[I]f the top thousandth enjoy a 6 per cent rate of return on their wealth, while average global wealth grows only at 2 per cent a year, then after thirty years the top thousandth’s share of global capital will have more than tripled. The top thousandth would then own 60 per cent of global wealth…
The dynamics of contemporary capital accumulation, he warns, “can lead to excessive and lasting concentration of capital: no matter how justified inequalities of wealth may be initially, fortunes can grow and perpetuate themselves beyond all reasonable limits and beyond any possible rational justification in terms of social utility.”
Piketty’s data show that since the eighteenth century, when capitalist growth took off, rising inequality has been the norm. This was broken only in the first seven decades of the 20th century. From what appeared to be the evidence of the first half of the 20th century, the economist Simon Kuznets came out with the theory that as capitalism matured, inequalities would decrease, which he illustrated with the famous “Kuznets Curve.” Piketty says, however, that the Kuznets Curve is an invalid extrapolation of a theory beyond a period that was marked by exceptional circumstances: what he calls “exogenous events” like two global wars and the domestic upheavals they produced led to political and social arrangements that temporarily reversed capitalism’s natural dynamic towards inequality. As he writes, “The sharp reduction in income inequality that we observe in almost all the rich countries between 1914 and 1945 was due above all to the world wars and the violent economic and political shocks they entailed. It had It had little to do with the tranquil process of intersectoral mobility…”
Liberal Democracy on Trial
As a member of parliament and long-time pro-democracy activist, I find Piketty’s remarks unsettling, for one of the things he seems to be saying, implicitly, is that democratic regimes, which are supposed to aim at promoting equality among citizens, don’t really work when it comes to containing economic inequality. That is, the natural dynamics of democracy cannot be relied on to contain inequality. They, of course, enshrine formal equality, run on the principles of one person, one vote, and institutionalize majority rule, but they are ineffective when it comes to bringing about greater economic equality.
Now my generation came of age in the Third World fighting to oust dictatorships and bringing about democracy from the 1970’s to the 1990’s. As people who participated in these anti-dictatorship struggles, one of our potent arguments against authoritarianism was that it promoted concentration of income in dictatorial cliques allied with transnational capital. We said that democracy would reverse this process of impoverishment and inequality. From Chile to Brazil to South Korea to the Philippines, fighting against the dictatorship was a fight for both democratic choice and greater equality. Yet the evidence now seems clear that what Samuel Huntington called the “Third Wave” of the spread of democracy in the South in the 1980s and 1990s went hand in hand with the spread and consolidation of inequality-creating structural adjustment policies.
How Liberal Democracy Promotes Inequality: The Philippine Case
The way that negative social outcomes are generated by liberal democratic process is illustrated by the land reform struggle in the Philippines, in which I have been an active participant both as an activist and a legislator in the 28 years since we overthrew the dictatorship of Ferdinand Marcos.
Land reform is probably the single most important factor in sharply reducing inequality during the process of development, as shown in the case of Taiwan, China, South Korea, Japan, and Cuba. In the Philippines, at first, things appeared to be headed in the right direction. With the ouster of Marcos in 1986, not only was a constitutional democracy set up, but a sweeping land reform law, the Comprehensive Agrarian Reform Program (CARP) was passed that was designed to give millions of peasants title to their land. Redistribution would be accomplished peacefully under democratic governance, in contrast to the coercive programs in China, Vietnam, and Cuba.
Over the next few years, however, the country evolved as a classical or western-style liberal democracy, where competitive elections became a mechanism whereby members of the elite fought one another for the privilege of ruling while consolidating their control of the political system as a class. One of the victims of this congealing of landed class power was CARP. With the combination of coercion, legal obstructionism, and permissible conversion of land from agricultural to commercial and industrial purposes, the agrarian reform process stalled, with less than half of original 10 million hectares designated for distribution actually distributed to peasants by 2008, 20 years after the beginning of the program. Indeed, with little support in terms of social services, many peasants ended up reselling their lands informally to the landlords, while other beneficiaries lost their recently acquired lands to aggressive legal action by landowners.
It is at this juncture that I and several other parliamentarians got together to sponsor the Comprehensive Agrarian Reform Program Extension with Reforms Law, or CARPER. It was a hell of a time we had getting this passed, but we did it in August 2009. What made the difference were peasant strikes, marches--including a 1700 km march from the southern island of Mindanao to the presidential palace in Manila--and even efforts to disrupt congressional sessions.
CARPER plugged many of the loopholes of the original CARP, and allocated P150 billion (some $3.3 billion) to support land redistribution as well as support services, like subsidies for seed and fertilizer as well as agricultural extension services. Support services had been singularly lacking under the original CARP. Most important of all, CARPER mandated that the distribution of all remaining land had to be done by June 30, 2014.
My party Akbayan (Citizens’ Action Party) joined the new Aquino administration as a coalition partner after the elections of May 2010, partly because we felt that the administration would put an emphasis on completing agrarian reform via CARPER. Despite our monitoring and constant pushing, the process of land acquisition and distribution proceeded at a snail’s pace. Landlord resistance using loopholes in the agrarian reform law and other legal mechanisms, bureaucratic inertia on the part of the Department of Agrarian Reform, and nonchalance on the part of the president combined to create a situation whereby, by the time the mandated period for land acquisition and distribution ended on June 30 this year, over 550,000 hectares of land remained undistributed, with 450,000 of them being private lands, indeed the best lands in the country. Since this core of elite landholdings had not been touched and most of the private land that had been distributed had not been subject to compulsory acquisition, the agrarian reform secretary was forced to admit in hearings last year that in all of the last 25 years, agrarian reform had not undergone its acid test.
