to the rates of the

Golden Age Era. Currently, the global economic growth rates stand at 3.4 percent as compared to

the 4.7 percent that was witnessed during 1950-1970 (Golden Age Era). As expected, this school

of thought has pointed fingers to the conservative capitalist ruling class that care only about the

profit maximization at the expense of the majority (Peet and Hartwick, 2009, p.45).

In his publication ‘How Capitalism is Killing Democracy’, Reich affirms that

majority of the capitalist nations are democracies in name only. Though economically successful,

these countries are encumbered by similar challenges which have hobbled the American

democracy in the recent past. One of the challenges that Reich states is that these nations face is

instability of the financial system that threatens their economies. For instance, the recent Greek

Debt Crisis has been termed by commentators and scholars as failure of the EU in enacting

democracy in any meaningful way. Soon after the Greek referendum that rejected the EU’s

bailout terms, the EU presented a step-by-step bailout terms which were worse off than those that

POLITICAL ECONOMY 15

were initially rejected. As one of the major neoliberalism capitalist entity, this move adopted by

the EU was a simple dismissal of the voices of the Greeks as well as them believe as part of the

European democracy.

Other than that, the hegemony of the dollar is also another critical element of capitalism.

A large chunk of the financial resources and wealth throughout the globe are held in terms of

dollars owing to the capitalistic strength of the United States. Hence, the dollars have allowed the

US economy to acquire their finance throughout the world in order for them to sustain the global

capitalism process (Ha-Joon, 2014, p.460). The instrument of dollar e.g. NATO have also

continued to play a crucial role in de-democratizing sovereign nations. In the recent past, the

United States along with it capitalistic allies have come under sharp criticisms on allegations that

the extended operations in the Middle-East are done to punish regimes that protect their mineral

resources from predatory western based companies. The wars that were fought in countries such

as Libya and Iraq were primarily fought to meet the said objectives. These operations were

disguised as being fought on humanitarian grounds while in the actual sense; they are fought

for capitalism to continue to maintain its hegemony throughout the globe.

Apart from that, the introduction of the Euro as a common currency in the member states

of the European Union has also been termed as one of the primary cause of democracy deficit in

Europe. The inability of the member states to adjust their interest rates has exposed these

countries to economic shocks such as increased labor costs in most of the peripheral member

countries. Additionally, as one of the bodies that are governed with neoliberal capitalism

policies, skeptics have alluded that the EU integration has boosted its affiliate institutions at the

expense of national assemblies of member states. This accelerated executive dominance of the

EU has led to increased European parliament authority that has prevented the will of the people

POLITICAL ECONOMY 16

from being implemented. Hence, citizens from some of the member countries have continuously

felt as if they are not part of the European Union evident by the 2017 Euro barometer.

Source:http://ec.europa.eu/commfrontoffice/publicopinion/index.cfm

Citizens of the United States can be said not to know what is entrenched in the

constitution or even knowing how the government structure is. This is raised by Caleb Crain

when arguing the case against democracy. He vividly describes how people entrusted with power

should be kept according to Plato. Plato saw a huge problem with democracy and envisioned that

those charged with safeguarding the democracy of a nation should be kept away from all

distractions of life. The said distractions are family, life’s pleasures and money. These corrupt

and interfere with decision making. The world has proven difficult to do this as leaders mingle

with everybody in society and have vested interests in some of the decisions they make (Crain,

2016). If American citizens do not know the contents of their constitution, then it will be very

difficult for them to elect a leader who will adhere to the constitution. The argument is that if one

POLITICAL ECONOMY 17

does not know the contents of the constitution, how they will know that the elected leader is

working rightfully and following the rules.

It is surprising to know that for a fact, approximately one third of citizens of the USA are

unable to name the branches of the government. This has led the nation over the years to invest

in voter literacy so that they can make decisions based on the best leader to rule them. This

resulted in the origin of the term epistocracy by Estlund. This was in line with the idea of having

a government which is run by knowledgeable individuals. It aims at ensuring that democracy is

maintained but the world has raised several objections to democracy over time. Some of the

challenges that democracy faces especially in electoral matters is that voters learning the truth

cannot be a measure of political judgment. This is a fair and true reasoning according to political

philosophy as politicians are geared towards controlling the masses to their favor. Many policies

and laws passed by our politicians are swayed by big corporations or rich individuals who push

their agenda. Many big businesses have been on investigations for acquiring assets such as land

illegally and freedom to carry out business at the expense of the common good.

