World on Fire - Brownstein, Michael [99]
Societies with a market-dominant minority face a specially formidable problem: class conflict and ethnic conflict overlap in a particularly explosive way. The rich are not just rich, but members of a hated, outsider ethnic group. In societies with no market-dominant minority, the division between the few who are rich and the many who are poorer is unlikely to be ethnicized—but it remains, at least potentially, a source of conflict. Wherever democracy and capitalism are joined together, mass political movements directed against the rich become a possibility, fueled by resentments and demagogic manipulation similar to (but usually less murderous than) that which arises in the presence of market-dominant minorities.
Indeed, for centuries it was thought that the danger of class conflict made universal suffrage irreconcilable with a market economy. Although largely forgotten today, leading Western statesmen, political philosophers, and economists long recognized a profound tension between market capitalism and democracy. Markets, it was thought, would produce enormous concentrations of wealth in the hands of a few, while democracy, by empowering the poor majority, would inevitably lead to convulsive acts of expropriation and confiscation. In Adam Smith’s words in 1776, “For one very rich man, there must be at least five hundred poor. . . . The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions.”
Similarly, James Madison warned against the “danger” to the rights of property posed by “an equality & universality of suffrage, vesting compleat power over property in hands without a share in it.” David Ricardo was willing to extend suffrage only “to that part of [the people] which cannot be supposed to have any interest in overturning the rights of property.” British statesman Thomas Babington Macaulay went further, portraying universal suffrage as “incompatible with property” and “consequently incompatible with civilization” itself:
Imagine a well-meaning laborious mechanic fondly attached to his wife and children. Bad times come. He sees his wife whom he loves grow thinner and paler every day. His little ones cry for bread. . . . Then come the professional agitators, the tempters, and tell him that there is enough and more than enough for everybody, and that he has too little only because landed gentlemen, fundholders, bankers, manufacturers, railway proprietors, shopkeepers, have too much? Is it strange that the poor man should be deluded, and should eagerly sign such a petition as this? The inequality with which wealth is distributed forces itself on everybody’s notice. . . . The reasons which irrefragably prove this inequality to be necessary to the well-being of all classes are not equally obvious. . . .
[I]s it possible to doubt what the result [of universal suffrage] must be? . . . What could follow but one vast spoliation? One vast spoliation!
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As it turned out, of course, these early doubters of free market democracy were proved wrong. Defining the terms broadly, markets and democracy have coexisted quite healthily in the United States for two hundred years, and the other leading developed countries have been both capitalist and democratic for at least a half century. That democratic politics proved compatible with capitalism in the West—that, in Claus Offe’s words, the electoral “power of numbers” did not overwhelm the “power of property”—is one of the great surprises of modern history.
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Why didn’t democracy result in confiscations and one “vast spoliation”? Why doesn’t it do so today? Redistribution is one reason: All the Western nations today have enormous tax-and-transfer programs, dulling the harshest edges of class