Democracy, Capitalism, and the Law

Joseph Taecker-Wyss

Joseph Taecker-Wyss is a junior at New York University’s Gallatin School of Individualized Study. There, he is designing his own concentration focusing on issues within the political economy. In the summer of 2017, he interned at the National Lawyers Guild San Francisco Bay Area Chapter and wants to continue to be work on progressive change-making.


The work of Milton Friedman is foundational to contemporary bourgeois economic theory. Friedman’s laissez-faire theories on the relationship be­tween economic structure and state formation dominate the contemporary political-economic ideology of most western nations. He claims each eco­nomic superstructure can only result in certain political formations because a society’s economic and political structures are interdependent. There are two ways, he argues, to organize economic superstructure: a coercive central authority or individual cooperation in organized marketplaces.1 Friedman calls the first totalitarianism, in which a few individuals in the economy ac­cumulate power, and the latter capitalism, which decentralizes power through the organized marketplace.

According to Friedman, capitalism’s dispersed economic power creates economic freedom by allowing individuals to act without the force of a central authority. To him, economic freedom is the prerequisite for political freedom. Capitalism fosters freedom and dispersed economic interdepen­dence between individuals because, under capitalism, economic power is spread among co-reliant individuals, who can each act freely. Capitalism also typically results in a political system that has dispersed power, oftentimes organized by the voting system in order to make adjustments necessary for interdependency. As such, democracy can only result from capitalism (although not all capitalist nations are democratic). Thus, he argues, for a society to have essential political liberties, there must also be the widespread existence of open-market trade.2

Friedman’s claims appear to follow logically from the sequential develop­ment of capitalism and democracy. In England, the shift towards capitalism began with the enclosure movement in the early 15th century and the transition from feudalism to capitalism and lasted through the early 17th century. Work previously performed by serfs, who paid their feudal lord rent in exchange for protection, was later done by laborers who were paid wages for their work by their employers. As Friedman describes it, while serfs worked because they feared violence by the feudal lord, laborers worked because it was their only means of material well-being within the economic marketplace. Soon thereafter, in the 18th century, the rise and expansion of democracy occurred in England.

Despite the sequential development of capitalism and democracy, there is no direct causal relationship between capitalism and democracy, as Friedman suggests. And, contrary to Friedman’s claims, capitalism disperses neither economic nor political power. Instead, it concentrates economic power within an elite controlling class: the owners of capital who, with time, become an ever-smaller group with ever-increasing power. With the accumulation of economic power by capitalists comes their near total control over the politi­cal system, which they use in turn to reinforce their economic power. Thus, capitalism is inherently antagonistic to democracy. It creates unequal access to political representation. It is such an anti-democratic force that throughout history, it has compelled workers to generate massive movements and initiate social upheavals in order to expand democratic institutions.

Capitalism creates economic polarity and highly limited workplace power for workers. Under capitalism, capitalists hire laborers, who are paid in wages, to produce goods or services for the capitalists. In addition, although the capitalists pay constant and variable costs—such as rent, equipment, and raw materials—they also decide how to allocate any profits, either keeping it for themselves or reinvesting it within their businesses.3 Because capitalists are able to reap all of the business profits in this regard, they accumulate the majority of the wealth within society. In the United States, the richest 10 per­cent of society—a conglomerate of capitalists—own 90 percent of corporate stock within society.4 Wealth is held by the few and taken from the masses.

