George Orwell (1903–1950), the author of the anti-Utopian novels Animal Farm (1945) and 1984 (1949), has often been quoted as saying, “Some ideas are so absurd that only an intellectual can believe them.” Whether he, in fact, said it or not, it rings inescapably true.
Even if logic and reason could not dislodge some of those on “the left” from their views and values, one would think that after a sufficient amount of evidence and time, historical experience would, finally, work its effect. Alas, this rarely seems to be the case. Misguided and factually erroneous ideas continue to reappear and be recycled, time and time again. The common denominator of most of these absurd ideas is a dislike for and usually a desire to weaken or eliminate free-market capitalism and the individual liberty that accompanies it.
An example is an article by Katharina Pistor, professor of comparative law at the Columbia Law School in New York City entitled “Capitalism Is Driving Democracy’s Death Spiral” (November 15, 2024), which is posted on the website of Project Syndicate. She argues that all the recriminations and finger-pointing among the Democrats in the wake of Kamala Harris’s defeat to Donald Trump in the presidential election was distracting “from the elephant in the room: capitalism. Democracy is in a death spiral because it is subject to a socioeconomic regime that pits everyone against everyone else, undermining the capacity for consensus and collective decision-making.”
The evils of capitalism, the tragedy of socialism’s demise
A great tragedy, in her view, was the end of 20th-century collectivism, “Had communism and socialism not collapsed at the very moment when [capitalist] financialization unleased its full force,” she says, “many might have noticed its corrosive effects on democracy much earlier. Instead, capitalism was celebrated as the only game in town” following the demise of the Soviet Union. “Financial returns became the end to which all other needs and aspirations were subordinated. While the collateral damage of this process was widespread, the biggest blow was dealt to our capacity for collective decision-making.”
It is important to appreciate the central dichotomy that Pistor sees as the alternative ways of organizing the institutions of society: a free-market economy guided by a price system reflecting consumer demands and producer possibilities, or a “democratic” system of political decision-making, behind which stands governmental force. A global market order of free exchange of goods and financial resources among willing buyers and sellers everywhere, or governmental coercion restricting, prohibiting, or commanding the production and allocation of goods, investment and employment based upon a presumed political “consensus” at the level of the nation-state.
Of course, this is not the language she uses. For her, there is the ruthless and disastrous pursuit of individual profit and gain by those who only care about “price signals” and little for their fellow human beings versus “human needs” that can only be served and satisfied by seemingly benign political decision-making through which, clearly, the individual and his actions are made subordinate to a “democratic” majoritarian “consensus.”
In true Orwellian newspeak, words and ideas are turned on their heads: individual freedom of choice and association is profit-lusting abuse and exploitation of others; political compulsion through underlying government force is “democratic” consensus-building based on voting numbers and coercive command of what people can do, how they do it, and with whom they associate in particular ways.
Globalization’s dramatic improvement in the human condition
Globalization, as it has grown over the past 35 years since the fall of the Berlin Wall in 1989 and the demise of the Soviet Union in 1991, is seen by Pistor as the great enemy of a more just fulfillment of “human needs.” It is certainly the case that the extension of globalizing flows of goods and services, financial investment, and capital transfers over the last several decades has not been fully free-market based. Indeed, a good deal of it has been fostered, restrained, subsidized, or taxed in terms of how international commerce, industry, and investment has been fostered, restrained, subsidized, or taxed by government fiscal and regulatory policies meant to assure political “influence” over how, where, and for what people are buying and selling, and lending and investing across borders. It has been forms of managed trade rather than truly free trade.
Nonetheless, even though it has been restrained and regulated market globalization via national and international organizational interventionism, it has radically transformed the lives of billions of people — and all for the better. According to the World Bank, in 1990, out of a world population of 5.3 billion people, 36 percent, or 1.9 billion people, lived in poverty around the globe. In 2024, with a world population of 8.3 billion people, or a 56 percent increase since 1990, world poverty has decreased to 9 percent, or 692 million people. Another indicator is the infant mortality rate per 1,000 live births. In 1990, the infant mortality was 93 deaths out of every 1,000 live births. In 2024, that number had fallen to 25.5 deaths for every 1,000 live births, or a 73 percent decrease.
