Dollar doctrine

by Frances Fox Piven and Richard A Cloward

New Internationalist magazine, June 2000


Mass protests are inevitably noisy and cacophonous affairs, as different voices raise issues in different ways. But through the cacophony of the Seattle protests, certain strong and historically resonant themes emerge. For the protesters the inscrutable officials of the WTO with their extraordinary powers are usurpers of democratic rights. The charge strikes to the heart, and could well continue to galvanize protests around the globe.

Elites have always understood the threat of democracy. Writing in the wake of the passage of the Third Reform Bill which extended the franchise in nineteenth-century England, the historian JA Froude explained the dangers: 'It is one man, one vote. And as the poor and the ignorant are the majority, I think it is perfectly certain... that those who have the power will we it to bring about what they consider to be a more equitable distribution of the good things of this world.'

In the US democratic arrangements were the price paid for popular support in a successful colonial war against the mother country. Colonial elites were impatient with the commercial constraints imposed by ties with Britain. They raised the rallying cry of democracy to recruit an army of farmers, artisans and the urban poor. 'Faith ran high,' says Gary Wills, 'that a better world than | any that had ever been known could be built where authority was distrusted and held in constant scrutiny. 'When the war ended, these men were still fired up by the idea of democracy, and still armed. Under such conditions, the basic features of electoral representation were conceded early.

But they were hedged in - at first by limitations on the franchise such as property or racial or literacy or gender qualifications, and later by procedural obstructions, such as onerous voter registration systems and bans on threatening forms of political speech and association.

Nineteenth-century electoral representative arrangements were quickly corrupted by clientelist relations which traded votes for personal favors - then, in the twentieth century, as radical protests by farmers and workers began to penetrate the political parties, by the steadily growing influence on electoral campaigns of big money and mass propaganda techniques. There is a vast literature exploring the mysteries of American exceptionalism, of its failure to develop a labor party and its late and limited welfare-state programs.

Maybe the simplest explanation is that democratic rights were in fact sharply limited.

But perhaps the largest inhibition on popular influence through democratic institutions in the US was the vigour of laissez-faire ideology- the doctrine that the economic relationships of capitalism are the product of 'nature' rather than a result of human design. As nature is governed by inviolable laws, so too, it is argued, are economic activities governed by market laws. Such natural laws brook no interference by government. The penalty for inhibiting the market processes that generate wealth is the risk of economic disaster. the economic grievances that fired popular aspirations for democracy were seen as beyond the reach of the democratic majorities that influenced government.

Why was laissez faire so exceptionally vigorous in the US? As elsewhere, the economy was in fact closely dependent on government policies which established the framework of currency, tariff, contract, labor and property law. Government deployed the military forces that were used to break strikes at home and protect imperial interests abroad. Government also subsidized the infrastructure of transportation and communication without which a modern economy could not exist.

However, the reality of the state's role in the economy remained obscure, in part as a result of the organization of government itself. Important economic policies were embedded in the constitution, or were the province of a national government which until the twentieth century was largely remote from popular politics.

When property and labor rights were disputed, decisions were relegated to courts whose judges were not exposed to electoral scrutiny and who justified their opinions as the mystical but seemingly indisputable requirements of constitutional and common law. Or critical economic policies were delegated to inscrutable and unelected bureaucracies, such as the Federal Reserve Bank. Meanwhile, there was a realm in which a kind of democracy seemed to flourish, largely in local government, where popular enthusiasms surged in fierce political contests over the distribution of patronage and ethnic honors, or over the management of the schools and garbage collection.

In other words, the distinctive organization of American government did indeed create realms in which politics flourished, and those realms seemed to operate apart from the economy.

The ideological separation of economy and polity began to break down in the twentieth century. Government intervention to aid a burgeoning industrial economy became ever more transparent. This rapid economic growth produced new hardships spurring waves of protest by farmers and workers. The contrived insulation of the economy from democratic politics weakened. Political rights became an instrument for popular influence on economic issues. New policies were inaugurated in the pre-World War One US to break up the trusts and to regulate the railroads. The Great Depression of the 1930s sparked another surge of protest, with the national government belatedly granting unions some legal rights. The 1930s also saw the inauguration of the basic programs of a limited welfare state in the US. Then, three decades later, the protests of the 1960s led by the civil-rights movement forced the expansion of these regulatory and economic security programs.

These victories were also limited and in some cases were won only to be lost, at least until the next surge of protest. But even partial victories represented elements of a new compact won through the flawed American democracy, setting at least some limits on business power.

There are no permanent victories in politics. In the early 1970s American corporations, goaded on by the pressures exerted on their profits by international competition and rising commodity prices, mobilized to take back much of what had been won. They launched a concerted mobilization against unions, and job security and other workplace protections were rolled back. Wages fell. But US business wanted more than they could win in the workplace alone. They wanted a reversal of the social compact, a rollback of business regulation, of welfare-state spending and of taxes. To win such policies they also needed to roll back the influence of ordinary people over government. They needed to roll back democracy.

Corporate America mobilized for politics by turning to the tried and true of US political history. Big money poured into the parties, especially but not only the Republican Party. Media techniques of persuasion and manipulation turned campaigns into frenzied advertising spectacles. Political duplicity in legislating business giveaways reached new heights. This much is obvious - as is the invasion of US-style of money-and-media elections spreading to Europe, particularly to Britain.

Less obvious is the revival of the doctrine of laissez-faire, this time conceived as natural laws enveloping the planet. National governments whose policies violated these new 'natural' laws would be punished by floods of imports that undercut domestic producers, or by currency markets, or by investors circling the globe in search of cheaper labor or better tax deals. There is no room for democracy in this new ideology because democracy is exercised as influence over national governments. If governments are helpless in global markets, then so too are democratic publics.

No wonder there is a collapse of popular political morale in the US. There is a startling rise in the number of citizens who tell survey takers of their cynicism and disaffection with government and politics. No wonder the turn in US politics is towards 'family values' and to candidates who are said to exemplify strength and personal morality. The politics of institutional reform is forced into the shadows in favor of a fundamentalist politics of personal moral rejuvenation.

There is of course some short-term truth in this neo-liberal doctrine. What it ignores is that national governments have themselves created the framework of currency, trade and tax policies in which global markets are flourishing, as well as the supra-national organizations which promote and enforce these policies. A politics dominated by business has created the institutions which make business domination seem inevitable.

Almost inevitable. The spreading protests against the WTO, the IMF, the World Bank, suggest the veil of doctrine is lifting. The protesters make familiar demands for democratic scrutiny and public accountability. Also familiar, they see their antagonists as the international corporations, the new men of property. But something is new as well - the protests are squarely aimed at institutions constructed precisely to evade democratic accountability.


Francis Fox Piven and Richard Cloward have written many books on US politics including Why Americans Don't Vote.

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