The capitalist–laborer relationship is not just one of inequality in wealth, it is also one of inequality in power. Most wage-workers do not receive sufficient income to become capitalists themselves, as it takes considerable wealth to buy a business or get a loan to start one. Therefore, wealth is retained within a select number of elite families inter-generationally. Fifty-five percent of the top 400 wealthiest people inherited their status directly, or a significant portion of it, while only 31 percent of the top 400 wealthiest people had little to no inherited advantage.5 Without the opportunity to become capitalists, workers are forced to stay within their lower-class position and continue to labor as their sole means of income. Most laborers may have some decision on where they work, but not whether to work. Additionally, under capital­ism, there are always more laborers looking for jobs than there are positions. Therefore, workers are always either desperate to be employed or, when they have a job, to maintain it. Thus, they are easily expendable and exploitable by the capitalist. As a result, the capitalist dictates the terms of the capital­ist–laborer relationship, resulting in low-wages and poor working conditions for workers. Power is not dispersed within a capitalist society as Friedman’s theories describe, but is consolidated in the few owners of the means of production. As will be discussed below, unions and collective bargaining have reduced, but have not altogether eliminated, this unequal relationship.

With capitalists’ asymmetrical economic power relationship with workers, a more egalitarian democracy would ideally help propagate workers’ rights, as Friedman erroneously suggests occurs within capitalist democracies. In reality, “democratic” institutions reinforce inequality of power between laborers and capitalists. Indeed, capitalists translate their economic power into political power. Just 5,778 capitalists own the majority of United States’ industrial and financial assets and private foundations. The same people own two-thirds of the assets of private universities, as well as most of the media, civic, and cultural organizations, and sway the government’s politi­cal agenda.6 Capitalists and their advisors, such as corporate lawyers and financiers, are highly represented in the government, which furthers their business interests. An even greater number of government bureaucrats and politicians grew up alongside capitalists—living in affluent neighborhoods, attending elite private schools and universities, and socializing in exclusive clubs and organizations. In these societies, the people who write and imple­ment policy are indoctrinated with bourgeois political views and are out of touch with society’s laborers.7 The individuals within government, in turn, are socialized to favor the position of the capitalists.

Corporate institutions also insure the capitalist ideology through lobbying and campaign finance, which are two of the most effective ways to influence the government.8 Lobbyists serve the putative purpose of allowing the public to inform legislators on policy decisions. Yet, lobbying requires assets to pay for research that affirms the validity of capitalism as well as for actual profes­sional lobbyists to inform bureaucrats of that perspective. Fifty-three percent of all lobbying groups represent business interests, one percent represent labor, and not a single lobbying group represents the means-tested poor. Ad­ditionally, elections are privately financed in the United States. Therefore, for politicians to be elected, they must either be extremely wealthy themselves or be supported by the super-wealthy. This reaffirms the way in which capitalists are able to personally capture the government: by pricing out any candidate who is not independently wealthy or fails to appeal to the rich.

However, even if the government was accessible to all in an egalitarian man­ner, it would still reflect the interest of the capitalists. A capitalist democracy will always prefer the wealthy because business is the primary way in which money is distributed. The government is faced with either adhering to busi­ness interests or watching businesses leave for a more financially hospitable nation, which would result in an economic depression and strongly reduce politicians’ reelection prospects. Business as the primary distributor of wages in society also means that income-based taxes, which supply the revenue necessary to fund government programs, are dependent on business. If the government does not follow business interests and capitalists outsource the means of production to other countries, not only will it face political backlash, but the state will dissolve due to the inability to fund its policies.9 Accordingly, even if a politician does not have any political preference toward business, business preference becomes the filter that all policies must pass through.

The preference towards business would not matter if business interests were the same as workers’ interests. However, the intersection of capitalism and democracy is significant because the workers and the capitalists have conflict­ing interests. The goal of capitalists is to enlarge profits as much as possible while maintaining competitive prices for consumers. Capitalists achieve this by reducing workers’ wages per unit output. Capitalists have also implemented a series of workplace policies to control worker productivity, such as by sub­dividing skilled work so it can be done by low-skilled workers who are easily replaceable. They also pay workers poor wages and highly regulate worker’s breaks, vacations, and meals in order for these capitalists to maximize each worker’s productivity down to the minute.10 This, of course, is against the interest of laborers who would prefer to have autonomy in their place of work, have better working conditions, and earn higher wages. Put simply, in order to maximize profits, capitalists must reduce their workers’ overall wellbeing.

