Who decides the market or the citizens?

In the economic system, do citizens or the owners of resources decide? And in a democracy, do citizens decide or does economic power? The market conditions democracy, the State seeks to regulate markets and social organizations fight for the rights of those who have less. Who should set the systemic course and the socioeconomic way of functioning? It remains a yet unresolved struggle. The Market

In the market, decisions are made by those who have resources and those who administrate them; the more resources an actor has or controls in relation with the mass of resources there is in that market, the greater will be his capacity to adjust the market’s situation and the decisions on economic policy to his interests and needs. On the contrary, the fewer resources an actor has or controls, the lesser will be his capacity to make the situation and decisions adjust to his interests and needs; if he were to lack the resources, he would not be able to satisfy his needs nor defend his interests in the market by himself. The market is not a democratic space in which the will of each person carries the same weight; your decision carries weight depending on the amount of resources you have and your vote is expressed by the way you assign your resources, what you decide to do with them.

Therefore, the more concentrated the wealth of the world, of a country or a locality is, the more the market dynamic will tend to favor interests, needs or emotions of the sectors that control that wealth. The freedom of deciding and acting in the market exists but it is weighed by the magnitude of resources you control.

However, certain mechanisms try to regulate the functioning of markets. Some of those mechanisms are part of the market’s own institutions and they are established in order to regulate conflicts, considerable imperfections and functional transgressions. Nevertheless, their impartiality and effectiveness are always questioned since (i) the most powerful actors have greater capacity to have influence upon them, and (ii) those mechanisms are not capable of avoiding negative ‘externalities’, such as environmental deterioration, wealth concentration, irresponsible consumerism, systemic instability, among many other unwanted effects of the way of functioning.

There are other mechanisms to regulate markets that undergo State action and the action of those who have less.

The State

The State has resources and coercive power. It gets the resources through taxes, fees and contributions it establishes, from contracting debt and receiving incomes from public companies. The way it acquires those incomes affects the market and the citizens, both through tax burden distribution among different actors and the level and nature of indebtedness it contracts in relation to short and medium term fiscal solvency. How it uses its resources and coercive power also affects the market and citizens: public expenditure level and structure carries much weight just like the other public policies that set the rules of the game of socioeconomic functioning, including monetary, credit, investment, domestic and foreign trade, education, health, security, sanitation, media, transport and housing policies, among several others.

However, the State is controlled by social and economic forces that define its direction and, as it has been pointed out, in a context of high income concentration the influence of economic power is quite significant.

Organizations of those who have less

On their part, social, union, small producer and consumer organizations seek to group relatively disperse interests in order to strengthen the decision-making capacity of medium and low income sectors. In that effort they are either assisted or confronted by a great diversity of political and civil organizations.

Their capacity to affect public policies and economic functioning goes hand in hand with the scale they acquire, the initiative and organization degree they achieve and the alliances they are able to establish with other forces. While independent, they cannot isolate themselves from the values and ideological context that influence and condition them.

Democratic functioning: traps and limitations

Political democracy exists as a governance system in a diversity of countries acquiring singularities in each case. Political rights and functioning rules are acknowledged in constitutions and laws but in every reality, democratic activity contains traps and limitations. Some traps are derived from the fact that the guiding principles, rules of the game and main institutions have been conceived by the social forces that prevailed at the time they were established. Thus, in general, they tend to safeguard situations that are outdated as time goes by and that are out of phase regarding the evolution of societies. Therefore, social forces seeking to transform the status quo have to operate in an unfavorable context of regulations and institutions. The democratic system foresees mechanisms to transform itself over time but it does not adequately contemplate severe limitations that often paralyze the process of change.

So, for instance, when confronting a crisis such as the one the world faces today and while majority sectors aspire to adjust the systemic course and the way of functioning by establishing new policies and more firmly regulating economic functioning, the economic power seeks to minimize or control those changes to keep their own privileges from being affected. In a democratic context, this struggle is uneven because of the aforementioned fact that the very State is to a large extent subject to an economic power that, with its resources and contacts, can control important media and co-opt critical segments of social and political leadership.

It is also true that within the field of those wishing to transform reality it is not simple to coordinate actions between a large number of people, all of them carriers of a diversity of needs, interests and emotions.

Those who decide the course and the way of functioning

Nowadays growth is concentration-oriented, this means, not only is wealth concentrated in minority groups but the prevailing economic dynamic tends to increase that concentration. Thus those who to a large extent today decide the systemic course and the way of functioning are relatively small fractions of our societies; they control financial capital and condition the action of the State, the media and the political system. While each of those spheres has its own entity, they actually end up reflecting as a whole the correlation of forces that prevail in the globalized world and in every society in particular.

In this scenario, the affected groups, which make up majorities, can oppose resistance without altering the existing rules of functioning seeking to achieve some improvements or, alternatively, they can take political initiative trying to transform the current socioeconomic dynamic. The accelerated economic concentration exacerbates greed and an irresponsible management of resources and institutions, which generates inequity, poverty, serious environmental deterioration, social and productive potential sterilization, irresponsible consumerism, segmentation and backwardness of effective demand, growth of criminal systems, acute social conflict, political and social representativeness deterioration, all leading to systemic instability.

A sustainable course

To adjust the course and the contemporary way of functioning it will be necessary to take down concentration by regulating the use of assets and the distribution of the income flow, as well as strengthening environmental policy, promoting responsible consumption and capital formation (economic, knowledge, management and articulation with other actors) at the base of the socioeconomic pyramid. It will also be necessary to face organized crime, to transform a state of acute social conflict into another of righteous collaboration, unveiling and elevating the quality of political functioning, democratizing social representativeness, strengthening the formation of coalitions between sectors that were left behind or outright excluded, establishing early alarms to address adverse circumstances and trajectory deviations.

In those new circumstances, the control of economic resources could be distributed more equitably and political decisions could be further aligned with the needs of the planet and its population. Democracies would become fuller and citizens would be the ones deciding the course and way of functioning of their economic systems.

Here is a referential utopia that, as such, poses a desired –though distant- situation but useful in order to orient the direction of our current efforts. If we were able to move forward in that direction, we would be closer to inclining in favor of the entire planet that unresolved struggle between market and democracy.

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