How capitalism is destroying democracy

We are used to hearing how capitalism goes hand-in-hand with freer, more democratic societies. But it's not always so. Investigative journalist Bruce Livesey reveals historical examples that show when wealth becomes concentrated among the very few, the stage can be set for totalitarianism, and for the destruction that totalitarianism inevitably brings.

'Authoritarian capitalism is where the U.S. is heading,' says Yale historian

According to investigative journalist Bruce Livesey, authoritarian capitalism is more than just wealthy people throwing their weight around — it's systemic and threatening democracy itself. (Sellwell/Shutterstock)

*Originally published on November 2, 2020.

By Bruce Livesey

Is capitalism destroying democracy and fostering the rise of authoritarian regimes around the globe? 

With the election of right-wing populist governments and leaders in Hungary, Poland, the United Kingdom, Brazil, Turkey, India, Italy and the United States, the prospect that the answer is "yes" is gaining credence. 

"Authoritarian capitalism is what China has under the aegis of the Communist party; authoritarian capitalism is what Russia has with no particular ideological content," asserts Timothy Snyder, historian at Yale University and author of On Tyranny.

"And authoritarian capitalism is where the United States is heading… I think it is much more closely connected to a certain kind of capitalism — a capitalism which says: it's okay for there to be radical inequality."

Financing Fascism

The belief capitalism and democracy always go hand-in-hand is historically inaccurate. 

"Capitalism is basically an economic system that can function, and has historically functioned, within the context of a number of different political systems, ranging from democratic to extremely authoritarian," explains Jacques Pauwels, a Canadian historian and political scientist.

The most dramatic example is the role big business played in the rise of fascism in Europe during the 1920s and '30s.

In Germany, the combination of the hardships imposed by the Treaty of Versailles, the rise of militant labour unions and left-wing parties, as well as the fallout from the Russian Revolution, frightened Germany's business class. And when the Great Depression began in 1929, they began throwing their money and support to the nascent Nazi party, which blamed the country's woes not on capitalism but on a familiar scapegoat, the Jewish community. 

Among Hitler’s earliest supporters was Fritz Thyssen, a German industrial magnate and CEO of one of the country’s largest steelmaking companies, United Steel Works. (Keystone/Hulton Archive/Getty Images)

"(The left's) explanation for the misery caused by the Great Depression was that it was the fault of the capitalists; whereas Hitler's explanation was that, no: it's all the fault of the Jews," explains Pauwels, the author of the 2017 book Big Business and Hitler. 

By the early 1930s, German industry and banks were pouring their money and support into the Nazi party, companies like: Siemens, Krupp, IG Farben Dresdner Bank and Commerzbank. Steel magnate Fritz Thyssen was an early supporter of the Nazi party. American corporations and banks followed suit, with Henry Ford being an open admirer of Hitler's.

"Every single big German company, and I should say every single, big company active in Germany, which means not necessarily German companies, but foreign companies that have subsidiaries that had branch plans in Germany, [supported the Nazis]," says Pauwels. 

During the Second World War, German corporations profited from the use of slave labour provided by concentration camps. 

Yet after the war, Western governments, with rare exception, refused to prosecute German industrialists and bankers for their financing and collusion with the Nazis.

Capitalism and authoritarianism after WWII

Capitalism and authoritarianism took a different twist in the post-war era.

"At the end of the Second World War, the United States looked around the world and told itself: 'We are the only important country that has not been sapped politically, economically, morally and militarily by this war'," observes Stephen Kinzer, a former New York Times foreign correspondent, author and academic.

"Therefore, it's our 'obligation' to lead the world."

In 1947, the U.S. government established the Central Intelligence Agency. And for the next 40 years, the CIA and successive American administrations intervened in 80 elections around the world, and invaded or initiated coups in numerous countries.

When you look at the governments we've overthrown, in many cases they're more democratic than the governments we support.- Stephen Kinzer

Yet the vast majority of these interventions were designed to further American corporate interests, according to Kinzer, author of All the Shah's Men.

"The U.S. has always preferred authoritarian governments to ones that are democratic and open," says Kinzer.

"In fact, when you look at the governments we've overthrown, in many cases they're more democratic than the governments we support. And we often replace them with governments that are harsher and more authoritarian. So if there's an image out there that we overthrow bad regimes and help democracies, history actually shows that the opposite is usually true."

For example, the CIA and British intelligence engineered a coup in Iran in 1953, overthrowing the democratically-elected government of Mohammad Mossadegh. 

Mossadegh had come to power with the mandate of nationalizing Iran's oil fields, which threatened American and British oil interests. After overthrowing Mossadegh, the CIA then installed the Shah as the new ruler, who ran a repressive and corrupt regime. 

This set of events, in turn, led to the Iranian Revolution of 1979.

"That revolution brought to power a clique of fanatically anti-American mullahs who proceeded to spend the next 40 years intensely, and sometimes quite violently, opposing American interests all around the world," says Kinzer.

