It isn't unusual to hear market capitalism and democracy likened to one another. Both involve mechanisms through which a large number of individual preferences are aggregated and used to make important social decisions. In a market economy, the individual choices made by large numbers of consumers shape the ways in which our society uses resources. In a democracy, the individual preferences of large numbers of citizens shape the ways in which laws are made, implemented, and enforced.
Both of these models, however, include troubling contradictions their most ardent supporters are not always willing to acknowledge. The ability of markets to satisfy individual preferences, for example, can be distorted by differences in income. The U.S. health care market provides a perfect example. The political choice to supply most health care resources as market commodities doesn't simply mean that consumers are allowed the freedom to choose their own doctor the same way they choose their own breakfast cereal. It also means that millions of dollars will be spent on cosmetic surgery for the rich while millions of working people will not be able to afford even basic routine medical care.
Democracy presents us with a very similar problem. In order for democracy to function in a meaningful way, candidates and parties must be able to communicate with potential voters. Yet, in the context of extreme economic inequality, political communication can be dominated by those with the deepest pockets.
In Citizens United v. Federal Election Commission (2010), the U.S. Supreme Court upheld the principle that democracy requires an open forum in which individuals and organizations can freely put forward their points of view. What the Court ignored, however, was the fact that in the context of extreme economic inequality, access to that forum will be increasingly unequal. Here, for example, are the amounts spent so far in the 2012 electoral campaign by business owners and labor unions:
In California, $350 million has been spent on this year's round of ballot initiatives. Of that amount, 22.5% came from just two individuals belonging to the same family.
Meaningful democracy requires free speech. But the incredible disparity in wealth our society now permits makes a mockery of both free speech and democracy. Why does economic inequality matter? Economic inequality matters because it distorts democracy.
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