With the awful implementation of a law that I was one of the sponsors of, I tried one last time a few weeks ago to salvage it by having the president dismiss his timid Secretary of Agrarian Reform. He refused. The president, Benigno Aquino III, is a scion of one of the most wealthy landed clans in the country.
Now, even as the landed elite was relying on the mechanisms of liberal democracy to subvert agrarian reform, it was also through liberal democracy that foreign powers like the US, International Monetary Fund, and the World Bank sought to fashion our economy along neoliberal lines. It was not a dictatorship but a democratically elected Congress that passed the automatic appropriations law that allowed foreign creditors to have the first cut of the government budget. It was not a dictatorship but a democratically elected government that brought down our tariffs to less than five percent, thus wiping most of our manufacturing capacity. It was not a dictatorship but a democratically elected leadership that brought us into the World Trade Organization and opened our agricultural market to the unrestrained entry of foreign commodities that has led to an erosion of our food security. Today, a thriving electoral politics, where elites fight it out with money and other resources, coexists with a situation where at 27.9 per cent, the rate of poverty remains unchanged from the early 1990’s. True, the last three years have shown relatively high GDP growth rates of 5-7.5 per cent, but all studies show that the rate of inequality in the Philippines remains among the highest in Asia, underlining the fact that the fruits of growth continue to be appropriated by the top stratum of the population.
Liberal Democracy: Neoliberal Capitalism’s Natural Political Regime?
The experience of the Philippines is very much like that undergone by other developing countries over the last 30 years, so that ironically, the liberal democracy we fought for also became the system for our subjugation to local elites and foreign powers. Argentina, Peru, Jamaica, Mexico, Ghana, Brazil: these are some of the scores of democratic or democratizing polities that implemented inequality-generating structural adjustment programs. Even more than dictatorships, Washington- or Westminster-type democracies are, we are forced to conclude, the natural system of governance of neoliberal capitalism cum landlordism, for they promote rather than restrain the savage forces of capital accumulation that lead to ever greater and greater levels of inequality and poverty. In fact, liberal democratic systems are ideal for the economic elites, for they are programmed with periodic electoral exercises that promote the illusion of equality, thus granting the system an aura of legitimacy, while subverting equality in practice, through money politics, the law, and the workings of the market. The old Marxist term “bourgeois democracy” is still the best description for this democratic regime.
To reverse the process requires not just an alternative economic program based on justice, equity, and ecological stability but a new democratic regime to replace the liberal democratic regime that has become so vulnerable to elite and foreign capture. As for the social democratic or welfare state variant of democracy, it is questionable how useful it is as a model since its safeguards against gross inequality have been swept away by the neoliberal counterrevolution in most of the countries where it came into being after the Second World War.
Towards a New Democracy
What might be some of the features of this new democracy?
First of all, representative institutions must be balanced by the formation of institutions of direct democracy.
Secondly, civil society must organize itself politically to act as a counterpoint and check to the dominant state institutions.
Third, citizens must keep in readiness a parliament of the streets or “people power” that can be brought at critical points to bear on the decision-making process: a system, if you will, of parallel power. People power must be institutionalized for periodic intervention, not abandoned once the insurrection has banished the old regime.
Fourth, citizen socialization must move away from the idealization of liberal democratic forms and towards bringing people to participate in the formulation of new, more participatory democratic arrangements. Likewise, equality, in the radical French Revolution sense of the term, not simply in terms of the bourgeois notion of equality of opportunity, must be brought back to center stage.
Fifth, unlike in liberal democracy, when most people participate in decision-making only during elections, under the new democratic regime, political participation would become a constant activity, with people being formed into active citizens instead of passive political actors in the process.
“Exogenous” Events as Triggers of Change
The question is, how do we bring such fundamental reforms about at a time when organized minorities and disorganized, quiescent majorities appear to be the norm in both the North and the South? Will the democratic reforms I have enumerated be “triggered” mainly by what Piketty calls “exogenous events”? Noting that “the long term dynamics of the wealth distribution are potentially terrifying,” he asks whether the only solution might lie in violent reactions or radical shocks, like the wars and the social revolutions they triggered during the first half of the 20th century.
Perhaps we are now in for those radical shocks. Perhaps current developments in Iraq and Syria are not marginal events but explosions that will sooner or later also occur in other regions, including the North. When the political explosions occasioned by inequality and the search for identity are combined with what many foresee as the turbulent social consequences of the climate apocalypse, then perhaps we are not too far away from the unfolding of events such as those that marked the period 1914-45.
Change, to quote one famous figure from the 20th century, is not a cocktail party. It is a raging bull in a China shop.
Walden Bello is a Filipino author, academic, and political analyst who currently serves in the Philippine Congress. He is a professor of sociology and public administration at the University of the Philippines Diliman, as well as executive director of Focus on the Global South. In 2003, Bello was awarded the Right Livelihood Award, whose website describes him as "one of the leading critics of the current model of economic globalization, combining the roles of intellectual and activist." Bello is also a fellow of the Transnational Institute (based in Amsterdam), and is a columnist for Foreign Policy in Focus. In March 2008 he was named Outstanding Public Scholar for 2008 by the International Studies Association.