Russia's oligarch-in-chief

At the same time it was active in Iran, the CIA also engineered a coup in Guatemala, overthrowing the democratically-elected government of Jacobo Arbenz, on behalf of the United Fruit Company, the American multinational famous for producing Chiquita bananas. 

Photo taken in the 1950's of Allen Dulles, who became director of the CIA in 1953. Under his leadership the organization assisted right-wing coups in Guatemala and Iran. (AFP via Getty Images)

Arbenz had wanted to expropriate unused plantation land and give it to agricultural workers. The coup installed a military junta, which led to decades of repressive rule by the Guatemalan army. More than 200,000 people were killed over the 36-year-long conflict.

The end of the Cold War saw a slowdown in such foreign interventions. The collapse of the Soviet Union witnessed the country transform from socialism into a chaotic form of capitalism, presided over by then-president, Boris Yeltsin. In 2000, Yeltsin was replaced by Vladimir Putin. 

"So under President Yeltsin in the 90s, Russia was a much freer country," says Snyder.

"There was much greater freedom of press. And there were rival clans of oligarchs. What Mr. Putin has done is assert himself as the oligarch-in-chief and use the organs of the state to crowd out all the oligarchs who didn't come to an acceptable deal with him.

"He's created a semi-permanent form of oligarchy where there's just one clan rather than competing clans and that one clan controls both politics and the economy. I would characterize it as an oligarchy with moments of Christian fascism."

A billionaire's game

The rise of right-wing populism arrived in America in 2016, when former Goldman Sachs executive, Steve Bannon, a proponent of the alt-right and head of Breitbart News at the time, went looking for a candidate to run for the Republican nomination. He found developer, Donald Trump. 

But long before Trump's ascendency, corporations and the ultra-wealthy had been using their resources to undermine American democracy. In 2010, the U.S. Supreme Court opened the door for unlimited corporate money to enter the political system through a ruling called Citizens United.

"It cannot be overstated what a deleterious effect on American political discourse the Citizens United decision has had," explains Andrea Bernstein, a New York-based investigative journalist and author of American Oligarchs: The Kushners, the Trumps, and the Marriage of Money and Power.

Attendees hold signs calling for an end to corporate money in politics, at a rally in January 2015 to mark the fifth anniversary of the Supreme Court's Citizens United decision. The landmark ruling allows corporations and labour unions to spend unlimited money on influencing the outcome of elections. (Drew Angerer/Getty Images)

"After Citizens United… it became possible for money to just flood into the system."

Indeed, President Barack Obama commented on the dangers of the ruling: "There aren't a lot of functioning democracies around the world that work this way. Where you basically have millionaires and billionaires bankrolling whomever they want and however they want and in some cases undisclosed. And what it means is ordinary Americans are shut out of the process."

Building democracy into existence

In recent years, the Republican Party and its wealthy backers have been attempting to undermine the U.S. electoral system by gerrymandering Congressional districts and engaging in voter suppression methods aimed at constraining the ability to vote among minorities, especially African Americans.

"And in 2016, for example, certain urban areas, college campuses had many fewer voting places," says Bernstein.

"We saw in 2018 that there were just cases where busloads of people going to the polls were just literally turned around. So there's been a very quick, deliberate and open effort by the Republican Party to keep people from voting and to dilute the political power of their opponents."

Bernstein focused her research on the Trump and Kushner families because she felt their rise to power underscored the growing oligarchic nature of America. 

As a New York-based journalist, Andrea Bernstein has spent years digging into the finances of Donald Trump, and another New York real estate family, the Kushners. In 2009, these two real estate dynasties merged when Jared Kushner married Ivanka Trump. (Drew Angerer/Getty Images)

"The Trump family business model has acted in an oligarchic way since its inception, since the birth of the Trump business," she explains.

"Fred Trump, Donald Trump's father, understood very early on, at a very young age, that the way that he was going to be successful as a builder in New York City was by getting governments to do what he wanted. And he understood that the way to do that was to make donations and make connections and play the game."

Her conclusion is sobering.

"I think something we've come to learn is just how fragile democracy is. And how it's not something that comes up everyday like the sun. It has to be constantly built and constantly willed into existence.

"And when you have a president and the people around him who are willing to break all those systems, I think we see just how fragile it is." 

Guests in this episode:

Timothy Snyder is the Levin professor of history at Yale University and author of On Tyranny and The Road to Unfreedom.

Jacques Pauwels is a Canadian historian, political scientist and the author of Big Business and Hitler and The Great Class War 1914-1918.

Stephen Kinzer is a former New York Times foreign correspondent and the author of Bitter Fruit and All the Shah's Men.

Andrea Bernstein is an investigative journalist with WNYC New York Public Radio and the author of American Oligarchs: The Kushners, the Trumps and the Marriage of Money and Power.

Donald Bowser is an international anti-corruption consultant.

* This episode was produced by Bruce Livesey and Greg Kelly.

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