The most spectacular achievement of capitalist propaganda is convincing us that capitalism is somehow compatible with democracy.

What makes this lie so incredible is that, as we will prove, capitalism is in fact inherently & BY-DEFINITION anti-democratic. 1/33

First, let’s start by defining democracy:

Real democracy means those who are affected by decisions get to have a fair say in those decisions.

Seems simple enough, but often political discourse obscures this obvious truth to make the non-democratic seem democratic. 2/33

Let’s demonstrate by way of example. Let’s say your next-door neighbor’s household has a vote & the majority decide that your household must abide by a strict 7 PM curfew. Sure, there was a vote. There was even a majority decision. But was it democratic? 3/33

Of course not! Why? Because those affected (your household) were excluded from the decision while those largely unaffected (your next-door neighbors) had all the say in the decision. While this example may seem ridiculous, it illustrates the most important point of democracy.4/33

For something to be truly democratic, those AFFECTED by decisions should be the ones to have a fair say in those decisions. And at its most idealistic form, democracy means people should have a say in decisions proportionate to the degree the decision affects them. 5/33

To illustrate this further, let’s take another example: Let’s say there is a decision that would cause your home to be demolished, so it obviously affects your household. But say it also affects your next-door neighbor because dust & debris would land in their backyard. 6/33

This is a decision that affects both your household & your next-door neighbor’s household. But it affects your household much, much more. Thus, ideally, your household should have more of a say in this matter because it affects your household more. 7/33

Thus, real democracy means those affected by decisions should have a fair say in those decisions: ideally a say in proportion to the degree they are affected by those decisions.

For a fuller exploration of freedom & democracy see this thread: 8/33 https://twitter.com/ArashKolahi/status/1125471207086649346?s=20

Now that we have a working definition of democracy, let’s look at capitalism & its defining institutions.

Internally, capitalist enterprises are largely defined by a Corporate Division of Labor. 9/33

Economists identify three general classes or roles within the Corporate Division of Labor found in Capitalist enterprises:

• Capitalist/Investor Class
• Managerial/Coordinator Class
• Working Class

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The Capitalist/Investor Class has an ownership stake & largely has the final say in decisions: either directly or indirectly through the hiring of the Managerial/Coordinator Class to manage operations in their interests. 11/33

The Managerial/Coordinator Class usually has a great deal of discretionary say in the day-to-day operations & decisions of capitalist enterprises. Their incentives are to make decisions in the best interest of themselves & those who hire them. 12/33

Finally, the Working Class are workers who have little to no say in any workplace decisions at all. Economists estimate that approximately 80 to 85 percent of most capitalist enterprises are Working Class workers. 13/33

Thus, by definition, capitalist workplaces are top-down, authoritarian enterprises where the vast majority have little to no say whatsoever in any decisions. Obviously, this is a violation of democracy, as defined earlier. 14/33

Work is a huge part of our lives. And workplaces make decisions every day that affect workers, their families & their communities. Virtually everyone affected by these decisions are excluded from having any say in them. 15/33

Furthermore, as we have explored in a separate thread, the fact that capitalist enterprises exclude the participation & voices of most workers from the decisions that affect them causes alienation, which extends far beyond just the workplace: 16/33 https://twitter.com/ArashKolahi/status/1212842818286211072

No one really argues that capitalist workplaces are democratic because it’s so obvious they are not. Instead, what we are told ad nauseam is that free markets allow us to ‘vote’ with our wallets. Surly the choices we make on the free markets are democratic, right? Wrong. 17/33

To understand just how undemocratic markets are, we must understand how markets work. Markets are an allocation system where buyers & sellers perform transactions, each in their own best interest. Buyers want the lowest price possible. Sellers want the highest price. 18/33

Between a floor price, where it’s no longer worth it to the seller (i.e., lose money/opportunity cost) & a ceiling price, where it’s no longer worth it to the buyer (i.e., forgo or find alternative) prices reflects the relative bargaining power between buyers & the sellers. 19/33

The transaction will only take place if there is a marginal benefit to both buyer & seller. But the problem is both the buyer & seller benefit & are incentivized to externalize as much of the cost of the transaction as possible via what economists call externalities. 20/33

Buyers & sellers in markets both benefit by externalizing as much of the costs associated with transactions as possible. Sellers benefit through higher profits since they don’t have to incur those costs. And buyers benefit since the price will be lower. Let’s demonstrate: 21/33

Let’s say it costs a seller $1 to make a widget: $0.50 labor & $0.50 parts/resources. To make widgets at the lowest price possible & stay competitive, they are manufactured in such a way that causes long term respiratory problems for the workers. 22/33

Furthermore, producing widgets entails emissions that negatively affect the neighboring communities as well as a significant negative environmental impact globally. Finally, when widgets are disposed of, they release toxic seepage into the earth & local water supplies. 23/33

With markets, none of these costs are borne by either the buyer or the seller. They are, as economists call them, externalities.

Further, both buyers & sellers are incentivized to externalize as much of the costs & burdens of their transactions as possible. 24/33

In other words, markets BY-DEFINITION exclude ALL parties affected by transactions other than the buyer & seller from having any say whatsoever in that transaction. As the above example shows, markets exclude workers, neighbors & ALL the communities affected. 25/33

Recall the definition of democracy: those affected by decisions should have a fair say in those decisions. But markets by-definition exclude EVERYONE effected by a market transaction except for the immediate buyer & seller. Thus by-definition markets are undemocratic. 26/33

This is important to understand. The reason market capitalism is so inherently environmentally destructive is precisely because market capitalism is so undemocratic!

We have trillions upon trillions of market transaction, each externalizing the worst environmental effects! 27/33

For a much fuller & more detailed explanation of how markets function, why they misprice everything & why they are inherently inefficient & environmentally destructive, please see this thread: 28/33 https://twitter.com/ArashKolahi/status/1164321010964815872

Finally, capitalism is also tangentially undemocratic because, as we have shown in a separate thread (below) capitalism is 1) inherently inequitable & 2) inherently exasperates wealth disparities because it rewards bargaining power. 29/33 https://twitter.com/ArashKolahi/status/1210332075787608065?s=20

Huge disparities in wealth distort the allocative properties of markets. For example, billionaires spending billions on things like luxury yachts means our economy over allocates resources to produce luxury yachts & under allocates to produce things like affordable housing. 30/33

In other words, since capitalism has an inherent tendency to exasperate wealth discrepancies & those with greater wealth can cause the misallocation of resources to their favor, it give those with massive wealth a disproportionate say in what is produced & consumed. 31/33

As we have shown, the defining structures of capitalism are antidemocratic. Internally, capitalist workplaces with their top-down corporate division of labor are undemocratic. And externally via free markets, capitalist allocation is undemocratic. 32/33

Economies effect every aspect of our lives, our communities, our environment & our planet. Capitalism’s defining institutions largely excludes those affected by decisions from having any say in those decisions. Thus, capitalism is inherently & by-definition undemocratic. 33/33