When capitalists cannot further exploit workers within the workplace, they exert their power over the state to continue to reduce workers’ rights. Capitalists prefer policies that ensure that workers are desperate for jobs, such as by reducing “the welfare state” and providing few benefits for the unemployed. One common method within the United States is to insist that citizens only receive welfare if they are (1) currently employed or are (2) short-term unemployed and actively looking for work. By coupling welfare and work, these policies insist people on welfare take any jobs available to them, regardless of how menial. As a result, employers can further exert their power and reduce both the pay and quality of jobs.11 Other anti-worker poli­cies include legislation that reduces union membership in order to limit the collective power of workers. The asymmetry of political power that favors capitalists is in direct opposition to the interest and wellbeing of workers.

Empirical data on legislative policies reflects state preferences towards capitalists. Very high-income constituents have their views more highly represented within government, while working and middle-class Ameri­cans have little to no sway with their representatives. Even the viewpoints of the relatively well-to-do do not influence their policy makers’ decisions. Americans up to the 70th percentile for income have almost no effect on their legislators’ policies.12 The state, under a capitalist superstructure, therefore, goes against the pluralist conception of equal democratic access for all. The “democratic” capitalist state we see today is not a genuine democracy at all. It is only a democracy for the bourgeoisie.

The capitalists’ usurpation of the political system for their own profit in­cludes the capture of the legal system by corporate business interests. Citizens United v. Federal Election Commission exemplifies the unmatched power of capitalists in the legal sphere.13 In Citizens United, speech is transmogrified into capital. It is to be treated as the exchange of goods within the capitalist marketplace—traded between entities according to the magnitude of their financial power. The decision means that only the “most powerful” are de­serving of speech heard by the larger society. Indeed, according to Citizens United, speech can and, in fact, should be unequal between entities. People lose their democratic rights when speech is equated to capital. Only the most privileged have the right for their speech to be heard and those that do not have access to capital lose such rights. Through cases like Citizens United, the democratic state is reconceived as an economic one and, when speech is commoditized, it becomes unequally distributed across society.14 Once the law is usurped by business in this regard, the ability to freely trade capital is the precursor to all other rights, further strengthening corporate hegemony.

Too frequently this is how the law is implemented. Yet, the law is a tool that can create justice where such inequalities exist, particularly when progressive and revolutionary lawyers, law students, and legal workers work alongside social movements to defend and protect them. The National Lawyers Guild was formed at a time of roiling class conflict. The Great Depression left mil­lions starving and jobless. Capitalism was threatened with revolution around the world. Franklin Roosevelt’s New Deal was an attempt to stanch the bleed­ing. It was a time when reforms benefiting the working class were not only possible, but critical. The Guild was, from its inception, an important force in advancing those reforms to protect the working class. Its members worked to create and enforce the National Labor Relations Act of 1935, legalizing American unions. Guild members also represented those unions, thereby advancing workers’ interests and improving their condition. By enforcing laborers’ right to unionize, Guild members changed the relationship between the capitalist class and workers. While the relationship was certainly not one of equality, through collective bargaining, workers gained more leverage. When they work together, workers’ voices cannot be ignored and owners can no longer hire and fire employees at will. In turn, wages are raised, working conditions are bettered, and job security is improved.

Later, in the 1960s, Guild work reflected—and helped advance—the politi­cal movements that were shaking the country. The Jim Crow system was not only a method of political subordination, but a way to create an economi­cally subordinate class. By taking away the fundamental rights of African- Americans, capitalists were able to super-exploit black laborers and lower their wages to nearly nothing. The National Lawyers Guild’s Committee to Assist Southern Lawyers provided critical legal assistance to the burgeoning Civil Rights Movement, winning important victories that helped the move­ment endure and spread throughout the American south.

