By using this site, you agree to our Privacy Policy and our Terms of Use. Close

Forums - Politics Discussion - Are Democracy and economic equality fundamentally incompatible?

 

Are Democracy and economic equality fundamentally incompatible?

Yes 43 40.57%
 
No 40 37.74%
 
Its Grey. 22 20.75%
 
Total:105
SamuelRSmith said:
BMaker11 said:
I don't think economic equality is achievable, period, in a capitalistic society. The largest thing I took from my senior Econ class (don't make fun of it! I did go on to go to Purdue) was that in order for there to be rich people, there must be poor people.

I've heard conservative pundits say "see, they think that if I make $100, that's $100 they can't get. But in actuality, we want to increase the amount of money for everyone". But that can't ever happen. Money is finite. There has to be, and will be, a difference in income in people. Because consumers control prices. Even if we all made the same amount of money, if I want an item more than the next guy, I'll pay more, meaning the supplier will have more money than he "should". That simple concept will eventually make a gap in income.

Not to mention that the moment everyone starts making even remotely similar wages across the board, there will be screams of socialism, and people will fall back on "why would I go through years of training to become a doctor when I can just work at McDonald's?"


This is false. Just about everything you said.

In a purely capitalistic system, there's only one way to make money: by trading something you have for it. How can there be losers in trade? If I thought I was going to get poorer through by trading something, I would never do it! When I go into a shop and buy X with $Y, I'm not $Y poorer, I'm X - $Y richer.

Value is subjective, everybody perceives things to be valued different things. This has to be true, or trade simply could not exist. When I buy a burger in McDonald's, it's because I value the burger more  than the money, and when McDonald's sells me the burger, it's because they value the money more than the burger.

Everybody wins in trade, everybody gets richer, it's a win-win situation. There are no losers.

You overlooked the point about if I want something more than you, I'll pay more for it. Capitalism is driven by greed, which sounds malicious, but it isn't a bad thing. But trade isn't just between you and the supplier. It's between you, me, and everyone else, and the supplier. When you buy a burger, it may be because you value the burger more than money, but you don't factor in that someone like me might value the burger more than you, and thus, pay more money to obtain it.

Competition. It happens for goods with consumers in the same fashion that it happens for money with producers. It's the same reason PS4s and XBones on eBay are selling for $600+ instead of the retail price of $400 or $500. You may only value the console at $400, but I want it more, so I pay upwards of $600.

I, personally, don't see myself as a loser in this scenario (McDonald's or consoles), because I would think I was getting my money's worth. So in that endgame, you're right, there isn't a loser between me and the person with the good that I want. 

Going back to the original comparison, McDonald's would have a greater benefit from me wanting the item more and, as a result, paying more (they made more money than they thought they would). And then, what would happen if people repeatedly valued the burger more than you, and paid what I paid? Eventually, McDonald's would catch on, and raise the price of burgers across the board (to maximize profits, also something that drives capitalism), and now you can't afford burgers there. And if you can't afford something, or goods are valued more than the amount of money you have across the board, you're, by definition, poor. You would be the loser in this endgame because you are no longer able to trade your money for a good. It's not win-win. There are losers.



Around the Network

Theoretically speaking in a democracy people would vote for laws and politicians that equal the playing field and the result would benefit everyone but that theory does not hold up in the real world. Why? The example has to assume everyone is living in a perfect world, it does not take into account for example social issues and/or people's lust for power.

It's not the fault of the democratic system, it's the fault of the people in the democratic system, people as a whole do not care for each other enough to bother, it's a consequence of our individualistic societies. Democracy has the ability to do great and terrible things at the will of the people and as a result it's a very fluid system that can fit in every corner of the political spectrum, but if people do not partcipate then democracy is useless.




PDF said:
freedquaker said:
I am an economics Professor, and I only have this to say :

Democracy has nothing to do with economic equality. Democracy is not an economic system, so the question is flawed to begin with. However, if you would change the question to ;

"Is capitalism incompatible with economic equality?"