The severest degrees of poverty, 20 percent national poverty or above, is primarily limited to sub-Saharan Africa, in particular, and the Indian subcontinent. For example, in India in 1990, 48 percent of the population were in poverty; in 2024, this was down to 13 percent, a dramatic decrease, while still above the global average. On the other hand, in the sub-Saharan countries, poverty is still widespread: Kenya, 36 percent; Democratic Republic of the Congo, 79 percent; Zambia, 64 percent; Nigeria, 31 percent; and Niger, 51 percent.
In 1990, per capita global GDP (all purchasing power parity, 2021 dollars) was $4,311; in 2023, it had increased to $13,138, for a three-fold increase over the last 35 years. In the United States, real per capita GDP has increased by 65 percent during this period. In a former Soviet-bloc country such as Poland, per capita GDP has seen a 337 percent increase, from $13,037 to $44,050. In Asian countries like India and the Philippines, the increases in per capita GDP have been, respectively, 420 percent and 210 percent between 1990 and 2023. In Latin American countries such as Chile and Mexico, the GDP per capita increases have been, respectively, 264 percent and nearly 30 percent over this same period.
On the other hand, in the Democratic Republic of the Congo in Central Africa, per capita GDP has decreased by 32 percent over 35 years due to unending civil wars and tribal conflicts, a social unrest and instability that really goes back to the early 1960s when the CIA conspired to assassinate the Congolese leader Patrice Lumumba. In northern Africa, Libyan per capita GDP has also decreased, by 15 percent, primarily due to the civil war that broke out in 2011 following the European Union and American-orchestrated overthrow of Muammar Gaddafi, which continues to today.
Hampered markets vs. free markets for human betterment
Of course, it would be a gross exaggeration to assert that all these improvements in many parts of the world are exclusively due to the globalization of opportunities and benefits from greater international trade, commerce, and investment. But to the extent that reduced trade barriers and increased degrees of more open markets emerged around the world, they certainly significantly contributed to this amazing and historically profound material improvement in the human condition around the globe. Yet this is the globalizing process that Pistor rails against as being steeped in social injustice and business ruthless profit-seeking.
However imperfect and government-hampered in far too many instances, market-oriented globalizing forces have helped to undermine the stranglehold of national governments whose interventionists and often socialist policies have prevented economic opportunities and consumer choice by using their political powers to plunder their own peoples. Yes, these same governments have often cut deals with private businesses to have access to their national economies, and these privilege-granting and privilege-benefiting arrangements have certainly not been examples of the ideal of free markets.
But even the partially opened doors to more competitive options on both the demand and supply sides have helped to transform pervasive poverty into degrees of never-experienced-before plenty for many of the world’s people. Even a little bit of economic freedom can go a long way to raise people up from abject poverty. If globalizing forces had really and truly been fully free market, it is not difficult to imagine that even that current 9 percent world poverty rate already would be far lower.
Political democracy vs. market participatory democracy
Free markets, both within countries and between countries, are social systems of participatory democracy. Each individual, guided by his own values and preferences, makes his own choices and decisions as to how he wants to live his life, how he wants to spend the income he has earned, and what goods and services to purchase in the relative amounts he desires. He enters into the voluntary associations and exchange relationships with others that he finds most advantageous and beneficial to himself.
As long as those demanding various goods and services are willing and able to offer to pay prices sufficient to cover the opportunity costs of those on the supply-side of the market to produce one set of products to satisfy consumer demands rather than producing some other goods, then both majority and minority demands for multitudes of different commodities are made available to the consuming public. Mass-market demands and niche market demands are fulfilled simultaneously. The free-market economy, therefore, is a system of democratic pluralism that is both diverse in supplying the many different wants and desires at the same time and also inclusive, in that it serves all to varying degrees rather than some but not others.
In the democracy of the marketplace, each of us gets to change our mind as often as we want: Cheerios for breakfast today, ham and eggs tomorrow, and maybe just a cup of coffee the next day, or even nothing at all later on in the week instead of a morning meal. And we don’t have to get anyone else’s permission to do so. Each individual is a majority of one in determining his own decisions and choices.
Spending other people’s money in the political process
Compare this to the democratic marketplace of political decision-making. Here the voting majority has its way on election day; their preferred candidates hold office for the stipulated period of time, and the social and economic policies promised and implemented by those elected by the majority of the voters are imposed upon all in the society, including the minority who voted for different candidates who promised different policies. And you have to wait until the next election cycle, usually years away, to try to change those policies by persuading enough other future voters to vote for your desired policies and preferred candidates when that next election comes around. If you fail, the winning majority imposes its preferences upon you again.
