Capitalism and democracy, can the two co-exist? The question I answered on another forum is indeed provocative.
I believe capitalism and democracy can successfully coexist in the long run only if economic actors become mature enough to police themselves in the way they conduct business, in “exchange” for freedom of market and reduced regulation.
In a democracy the people entrust a government to defend their
individual freedom & rights and their interests as a society or
nation, and to preserve a social order in a long term perspective.
Capitalism is based on the inalienable right to ownership and profit, and on the principle of a free market.
Conflict between capitalism and democracy occur when the exercise
of freedom jeopardizes the rights and interests of the people and the
interests of society at large.
In the past 30 years, many economists and management theorists have pushed the concept of freedom of enterprise and free market to a point where any intervention of the state or attempt to regulate the economic, social or environmental field is qualified as “socialism”. At the same time the world has seen more and larger frauds, scandals, crisis, and yoyo bubbles than ever, all in the name of free markets – including wars for democracy-, far from bringing the “equilibrium” expected.
Capitalism and free markets are not to blame here, but rather the behavior of economic actors. A free market does not confer the right to do anything at any cost, regardless of the impacts on people, societies or the generations to come. It can’t be a free ride to grab everything you can as fast as you can. In a democracy, freedom comes with duties and responsibilities. What is true at the individual level is also true for corporate economic actors. For democracy and its social contract to survive in a free market, the economic actors, whether individuals or corporations, must assume their social role (i.e role in society, not “socialistic” role) and take their part of duties and responsibilities. The counterpart of a free market and absence of regulation is the adoption of self imposed rules and principles for the conduct of business as an actor of society, and the accountability thereof. This proactive approach is what I believe Corporate Social Responsibility is ultimately about. When economic actors are not able to police themselves, they misuse the freedom they have been granted, and “the people” will legitimately want to impose more rules, or topple the system.
Proactive Corporate Social Responsibility is the safeguard that will prevent capitalist democracy to fall into socialism, anarchy or the reign of plutocracy…
Sweden -that I had the opportunity to observe for a few years- is probably ahead in its approach of capitalist democracy and practice of proactive CSR. The Swedish democracy is monitored and nurtured. It is the object, together with the cohesion of society, of continuous attentions though a long term engagement in democracy policies, because nothing is ever to take for granted.
To conclude, I would like to share a quote of Jean Jacques Rousseau that I particularly like:
“What man loses by the social contract is his natural liberty and an unlimited right to everything he tries to get and succeeds in getting; what he gains is civil liberty and the proprietorship of all he possesses. If we are to avoid mistake in weighing one against the other, we must clearly distinguish natural liberty, which is bounded only by the strength of the individual, from civil liberty, which is limited by the general will; and possession, which is merely the effect of force or the right of the first occupier, from property, which can be founded only on a positive title.
We might, over and above all this, add, to what man acquires in the civil state, moral liberty, which alone makes him truly master of himself; for the mere impulse of appetite is slavery, while obedience to a law which we prescribe to ourselves is liberty.”
Jean Jacques Rousseau -The Social Contract - Book I, Chapter VIII
Just came across Drucker's definition of freedom in relation to responsibility:
“Freedom is not fun. It is not the same as individual happiness, nor is it security or peace or progress. It is a responsible choice. Freedom is not so much a right as a duty. Real freedom is not freedom from something; that would be license. It is freedom to choose between doing and not doing something, to act one way or another, to hold one belief or the opposite. It is not “fun” but the heaviest burden laid on man: to decide his own individual conduct as well as the conduct of society and to be responsible for both decisions.” — Peter F. Drucker
http://thedx.org/2011/03/joes-journal-freedom-is-not-fun/
Posted by: Helene | 03/15/2011 at 11:30 AM