Then the theoretical answer would be yes, they are incompatible. However, an economic system creating a perfect income equality is neither possible nor desirable. So this "incompatibility" does not automatically render capitalism wrong. But what kind of economic system do people want? This is where capitalism conflicts a social democracy (with more of a humanitarian view) :

Social Democracy wants :
a) Equal fundamental access & opportunities to broadly defined rights, regardless of income or status
b) Equally distributed or proportional public responsibilities and rights
c) Active State reflecting the social conscious
d) Heavily regulated market system
e) Earnings based on "worth", and "social value" etc...
etc...

Capitalistic Economy wants
a) Equal capability for entrepreneurship, market and funding access,
b) Self correcting and operating efficient market system
c) Non-disturbing and low level of taxation
d) Near complete private ownership, with state serving only as a regulatory body
e) Free floating and deregulated market system
f) Earnings based on "demand & supply"
etc...

Both of those systems are inherently utopia. Neither of them produces perfect equality or inequality. Social democracy is not socialism because there are well functioning markets with a large but minority share of state operating. The IN*equality will also be much smaller in a social democracy.

The question is, "Is pure capitalism really possible?"... Current experiences disagree. Kuznets famous inverse U shape inequality patterns are not observed and inequality in US (one of the last bastions of pure capitalism) has been increasing tremendously; especially the wealth inequality (Gini > 80%). This is basically unsustainable.

So there you have it. Capitalism in its pure form is incompatible with democracy, just like socialism was an unnatural unsustainable regime. However, democracy with "domesticated" social capitalistic policies seem to be not only very much possible but also lucrative and sustainable.

This is not meant to be a question of Capitalism compatibility with economic equality.  It is meant to be a question of demmocracy effect.  It was proposed by my Professor.  It would be fair to say that democratic government would most likely lead to capitalism.  Which in turn would lead to economic inequality.

This is much more about a quesiton of the electorate and whether they would push for economic equality as a tenate of democracy.  Democracy, along with universal suffrage was designed to give people equality under the law.  Is it concievable that people would push for further equality?  As economic inequality grows and more of the electorate could fall into lower class.  Is it possible they could elect politicians with the goal of leveling the playing field?

added an edit in the OP


The ANSWER to your question is VERY TANGLED UP; and I don't believe we do even know it yet as humans. But there are certain results that may lead to a better understanding...

Democracy IS compatible with capitalism. There is no such country on earth with pure capitalism & democracy. US is neither. The US economy is more capitalistic than pretty much all else but, the state is TOO LARGE, not because of social democracy but because of inflated healthcare, military expenditures and endless other institutions with big budgets. US is also not a true democracy either as there has been practically only 2 parties forever (I am really dumbfounded by the politicians who export democracy to others while we don't have real democracy right here!).

Democracy is compatible with (but not a guarantor for) economic institutions which promote growth, development, freedom, and innovation. Empirical studies show, however, some dictatorships are better at economic growth & development, while some others lag substantially. On the average, there is not much correlation between democracy and economic growth & development, meaning democracy is neutral (but compatible). On the other hand, there is a strict positive with social development and democracy, although with huge variations. In other words, democracy is correlated with development but the implementation varies a lot, and it does not guarantee success.

Finally Democracy doesn't say much about income inequality. However, one might argue, from an egalitarian perspective that the democractic rights of people may mandate equality beyond what capitalism readily offers. In that sense, "pure capitalism" might be at odds with democracy. Personally I wouldn't consider this "incompatible", but "not entirely compatible" so "must be adjusted", which is what exactly the European Social Democracies do, sometimes a bit too much.



Playstation 5 vs XBox Series Market Share Estimates

Regional Analysis  (only MS and Sony Consoles)
Europe     => XB1 : 23-24 % vs PS4 : 76-77%
N. America => XB1 :  49-52% vs PS4 : 48-51%
Global     => XB1 :  32-34% vs PS4 : 66-68%

Sales Estimations for 8th Generation Consoles

Next Gen Consoles Impressions and Estimates

BMaker11 said:
Kasz216 said:
BMaker11 said:
I don't think economic equality is achievable, period, in a capitalistic society. The largest thing I took from my senior Econ class (don't make fun of it! I did go on to go to Purdue) was that in order for there to be rich people, there must be poor people.

