My friend Andrew hates when people misuse the term “catch-22.” So I hope I am using it correctly here to describe Charles Lindblom’s argument about the relationship between market economy and democratic rule. Lindblom writes:
No democratic nation state has ever arisen anywhere in the world except in conjunction with a market system -surely a historical fact of enormous importance. But, according to my argument today, no market society can achieve a fully developed democracy because the market imprisons the policy-making process. We may be caught in a vise. For minimal democracy, we require a market system. For fuller democracy, we require its elimination. But its elimination might pose more obstacles to a fuller dthan does its continuing imprisoning of policy making.
Fully developed democracy thus seems to require a component that negates its own possibility. While you likely need access to academic databases to encounter the argument in full (or you can go buy Politics and Markets to get an idea of what’s at stake here), the idea is that the market “imprisons” political decisions because so much reform is repressed by the costs of structural economic change and its effects on retarding economic growth. Because the market imprisons political decisions, it ensures that the government cannot be too successfully interventionist (think about market effects on China). The other side of the coin is that, if the political-business relationship wants to regulate environmental damage (for example), the effects would likely be costly, deter capital investment from the ownership class, and certainly reduce risky investments, thus slowing growth, causing job loss, etc. Hence, we may be cut off from doing things that may be quite democratically popular and desirable because of how much we have to “feed the beast” that is the market.
I find Lindblom’s argument quite interesting, but I think he undersells the reach of the democratic state. Fully realized democracy is off the table, but I do not think responsible government is off the table. Reforms may be slipped in by politicians during recessionary periods since no one will link them with the negative growth already occurring, situations emerge in which regulators ay prioritize which firms are dominant in an industry based upon broader policy concerns, and the market has made life so comfortable for so many that pulbich health and safety concerns stirke abject terror into the earts of voters even if the likelihood that they themselves will be victims of neglect may in fact be preposterously unlikely. On this view, the market is still a prison, but perhaps a bit more like the versions of minimum security prisons one sees in the movies.
Posted by stevenmaloney 