Marxism Critique of Capitalism

Marxism view of capitalism is that it is inherently exploitative. In essence, exploitation

relates to the expropriation of labor for the maximization of profit. According to Karl Marx, the

product is the basic unit of any capitalist firm that results from labor and is related through the

exchange value i.e. the price. In relation to the labor theory of value, Marx affirms that there

exists a connection between the labor and the price of the commodity based on the sheer fact that

commodities are exchanged based on the socially mandated labor time required for their

production. However, the working class has been perceived as creating more exchange value

POLITICAL ECONOMY 18

than their survival costs. Furthermore, Marxists have argued that economic inequality in

neoliberalism capitalism has caused labor purchase not to occur in free conditions because the

capitalist continue to control the production means while workers can only be able to control

their labor thereby exposing them to exploitation. In essence, these workers must sanction the

exploitation of their labor or face destitution.

In Marxism view, the working class refers to the class that owns no production means

and it’s, therefore, forced to sell its labor factor to the capitalist class so as to thrive. One of the

implications of this definition is that the working class needs individual consumption, such as

food, shelter, and clothing, as well as social consumption such as, access to education and

healthcare in order to survive. Thus, Marxism theory contends that workers are not only

producers in the society, but also have additional roles, such as consumers (Burawoy, 2010,

p.43). In Post-World War II era, the Soviet system of enterprise management was founded on the

basis of one-individual management that was undertaken by the firm director. Nevertheless,

workers enjoyed significant informal powers within the work setting due to the full employment

that accompanied it. Firm directors were compelled to meet their quota and the only way to do so

was to ensure that the working class was not threatened by retrenchment or employment

termination.

Alternatives to Neoliberalism Capitalism

To be able to solve the `problems that have been identified above, it is essential for states

and policy makers to devise an alternative to neoliberalism to capitalism that takes into account

to private property, individualism, and competitive markets. Some of the alternatives to

capitalism include: return to the socialism ideology, a return to Keynesianism ideology or the

POLITICAL ECONOMY 19

embracement of a new socialist ideology that is founded on the principles of 21

century (Klein,

2014, p.69). As noted above, the capitalism ideology as a world system has been mainly founded

on labor exploitation with the main goal of profit maximization. Hence, an alternative to

capitalism ought to ensure that the power of the poor and workers is strengthened while that of

the elite and capitalists is diminished. One of the most progressive options among the three is

real socialism as it will effectively handle the crises that have been brought about by capitalism.

In its basic definition, socialism refers to the communal ownership that ensures that there is

direct ownership as well as control of major industries by the state.

The socialization of the production means is the key facet of the socialism ideology. In

essence, this mandates for the capitalist means of productions be substituted with communal

ownership. However, for socialism to be considered as the most viable solution, radical changes

have to be undertaken to give the ideology a 21

century face (Gourevitch, 2015, p.32). Based on

the Soviet Union socialism model of the 20

century, the public ownership of the production

means was on the same level with that of the government ownership. Hence, the Soviet

government managed and ran firms which led to high levels of bureaucracy in the control of the

economy. Furthermore, workers did not offer any form of input or rather say in the running of

the firms which can be attributed to the centralization of the bureaucracy. However, the 21

century socialism should be of different forms. For instance, there can either be a state run and

owned firms as well as a public service that allows for broader shareholding. Additionally, there

can be collective firms owned by cooperatives or workforce rather than a central system evident

during the 20

century in the Soviet Union.

Another vital element of socialism involves that of a planned economy. However, the

planning of the economy should be conducted in a manner that decentralizes the decision-

POLITICAL ECONOMY 20

making process. Additionally, in order to guarantee popular participation in decision-making,

democracy has to implement. Unlike the capitalist ideology where democracy is restricted, the

century socialism can only develop through active participation of the citizenry. Hence, this

calls for the establishment of assemblies at various levels that not only have political but also

economic powers (Selwyn, 2009, p.165: Milanovic, 2016, p.45). That said, the establishment of

multi-party rule will aid in preventing some of the distortions that come with one party rule.

Additionally, the delineation between the government and the ruling party must be

institutionalized to ensure socialism flourishes. One of the principle agenda of socialism is the

emphasis in social inclusion and as such, the need for cohesiveness and integration is of immense

importance. Ultimately, the 21

century socialism ought to be also founded on neoliberalism

capitalism hostility. This ensures that it becomes a tool for developing consciousness as well as

the mobilization of people to adopt and defend the ideology.

There are those who believe that capitalism and democracy go hand in hand. Robert and

Marc(2011, p.270) affirm that during the second half of the 20

century, an increasingly

systematic form of capitalism proved to be highly compatible with the democratic policies in

North American, Japan, and Western Europe. According to them, this was an outcome of an

interventionist or ‘Keynesian welfare society’ that obstructed the capitalistic economy through

regulation, equalization, and stabilization (Struna. 2013, p.47). Thus, these measures led to the

formation of a social and coordinated form of capitalism which manifested in the

interdependence between the market and the state as well as between democratic institutions and

economic institutions. This era proved to be the zenith of compatibility between capitalism and

democracy which therefore shows that the two elements can exist.