I've heard conservative pundits say "see, they think that if I make $100, that's $100 they can't get. But in actuality, we want to increase the amount of money for everyone". But that can't ever happen. Money is finite. There has to be, and will be, a difference in income in people. Because consumers control prices. Even if we all made the same amount of money, if I want an item more than the next guy, I'll pay more, meaning the supplier will have more money than he "should". That simple concept will eventually make a gap in income.

Not to mention that the moment everyone starts making even remotely similar wages across the board, there will be screams of socialism, and people will fall back on "why would I go through years of training to become a doctor when I can just work at McDonald's?"

Dude.  If that was the biggest thing you took from your senior econ class... you took nothing from your senior econ class... because I gurantee you they didn't teach you that.

 

Nobody thinks that money and wealth is finite.  Not even the most diehard Hayekians who want money tied to a gold standard.

That was literally a sentence that came out of my teacher's mouth. I took other things from the class, like supply and demand vs quantity supplied and quantity demanded, multipliers, the Keynesian economic model, and more. Based on concepts of basic economics, I learned a lot. But that one statement had the most impact.

If nobody think that money and wealth is finite, then that means people think money and wealth is infinite, and that's just false. There's only so many resources, so much labor, so many goods, etc. in the world at any given time. Technically you could make money "infinite" if you just kept printing it, but then the money would lose all value

But there are more goods produced in the last 20 years then there has in the entire history of mankind before that.

To suggest that as much money and wealth exist today, as 100 years from now is ludicrious.

When rich people talk about a $100 that wouldn't exist otherwise, they mean that competition has created that $100 by increasing the amount of goods, standard of living and just general stuff that exists.



Kasz216 said:

While that works short term, in the long term you usually end up with polticians who use their confiscatory powers to fatten up his allies until he can gain enough power to take over dictatorship style.

Like Mugabe for example, or Castro... or really any great "redistributive" politician who gained power.

Hugo Chavez actually being a pretty decent example in south america... he never got to the point of dictatorship, but his redistirbution found it's way in his allies pockets quite often.  

Do give him credit though in that he at least redistributed some money to the people he said he would.

Even a backlash against inequality often finds it's way creating inequality.  It's sad but true.   Even if you had direct voting on every issue, you'd find the smart and Charismatic tricking others into voting for things that specifically enriched them.

A change in culture is all that will change inequality, otherwise there will always be people on the top.

Let alone, that even if you pay people the same there will be economic inequality, pay my friend and I the same and i'll be richer then him in a year because he'll spend most of it on frivelous stuff that's gone after a day.

Fair enough. It would be too much to expect a perfect solution, but I would still consider it a realistic achievable possibility of reducing inequality from and within democratic leadership.

Not that I like populism, but there are things I dislike more.



 

 

 

 

 

Around the Network
SamuelRSmith said:
BMaker11 said:
I don't think economic equality is achievable, period, in a capitalistic society. The largest thing I took from my senior Econ class (don't make fun of it! I did go on to go to Purdue) was that in order for there to be rich people, there must be poor people.

I've heard conservative pundits say "see, they think that if I make $100, that's $100 they can't get. But in actuality, we want to increase the amount of money for everyone". But that can't ever happen. Money is finite. There has to be, and will be, a difference in income in people. Because consumers control prices. Even if we all made the same amount of money, if I want an item more than the next guy, I'll pay more, meaning the supplier will have more money than he "should". That simple concept will eventually make a gap in income.

Not to mention that the moment everyone starts making even remotely similar wages across the board, there will be screams of socialism, and people will fall back on "why would I go through years of training to become a doctor when I can just work at McDonald's?"


This is false. Just about everything you said.