Instead of spending their own money on what they individually want in the free marketplace, the political voting majority spend the tax money of all the voters, including all those whose preferences were defeated in that last election. In other words, under the system of political democracy, the individual is forced to pay for many things he does not want and which he may wish, perhaps, government should not be doing at all. Since it is other people’s money that is up for grabs in the political democratic contest, the political system swarms with special-interest groups of virtually every imaginable type, all of whom want to get their hands in the taxpayer-funded cookie jar to obtain what they want for “free” or for far less than if they had to voluntarily pay for it in a competitive free marketplace.
The corruption and swindling that Pistor wails about as instances of injustice and exploitation in society are the creation of the very political-economic system she clearly wants more of. She has this implicit fantasy conception of “democracy” as some idealized town meeting in which we all get together, jointly only thinking about some shared notion of the “common good” and the “general welfare.” We discuss, deliberate, and decide on what is good “for all of us,” separate from our narrow, self-interested individual wants and desires. We rise above the pettiness and perversity of our personal selfish desires for the “collective good” of our real joint “human needs.”
The only real democracy is when progressivism wins
All of this explicit rhetoric and implied views are really covers for the reality of Pistor expressing what she wants — and using “politics” to impose it on all of us, whether or not we share her conceptions of the “common good” or “social justice.” I am very sure that Pistor is shocked, dismayed, and angered by the outcome of the 2024 presidential election. The democratic outcome, I am confident, is not one she considers democracy triumphant. True democracy is when the democratic outcome is the one she wants imposed by government on everyone.
About 155.2 million votes were cast for those running for the presidency, that is, for Donald Trump, Kamala Harris, and smaller party candidates. Donald Trump’s total was around 77.3 million votes to Kamala Harris’s 75 million. Trump won about 2.3 million votes more than Harris, or 50.7 percent of the votes cast for the two major party candidates. As a percentage of all votes cast for all presidential candidates, Trump won 49.8 percent of the vote to Harris’s 48.3 percent. The will of the majority (or near majority if all presidential votes cast is the benchmark) was expressed by the election of Donald Trump.
But if the policies that Trump proposed and promised during the election campaign are imposed on the country, will Professor Pistor consider this a shining example of the meaning of the common good and social justice triumphant? I would be greatly surprised. It will not be a matter of Trump maybe trying recess appointments to cabinet positions to circumvent the Congressional process of advise and consent. Or the declaration of a national emergency to impose mass deportations of illegal immigrants. Or the use of various executive orders reflective of an imperial presidency.
It is the belief of Pistor and her ideological comrades that “true” democracy always moves society in the “progressive” and socialist direction. Pistor is so sad about us not having more clearly before us the socialist alternative because of the unfortunate demise of socialism and communism in the 1990s. If only the Soviet socialist experiment was still there for us to learn from and want for ourselves, only in a more “democratic” garb that those imposers of the “dictatorship of the proletariat.” You know, socialism with a more “human face.”
That is, her notion of true democracy is a progressivism and a socialism promoted in government by people like, well, like herself. Who better than people like her to make the rest of us live the way she knows is better for us than we know ourselves? A benevolent “democratic despotism” for our own good. Trump represents the undemocratic despotism because it is not the political paternalistic despotism she wants.
Progressives and Trump are fighting over different types of paternalism
None of what has been said implies that Donald Trump’s agenda or policies reflect an alternative that represents something in any way closer to the classical-liberal and libertarian ideal of individual liberty, free markets, freedom of association, free movement, or constitutionally limited government than what Pistor wants. The point being made here is that “progressives” and implicit socialists like Pistor only oppose him because they view Trump’s policies as the wrong types of government interventionism, planning, and redistribution.
She merely wants the interventionist, planning, and redistributive governmental powers in the hands of those who think like her. Just as much as Trump, she has no desire for the powers of government to be reduced to the much-abused “night-watchman state,” in which the political authority is narrowly confined to respecting and protecting each individual’s right to his life, liberty, and honestly acquired property in a social setting of voluntary association, peaceful production, and free exchange.
It is of note that whether the political paternalists and social engineers label themselves or others as being as on “the right” or “the left,” what they jointly oppose at all costs is the classical-liberal, free-market alternative in which political power to play the role of paternalist is removed from the hands of all those in government. F. A. Hayek pointed out in The Road to Serfdom (1944) that in the Germany of the 1920s and early 1930s, before Hitler came to power in 1933, Nazis and communists viewed each other’s members as potential recruits to their respective causes. They shared more in common than either one had in common with the remnants of classical liberalism in Weimar Germany. The German liberals were viewed by Nazis and communists as their common enemy because those liberals rejected their shared premises of collectivism, command, and control over all aspects of people lives, regardless of the statist style of ideological clothing they covered themselves with.