POLITICAL ECONOMY 21

There is an intimate link between politics and economics as both have been established to

influence each other. However, conventional wisdom dictates that one must flourish first for the

other to soon follow. This connection is especially visible when it comes to democracy and

capitalism, elements of politics and economics respectively, which tend to share similar

fundamental principles of choice and individualism (Munck, 2013, p.752). The key characteristic

in the two systems involves their ability to pick whatever one wants for instance, an electorate

votes for a policy or party he or she endorses or a consumer chose the product he or she prefers.

Thus, both democracy and capitalism perceive that power solely lies in private hands: in

democracy an individual can not only elect the party or rather policy but can also develop his

policies to be elected into the same office. Likewise, capitalism offers an opportunity for

individuals to become entrepreneurs and establish their own companies. All these opportunities

relay on only one factor which is freedom and to be able to achieve this ‘freedom’, a specific set

of combination of political and economic arrangements must be present.

Conclusion

In summary, neoliberal capitalism has played a role in undermining democracy in most of

the capitalist nations. Some of the crucial aspects of democracy such as equal distribution of

resources and liberty have not been achieved. As noted, this can be entirely be blamed on the 20

century neoliberal policies that has made it virtually impossible for citizens in lower classes to

reap the full benefits that come with capitalism. In fact, these policies have only transferred

wealth to those in top classes while neglecting those in low classes. The conservative media has

been used as a manipulation tool in the promotion of these neoliberal policies which has affected

the perception of the public. Free markets are expected to move towards free societies. The

world’s economy today however is eroding the people’s power that is denying them democracy

POLITICAL ECONOMY 22

and implementing the capitalistic views without consideration of the common good. The

governments are seen to have a blind spot for big companies and their capitalistic agendas. The

common man and woman end up losing the social benefits owed to them from the concept of

free markets. Capitalism and democracy are supposed to go hand and result in free societies. The

events of the world have proven this wrong as is evidenced by the disparities seen because as

capitalism flourishes and thrives, democracy is struggling. Democracy is a combination of

several rights and freedoms owed to the citizens of a nation. Social justice which is fairness and

justice for all people and the society that they live in is crucial for democracy to thrive.

Businesses that have thrived have been observed to ignore the humanity part of their human

capital and substituted it with being a resource. The human capital is a means for a business to

finish the final product or deliver a service. Fairness and justice are important for the success of

democracy in a capitalistic environment. It is therefore safe to say that neoliberalism capitalism

has led to the depletion of self worth of a human being and led to a person being seen as human

capital worth investing in.

The rise of capitalism in the modern world has been marked with the exploitation of the

labor power which has brought prosperity to a few. Consequently, this has created job insecurity

as a vast majority of multinational corporations undermining governments’ ability to respond to

the concerns of the citizenry. Well, it is worth noting that one of the primary roles of democracy

is to create an avenue through which the citizenry can be able to address issues, such as

inequality, in a constructive manner. Other than that, the hegemony of the dollar is also another

critical element of capitalism. A large chunk of the financial resources and wealth throughout

the globe are held in terms of dollars owing to the capitalistic strength of the United States.

Hence, the dollars have allowed the US economy to acquire their finance throughout the world in

POLITICAL ECONOMY 23

order for them to sustain the global capitalism process. The instruments of dollar e.g. NATO

have also continued to play a crucial role in de-democratizing sovereign nations. In the recent

past, the United States along with it capitalistic allies have come under sharp criticisms on

allegations that the extended operations in the Middle-East are done to punish regimes that

protect their mineral resources from predatory western based companies. The wars that were

fought in countries such as Libya and Iraq were primarily fought to meet the said objectives.

These operations were disguised as being fought on humanitarian grounds while in the actual

sense; they are fought for capitalism to continue to maintain its hegemony throughout the globe.

POLITICAL ECONOMY 24

References

Abdelal, R., 2006. Writing the rules of global finance: France, Europe, and capital liberalization.

Review of International Political Economy, 13 (1), pp.1 - 27.

Amartyra, S., 1999. Development as freedom, Oxford University Press

Buck, D., 2007. The ecological question: Can capitalism prevail? Socialist Register 43: 60 - 71.

Burawoy, M., 2010. From Polanyi to Pollyanna: The false optimism of global labor studies.

Global Labour Journal, 1 (2).

Crain, C. (2016). The Case Against Democracy. [online] The New Yorker. Available at:

https://www.newyorker.com/magazine/2016/11/07/the-case-against-democracy [Accessed

4 Feb. 2018].

Chomsky, N., 1999. Profit over people: Neoliberalism and global order. Seven Stories Press.