In a purely capitalistic system, there's only one way to make money: by trading something you have for it. How can there be losers in trade? If I thought I was going to get poorer through by trading something, I would never do it! When I go into a shop and buy X with $Y, I'm not $Y poorer, I'm X - $Y richer.

Value is subjective, everybody perceives things to be valued different things. This has to be true, or trade simply could not exist. When I buy a burger in McDonald's, it's because I value the burger more  than the money, and when McDonald's sells me the burger, it's because they value the money more than the burger.

Everybody wins in trade, everybody gets richer, it's a win-win situation. There are no losers.

"Win" is a very relative term. People may make the "best" decision, but that is hardly a "win" in most cases, but rather the least painful loss: "become homeless or declare bankruptcy" is a choice that many might face as economic actors, and one can certainly make the rational decision, hedging homelessness against bankruptcy, but neither of those choices are a "win" in anyone's book. Monopolistic tendencies clean out the rest.

You can never assume perfect markets. It's pure theory like that which, ironically, corrupts the study of economics, because then people assume that these "textbook markets" are possible. Part of the reason why Macro should be taught in schools before Micro.



Monster Hunter: pissing me off since 2010.

freedquaker said:
PDF said:
freedquaker said:
I am an economics Professor, and I only have this to say :

Democracy has nothing to do with economic equality. Democracy is not an economic system, so the question is flawed to begin with. However, if you would change the question to ;

"Is capitalism incompatible with economic equality?"

Then the theoretical answer would be yes, they are incompatible. However, an economic system creating a perfect income equality is neither possible nor desirable. So this "incompatibility" does not automatically render capitalism wrong. But what kind of economic system do people want? This is where capitalism conflicts a social democracy (with more of a humanitarian view) :

Social Democracy wants :
a) Equal fundamental access & opportunities to broadly defined rights, regardless of income or status
b) Equally distributed or proportional public responsibilities and rights
c) Active State reflecting the social conscious
d) Heavily regulated market system
e) Earnings based on "worth", and "social value" etc...
etc...

Capitalistic Economy wants
a) Equal capability for entrepreneurship, market and funding access,
b) Self correcting and operating efficient market system
c) Non-disturbing and low level of taxation
d) Near complete private ownership, with state serving only as a regulatory body
e) Free floating and deregulated market system
f) Earnings based on "demand & supply"
etc...

Both of those systems are inherently utopia. Neither of them produces perfect equality or inequality. Social democracy is not socialism because there are well functioning markets with a large but minority share of state operating. The IN*equality will also be much smaller in a social democracy.

The question is, "Is pure capitalism really possible?"... Current experiences disagree. Kuznets famous inverse U shape inequality patterns are not observed and inequality in US (one of the last bastions of pure capitalism) has been increasing tremendously; especially the wealth inequality (Gini > 80%). This is basically unsustainable.

So there you have it. Capitalism in its pure form is incompatible with democracy, just like socialism was an unnatural unsustainable regime. However, democracy with "domesticated" social capitalistic policies seem to be not only very much possible but also lucrative and sustainable.

This is not meant to be a question of Capitalism compatibility with economic equality.  It is meant to be a question of demmocracy effect.  It was proposed by my Professor.  It would be fair to say that democratic government would most likely lead to capitalism.  Which in turn would lead to economic inequality.

This is much more about a quesiton of the electorate and whether they would push for economic equality as a tenate of democracy.  Democracy, along with universal suffrage was designed to give people equality under the law.  Is it concievable that people would push for further equality?  As economic inequality grows and more of the electorate could fall into lower class.  Is it possible they could elect politicians with the goal of leveling the playing field?

added an edit in the OP


The ANSWER to your question is VERY TANGLED UP; and I don't believe we do even know it yet as humans. But there are certain results that may lead to a better understanding...

Democracy IS compatible with capitalism. There is no such country on earth with pure capitalism & democracy. US is neither. The US economy is more capitalistic than pretty much all else but, the state is TOO LARGE, not because of social democracy but because of inflated healthcare, military expenditures and endless other institutions with big budgets. US is also not a true democracy either as there has been practically only 2 parties forever (I am really dumbfounded by the politicians who export democracy to others while we don't have real democracy right here!).

