Curing Neoliberalism with Democracy

Introduction: Pope Francis and the Critique of Capitalism

Pope Francis, never one to shy away from controversy, attacked contemporary forms of capitalism as not only exclusionary but also deadly (Downie). To support his claim, Francis notes that the news media regularly report a meaningless one or two percent change in the Dow Industrials, but the death of a homeless person goes unnoticed; or that daily tons of food is thrown into the trash while millions starve. Although some liberty was taken in the paraphrasing of Francis' words, the point is clear: capitalism today, as it is being practiced, rewards the ruthless and powerful and marginalizes the rest.

According to James Downie, author of a Washington Post article about Pope Francis' stinging criticism of neoliberalism, what separates Francis from earlier papal proclamations of capitalist evils is that he talks specifics—such as the destructiveness of trickle-down economics and the market economy. The main tenet of trickle-down theory, according to Downie, is that economic growth through a free market economy will eventually increase social justice and inclusion (para. 4). In addition, neoliberal proponents argue that the nation state should step aside and let the open markets determine our economic fates.

Historical Inequality and Postwar Egalitarianism

Thomas Piketty explained in his book Capital in the Twenty-First Century that historically, economic and social inequality and exclusion have always dominated, at least up to the end of World War II (241). During the eighteenth and nineteenth centuries, Western societies were stratified economically into incomes derived from capital or labor; the latter at a huge disadvantage. Inherited wealth was everything, since the amount of income that could be expected from labor alone, regardless of the profession, relegated laborers to a life of struggle near the edge of poverty. Increasing one's social status therefore could only be accomplished by acquiring a large dowry through marriage or inheriting a fortune. The moral implications of such a system, according to Piketty, are the lack of economically meaningful work incentives. Instead, ruthlessness would seem to be the best attribute to have.

After the end of World War II, there was an apparent growth in egalitarian values in Western nations as the social value of inherited wealth declined and the best pathway to economic health was academic and career success (Piketty 241). Although Piketty admits to the reemergence of inequality concerns in recent years, he argues that the same values and work ethics that emerged after the war are still intact today. For example, would it be a familiar refrain that the best way to ensure economic security is through a large dowry or inheritance, rather than pursuing a law or medical degree? Not yet, anyway.

Habermas, Democracy, and the European Union

The most likely sources of contemporary economic inequality are a decline in the demand for skilled laborers, a faltering educational system, and government policies influencing the course of the labor market and wage levels (243). Piketty's arguments seem to have merit. In the United States at least, access to and the cost of a college education has become more restrictive, and the power and prevalence of labor unions have steadily declined for several decades. Free Trade Agreements have allowed the labor market to ignore international borders, which brought American workers into direct competition with low-wage laborers in third world and emerging economies.

The neoliberal ideal of an unregulated open market economy would terrify Jürgen Habermas, a first-hand witness to the atrocities committed by the National Socialist Party of Nazi Germany (Muller-Doohm 443). According to Muller-Doohm's interpretation of Habermas' political and economic philosophy, any discussion of neoliberal theories should include the inevitable threat of fascism and totalitarianism (445). Although Habermas remained fearful of the power inherent in nation states, he also remained silent for decades as European nations began to work on creating a European Union (447). Muller-Doohm claims the basis for this silence was Habermas' justifiable concern that the primary beneficiary would be a larger open market and more liberalized trade policies.

Habermas finally becomes vocal about the benefits of forming a European Union, in part as a respected voice arguing against the self-interests, power, and destructive nationalism of nation states, and in part to promote democracy as an antidote to the dangers inherent in a liberalized open market economy (Muller-Doohm 447). To create a European community based on the democratic ideals of self-determination, human rights, and the rule of law, Habermas encouraged the political merging of European nation states. This would allow the establishment of consensus rule by a trans-European citizenry under a European constitution, thereby limiting the influence of politically powerful interests and empowering the previously marginalized. For example, Muller-Doohm presents the worldwide protests against the U.S.-led invasion of Iraq as evidence of an emerging trans-European voice immune to the political influence wielded by the United States over some European nations.

Conclusion: Democracy, Unions, and Economic Justice

One fact seems apparent: labor unions were strongest in the United States during the period when the economy was most egalitarian. Implementing policies that strengthen labor unions could therefore reduce inequality where democratic processes have failed. This would be one alternative if the value of "an honest day's wages for an honest day's work" is to continue to play a prominent role in American society.