Democracy and finance

The discussion about the democratic management within corporations is not enough to attain our final goal: it’s also important to re-examine banks and other financial institutions as this sector determines which kinds of projects to be developed.

In fact the financial sector is the least democratically-controlled one among other economic actors. You deposit your money, for instance US$10,000, at a bank and your sole concern is the interest rate, in other words the growth rate of your asset provided that the chance for your bank’s insolvency is none. You’re happy when you get a higher return and it doesn’t matter you whether this growth comes from McDonalds’ or from an organic farm, from Nike’s impoverished workers in Southeast Asia or from modest craftsmen in Italy, from a destroyer of rain forest in Brazil or from a reforestation NGO in the Philippines(I’m not sure whether reforestation is regarded in today’s economy as a profitable project or not, but just to give you an example).

This structure makes ecologically or socially devastating projects thrive while social enterprises find it quite difficult to be sufficiently financed. Usually you can make more money by ignoring human rights and environment because the consideration on these aspects brings you no direct economic benefit at all(although corporations run the risk of boycott and/or other sanctions if they go too far in this respect) and it’s quite natural that CEOs are rather interested in saving cost than in improving their employees’ life standard and/or the environment. But I don’t see any logical consistency in those who claim the company they work for is not paying them enough and that the interest rate for their deposit is too low.

We need to make it possible for ourselves to check how our money is used should we want to have an economy which is friendly both to humans and to the ecology. The civil control on money is indispensable if we are to direct our monetary resource for socially and/or environmentally responsible projects. Or are we happy to make more money while impoverishing others or our own ecosystem?

Neither capitalism nor communism

Our economic system today is called capitalism because corporations(main economic actors) are supposed to serve for the capital(called investors or stockholders) and are obviously far from being democratically managed: most corporations are owned by stockholders who see these economic actors merely as their income source.  Employees are regarded, in this mindset, no different from machines, computers and other tools which are necessary for their moneymaking process and CEOs, always under the pressure from stockholders, are forced to save as much as possible to maximize the profit.  They open their factory in China where they can get somebody who works for US$100 per month while closing another one in United States, Western Europe or Japan where they need to pay more than ten times to get the same workforce, just not to “overspend.”  There’re for sure some laws in any country to protect employees, but it’s an universal rule that managers put employees just at the same level as machines, with the following priority: 1) stockholders(as they’ll be fired if they fail to make money), 2) clients(as they’ll give money) and 3) workers(who are easily replaceable).

We need to make clear the difference between capitalism and market economy, because both the capitalism without market economy and the market economy without capitalism are possible.  A good example of capitalism without market economy is monopoly(Windows, for example) where the sole provider of goods and/or service raises its price as much as possible to earn more.  And you can see some real experiences of market economy without capitalism even today, for instance at a farmers’ market where producers aren’t governed at all by anybody else.

Last century saw the emergence and fall of an alternative to the capitalism: communist countries nationalized all corporations to do away with stockholders and to improve workers’ life standard.  But the lack of pursuit for the efficiency, always and forcibly achieved in the capitalism in the form of pressure from stockholders, deteriorated these corporations and most of them had to give up this regime except Cuba and North Korea.

What’s common in both systems is that employees have no access at all to the management of the corporation they work for.  They’re at the mercy of a system they can’t control at all, and it makes little difference whether it’s run by private stockholders or by the State.  So how can we reach a system where employees can have a real influence on the management of the company they work for?

Political democracy and economic tyranny?

The fierce neoliberalism is sweeping all over the world. Here in Japan, just to give you an example, more and more youngsters are forced to settle with an informal job, either in the form of so-called “freeter” or “dispatched employees(haken shain),” and are unable to plan for their future, i.e. marriage and childraising, because of their uncertain labor condition on top of their low income. Even formal workers are afraid of layoff and are obliged to work overtime(sometimes 70 to 80 hours per week!), without being duly paid or even unpaid(so-called “service zangyô”). None of these new slaves is happy with this circumstance, but this is the only way they can make ends meet.

Well, I know Japan is an extreme case as individuals are meaningless before the “culture of harmony”(wa-no bunka) people in the archipelago are proud of. Those who stick to legally-acknowledged rights without taking people’s emotion into consideration are rather blamed as “selfish” as the abduction of three JP nationals two years ago showed. But something similar is happening in Germany too where some workers gave up their 35-hour just to prevent their employer from transferring its factory to somewhere in Eastern Europe. Workers are afraid that the company will take them out to the street, so they need to do as much as possible to please their boss.

I just don’t understand what makes it possible for us to live in two contradictory disciplines: political democracy and economic tyranny. We can elect any politician we like, but what does it serve for while we are still deprived of human rights in the economic life? Why isn’t there anybody at all to discuss seriously how to achieve the same democratic process that we have today in the politics for our economy as well?

This blog is just my small attempt to seek for such a transformation in our economic life. Your comments will be highly appreciated.