Fairhead J., Leach, M., and Scoones, I. (2012) Green Grabbing: A new appropriation of nature?

The Journal of Peasant Studies 39 (2): 237 - 261.

Financial Times. New ‘gig’ economy spells end to lifetime careers — FT.com.pdf 5 Aug. 2015

Foster, J, and Bellamy, B., 2010. ‘Introduction: A rift in earth and time’, in The Ecological Rift:

Capital ism’s War on the Earth, Monthly Review Press: 13 - 49

POLITICAL ECONOMY 25

Gill, S., 2017. ‘Transnational class forma tons, European crisis and the silent revolution’, Critical

Sociology 43(4 - 5): 635 - 651.

Gonzalez V. and Carroll T., 2017. ‘Politics after national development: Explaining the populist

rise under late capitalism’, Globalizations (online first).

Gourevitch, A., 2015. From Slavery to Cooperative Commonwealth: Labor and Republican

Liberty in the 19

Century, Oxford University Press.

Ha - Joon C., 2014. ‘Boris’s goat should drop dead: inequality and poverty’, Economics: the

user’s guide, Penguin Books, pp. 317 - 343.

Harvey, D., 2014. Capital’s relation to nature, in Seventeen Contradictions and the End of

Capitalism, Oxford: Oxford University Press.

Klein, N., 2014. Hot money: How free market fundamentalism helped overheat the planet. In

This Changes Everything, London: Penguin Books, pp. 64 - 95.

Locke, R.M., 2013. The Promise and Limits of Private Power Promoting Labor

Mcafee, A. and Brynjolfsson, E.,2014. The second machine age: work, progress and prosperity

in a time of brilliant technologies, W.W. Norton & Company.

Milanovic, B., 2016. Global inequality. Harvard University Press.

Munck, R., 2013. The Precariat: a view from the South. Third World Quarterly, 34(5), pp.747 -

762.

POLITICAL ECONOMY 26

Peet, R. and Hartwick, E. 2009. ‘Classical and neoclassical economics’, in Theories of

Development: Contentions, Arguments, Alternatives, New York: The Guilford Press, pp.

23 - 52.

Pradella, L., 2015. The working poor in Western Europe: Labour, poverty and global capitalism.

Comparative European Politics, 13 (5), pp.596 - 613.

Redclift, M. 2005. Sustainable development (1987 - 2005): An oxymoron comes of age.

Sustainable Development 13: 212 - 227.

Ricardo, F. 2012. ‘The invisible Leviathan’, in The new global political economy: from crisis

to supranational integration, Edwar Elgar Publishing Limited, pp. 3 - 37.

Robert O., and Marc W., 2011. ‘Development, neoliberalism and beyond’, in Global

Political Economy, p.327 - 331

Roccu, R., 2016. Inequality and Poverty in the Neoliberal Era. In The Palgrave Handbook of

Critical International Political Economy. Palgrave Macmillan UK, (pp. 181 - 207).

Rodrick, D., 2016. “Put Globalization to Work for Democracies”. The New York Times /

Rodrick, D., 2016. No Time for Trade Fundamentalism. Project syndicate, 14. 3 pages.pdf

Rudra, N. and Tobin, J., 2017. When Does Globalization Help the Poor? Annual Review of

Political Science, 20, pp.287 - 307.

Selwyn, B., 2009. ‘An historical materialist appraisal of Friedrich List and his modern - day

followers’, New Political Economy 14(2): 157 - 180.

POLITICAL ECONOMY 27

Standing, G., 2011. The precariat: The dangerous new class. Bloomsbury Academic.

CHAPTER 1.pdf

Struna, J.,2013, "Global Capitalism and Transnational Class Formation." Globalizations 10, no. 5

10(5): 651 - 657.

Varoufakis, Y., 2015. The global minotaur: America, Europe and the future of the global

economy. Zed Books Ltd.

Wolf, Martin. 2017. Capitalism and democracy — the odd couple. Financial Times.

Place new order. It's free, fast and safe

Paper type

Deadline

Page count

550 words

Total price: $ 15.00

Our customers say

Jeff Curtis

USA, Student

"I'm fully satisfied with the essay I've just received. When I read it, I felt like it was exactly what I wanted to say, but couldn’t find the necessary words. Thank you!"

Ian McGregor

UK, Student

"I don’t know what I would do without your assistance! With your help, I met my deadline just in time and the work was very professional. I will be back in several days with another assignment!"

Shannon Williams

Canada, Student

"It was the perfect experience! I enjoyed working with my writer, he delivered my work on time and followed all the guidelines about the referencing and contents."