Market price signals and personal freedom
The “price signals” of the marketplace that Pistor finds so abhorrent are the means by which all those who participate in the social system of division of labor are able to cooperate and coordinate all that they do without being coerced and commanded to act in certain ways as both consumers and producers and demanders and suppliers. The competitive, free-market price system is the essential communication tool for people to convey to each other what they want and what they could do. What they would like to buy and what they might be able to produce. What they would voluntarily be willing to pay for what they demand and how much they would have to receive to supply what others would like to have. Each individual can freely say to those, respectively, on the other side of the marketplace that the price being asked is too high or the price being offered is not enough.
Others are at liberty to step in and, respectively, say that they would be willing to pay the price asked rather than not have the product that is up for sale, or to say they would be willing to take a lower price offered rather than lose a sale. Globalization is an extension of this into a more inclusive and diverse shared community of free association and mutual betterment.
No one is forced to participate; everyone is free to live and make a living in a more isolated and far less productive way. But they must pay a price for this, including losing customers or production partners who freely choose to enter into and participate in the expanded global system of division of labor. The individual who does not want the life and the way of earning a living in this more cosmopolitan existence cannot limit, prohibit, or force those around him to do things in his preferred economic ways, to the extent that those others are free to choose.
This is why Pistor does not like the course followed by globalization, even if this globalization has already been heavily politicized with interventionist and regulatory policies and is far less free than it could be and, from the classical-liberal perspective, should be. The global price signals communicate essential information both to the corporate executive sitting in a high-rise corner office overlooking some crowded street in a financial metropolis and to a humble farmer plowing his field or a simple tradesman selling his wares in a far distant rural area. The price signals inform each in its own way what people they have never met and know nothing about in all the corners of the world may want and the market value they place upon it; the price signals convey what some of those anonymous others, maybe half way around the globe, would be willing to supply, without needing to or being able to know who they individually are and all the details about how they plan do it.
But this often requires the corporate executive or the rural farmer or tradesman to adapt and adjust to what those price signals suggest they need to do and how and where in ways different from what they have been doing. It seems so out of their control; there seems to be unseen, invisible forces “forcing” them to do things that they do not understand nor always want to. But by adapting and adjusting to what others want as unknown consumers or as unknown producers by following those price signals, they integrate their own actions and activities with others in the world to better serve them, and they, in turn, reciprocally adjust and adapt their own actions to better serve, among others, the executive and the farmer and the tradesmen.
As the Austrian economist Ludwig von Mises once expressed it in Human Action (1949), the market is that great social process through which individuals are “competing in cooperation and cooperating in competition.” This, no doubt, would seem paradoxical to Pistor, who cannot conceive of any form of human cooperation than that imposed on all the members of society after a democratic vote has been taken and the outcome is imposed on all, both winners and losers in the election process.
All those participating in the free-market economy are cooperating with each other by finding ways to produce new, better, and less expensive goods and services for others in the marketplace as the means of earning the financial wherewithal to reenter the market as a consumer, to purchase from others what they are offering as the financial means to then buy what they, in turn, desire.
In this process, each is pursuing his own personal self-interest to improve his own circumstances. But his only successful means of doing so is to apply his knowledge, talents, and abilities to improve the circumstances of others by producing and offering for sale what they may want to buy, and do so better than his rivals. Men cooperate for their mutual gain by peacefully competing for the business of others in the marketplace. By doing so, the cumulative outcome is the eradication of that dreadful and original condition of man: poverty, and its replacement with increasing prosperity for a growing number until essential human wants unsatisfied becomes a thing of the past.
It is Pistor’s quest for more intrusive political democracy that is the driving force behind the death spiral of paternalism in more and more corners of society. Not the “capitalism” to which “progressives” like her are always pointing the finger of guilt. The polities proposed by Pistor are better referred to as “regressivism,” as their goals are to return humanity back to a previous and less plentiful and less free time in humanity’s past. A past in which people live under imposed cooperation through political command and coercion rather than the voluntary cooperation of free association through peaceful competition. Let us hope that Professor Pistor does not get her wish. Her political triumph would be humanity’s tragedy.