Democracy is compatible with (but not a guarantor for) economic institutions which promote growth, development, freedom, and innovation. Empirical studies show, however, some dictatorships are better at economic growth & development, while some others lag substantially. On the average, there is not much correlation between democracy and economic growth & development, meaning democracy is neutral (but compatible). On the other hand, there is a strict positive with social development and democracy, although with huge variations. In other words, democracy is correlated with development but the implementation varies a lot, and it does not guarantee success.

Finally Democracy doesn't say much about income inequality. However, one might argue, from an egalitarian perspective that the democractic rights of people may mandate equality beyond what capitalism readily offers. In that sense, "pure capitalism" might be at odds with democracy. Personally I wouldn't consider this "incompatible", but "not entirely compatible" so "must be adjusted", which is what exactly the European Social Democracies do, sometimes a bit too much.

There is both correlation and causation, but in reverse. Economic growth and development usually leads to democracy, which is why the "well-intentioned" dictatorships always fall in time, because they spend their time educating their people and building infrastructure and putting the people to work, compared with third-world plutocracies that are just interested in lining their own pockets. More educated people who have time in their lives for something other than just living a hand-to-mouth existence.

Relative levels of economic equality also help decrease tensions between the classes in society. In a highly unequal society, where the wealthy might be in the 21st century but the poor are still in the 18th century, the wealthy are going to fear the poor due to the great degree of "otherness", or the poor will resent the wealthy for having basic things that the poor will never see. This can get exacerbated when the lines are drawn along racial or ethnic boundaries (why, for instance, everyone assumed that Apartheid would end in a bloodbath one way or another, huge inequality enforced along easily discernable lines), so economic inequality will lead to the conditions of dictatorship, either a military coup d'etat usually for the upper class seizing power, fascism if the yeoman class seizes power, or Bolshevism if the underclass takes power by force.

Generally democracies cannot exist without a degree of prosperity and equality. Countries like India, which retain stability while having massive inequality still, are very much the exception rather than the rule.



Monster Hunter: pissing me off since 2010.

Dr.Grass said:
Since some people are

- smarter
- better with money
- grow up with different cultural outlooks towards money
- more talented
- more industrious
- more driven and ambitious
- of more value to the economy
- spend money more wisely
- etc.

than others, I think the society in which everyone has the same amount of capital is an artificial one that is just entirely unrealistic.

For instance, I deserve much more money than most of you because of some of the above reasons :P


lol



You can't talk about Democracy because no country has a real democracy, since democracy is an ideal and people are to lazy and corrupt to create a real one.

Democracy is not the problem, but the solution. You cannot have equality without it.



 

Kasz216 said:

But there are more goods produced in the last 20 years then there has in the entire history of mankind before that.To suggest that as much money and wealth exist today, as 100 years from now is ludicrious.When rich people talk about a $100 that wouldn't exist otherwise, they mean that competition has created that $100 by increasing the amount of goods, standard of living and just general stuff that exists.

To compare right now to the past is meaningless, in the little social experiment the OP has brought up. Sure, relative to 20 or 100 years ago, we have more wealth, goods, etc. A lot more people can eat, have shelter, etc. than 100 years ago. But relative to right now, it's still finite. There are "only so many goods" and "only so many resources" right now. Resources will never exceed our wants and needs (scarcity). And because of that, we have to compete for them. And since those resources are limited, at some point, the fact that I was able to obtain said resource results in someone else not being able to obtain it. If I have something (1) and another person doesn't (0), well, 1 does not equal 0. If we aren't equal then we are unequal.

edit: and please don't take this as me wanting there to be perfect economic equality. I don't think we should. It's good to have income inequality. If you work hard, become skilled, and work a difficult job, you should be compensated more than someone mopping floors. Is the income gap in the US large? Yes, and I would like it to shrink because it's ridiculous, but at the same time, we shouldn't all make the same amount of money either. I'm just defending my point that economic equality doesn't exist in capitalism.