Who is the Economy for?
A call for power-sharing liberalism, and an economy that supports freedom and equality.
“It’s the economy, stupid.” “Voters only care about the economy.” But what is “the economy”? The price of eggs? A stock market index? Unemployment levels? Interest rates?
If we’re talking about the economy in the context of democracy, the better question is: Who is the economy for? A constitutional democracy exists to bring about happiness and prosperity for its citizens, as much as possible. Its economy must support that goal, too.
Gross domestic product (GDP) does not measure whether we are building an inclusive and dynamic economy that connects all to opportunity and security and thereby provides a foundation for political empowerment. The unemployment rate doesn’t tell us enough about good jobs, jobs that provide workers with clear career paths, possibilities of self-development, flexibility, responsibility, fulfillment, and time and stability to support civic participation — life-work-civic balance, in other words.
At the most fundamental level, the economy is the system that determines our ability to get the basic necessities of life: food and housing, above all, but also things like transportation, health care, and other goods and services. Unless you’re on a very specific kind of reality show, you’re not making or doing all those things for yourself, so you need to get them from somewhere – and someone. Your access to those necessities is a kind of freedom. If you have completely free access to the economy, meaning that you can take whatever you want, then the people you’re taking things from do not have the same freedom. You are dominating them. If someone else could do the same to you, you would be dominated. So we accept some limits on our choices in order to protect the freedom of all of us equally, at the same time.
Economic freedom is distinct from the political freedom to choose your own destiny, but it’s also connected to it: If you experience domination in the workplace, it undermines your ability to be a functioning citizen. If you don't have stable housing, then you can't actually step up and play a role in your community as a public participant. If you live in a company town and you can buy things only from a store where your employer sets the prices, that’s not a free market. If you have the political freedom to make your own choices, but you know that every choice but one leads to starvation, that’s not really freedom.
In a constitutional democracy like the one we want in the United States, we enjoy political equality, even though we’re all different in lots of ways. Each of us is equal in the eyes of the law, and each of us is equal in the sense that we are entitled to the same civil and political rights. One of those rights is self-determination — the right to participate in democratic decision-making and government processes — and this is the key to freedom and empowerment in a democracy. None of us can really thrive if we don’t have a voice, a sense of being able to steer our world. This is what allows a society to thrive and prosper.
The economy needs to be structured to support that freedom and prosperity. But currently it’s structured instead to tilt the scale toward inequality and domination, in a variety of ways. Our regulatory state isn’t working well: It’s not driven by the will of voters (because it is mostly administered by political appointees), it’s not protecting workers as well as it should, and it’s hampering innovation and growth. Many workers in the United States aren’t free to choose their hours, to live close to where they work, to take care of themselves when they’re sick, or to take their health insurance with them to a better job. Housing costs have dramatically outgrown wages, leading to a nationwide housing crisis. Huge monopolistic companies, especially tech companies, limit our choices as consumers and influence policy unfairly, through lobbying and political campaign donations. Many young people, whose job prospects are already being limited by AI, are sending out an endless flurry of resumes to try to prove that they match the skills demanded by employers. What about the question of whether the jobs on offer fit the needs of the people to be employed?
In a healthy democratic political economy, we would all benefit from growth and innovation: Consumers would get access to products that improve our lives without sacrificing their privacy or security or freedom, workers would make good and reliable wages, and corporate taxes would be reinvested into public projects (a fair return for the public goods that made such growth and innovation possible). This ideal political economy, in classical economic theoretical terms, is a “liberal” one, because individuals have protected rights, including the “liberty” to work and consume and conduct business as they like, within the boundaries that make it possible for all to share in freedom.
The economy we have now in the United States is also a “liberal” one in this theoretical sense, because individuals have protected rights. We should note that not all individuals have enjoyed these protected rights in our system, for much of our country’s history. And our rights are threatened now by monopolistic companies and weak labor protections. If we think that our economy exists to provide maximum profit to shareholders or holders of capital, then our economy is succeeding by those standards. But if we want our economy to support our political freedom instead of undermining it, we need to make some major changes.
The connection between economic and political power is clear: Holders of capital also hold disproportionate political power, enabling them to dominate others – especially undocumented immigrants and people in prison, who are vulnerable to domination because their political rights are not protected – through wage theft or violations of labor rights.
In the ideal democratic political economy we described above, power is instead shared, not among shareholders but among stakeholders -- all the people who are affected by the system. All of those stakeholders have the freedom to participate in decision-making processes and contribute their good ideas and judgment. That means that workers might more frequently own the companies, or participate alongside the owners in making decisions about how to operate better and how to use profits. It means that government, civil society, and private businesses cooperate to decide on fair rules and regulations.
To be clear, we’re not talking about a system where everyone has to have equal wages, or the same job. We live — and want to live — in a free society, and freedom always produces difference. We form different bonds and affinity groups, we choose different educational paths and occupations and places to live, and different household structures. What we are talking about, however, is an economic system where different people still have the same equal rights, and where no one is dominated by anyone else.
Do you feel that your rights are protected at work? How about the rights of your co-workers? Does your work help you to live the kind of life you want? Do you feel that you have a voice in the decisions that are made in your workplace, or that your input is valued? Can your co-workers contribute their ideas and feedback in a meaningful way? And if not, what can you do to join with them to make your voice heard?
Read more:
Justice by Means of Democracy by Danielle Allen, 2023
Listen:
Power Sharing Liberalism: Danielle Allen. Future Hindsight podcast, April 11th, 2024
Renovating Our House with Danielle Allen, What Could Go Right? Podcast from the Progress Network, June 15, 2023
This Philosopher Wants Liberals to Take Political Power Seriously: Danielle Allen makes the case for ‘power-sharing liberalism.’ The Ezra Klein Show, April 14, 2023