As a result of the pressure this movement put on the United States govern­ment, Congress passed Title VII of the Civil Rights Act of 1964. Title VII states “It shall be an unlawful employment practice for an employer [. . . ] to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.” Because New Deal-era federal statutes did not adequately protect against racial discrimination, Jim Crow was able to flourish in the South as a legal system of oppression, and lawyers were unable to enforce racial equality in the courts. The National Lawyers Guild played a crucial role in protecting those who fought to change these unjust laws. Today, through the work of the Civil Rights Movement, it is illegal to use racial discrimination in wages and, for all the high hurdles and tremen­dous obstacles that still exist, there is a legal framework in which progressive lawyers can seek to enforce the rights of all workers.

More recently, the National Lawyers Guild has continued its involvement in giving workers the agency to protect their own rights and build a strong proportion of power to defend themselves against the capitalist class. Dur­ing the Occupy Wall Street movement, a time in which many people were resisting the hegemonic dominance of business over government, the Guild protected many protesters from being evicted from the public spaces where they were gathered. The Guild litigated to defend Occupy encampments in cities such as Boston, Los Angeles, San Diego, Fort Myers, and the move­ment’s epicenter—Manhattan’s Zuccotti Park.15 The Guild’s work on behalf of social and political movements remains critical. While the law can be used to protect laborers, its current effectiveness is limited by capitalists’ effective passage of pro-business legislation, which confines the power of the working class, and their use of financial power to win important legal decisions, such as Citizens United. Assisting the work of leftist activists to overthrow the current economic system is paramount for a more just political and economic future.

Legal work can provide valuable assistance and support to social move­ments but cannot be a substitute for them. In times of ebb, legal work will be defensive, seeking to protect gains that have been won in the past. In times of flow, legal work can help advance movements and win new victories. But, that work can only be as strong as those for whom it is done. By litigating on behalf of employees oppressed by their corporate higher-ups and by providing protection for activists, the Guild and other progressive legal organizations give power to the agents of democratic, pro-worker change. The Guild’s pro-labor advocacy stands at the forefront of the fight for workers’ rights, a battle which the Guild continues to fight against all odds. It is this work that can help change the laborer-capitalist power dynamic into a more equitable system and, finally, place people over profits as well as human rights over property interests.



  1. MiltonFriedman, Capitalismand Freedom13 (1962).
  2. See Id. at 8–9.
  3. See Samuel Bowles, Richard Edwards & Frank Roosevelt, UnderstandingCapitalism: Competition, Command, and Change 143 (Oxford University Press, 3d ed. 2005) (1993).
  4. Dennis Gilbert, The AmericanClass Structure inanAge of GrowingInequality 173 (SAGE Publications, 9th ed. 2015) (1998).
  5. Id. at 176.
  6. Id. at 170.
  7. See id. at 178.
  8. See Kay L. Schlozman, Sidney Verba & Henry E. Brady, The Unheavenly Chorus: Unequal Political Voice and the BrokenPromise of AmericanDemocracy 126, 319 (2012).
  9. Charles E. Lindblom, Politics and Markets: The World’s Political-Economic Systems 172–173 (1977).
  10. Harry Braverman, Labor and Monopoly Capital: The Degradationof Work inthe TwentiethCentury 49, 62 (1974).
  11. Jane L. Collins & Victoria Mayer, BothHands Tied: Welfare Reformand the Race to the Bottominthe Low-Wage Labor Market 161 (2010).
  12. MartinGilens, Affluence and Influence: Economic Inequality and Political Power inAmerica 76–82 (paperback ed. 2014).
  13. Citizens United v. Fed. Election Comm’n, 558 U.S. 310 (2010).
  14. endy Brown, Undoingthe Demos: Neoliberalism’s StealthRevolution158–165 (MIT Press, 2015).
  15. Press Release, Nathan Tempey, Lawyers Challenge Occupy Evictions (Nov. 21, 2011) (on file with the National Lawyers Guild), available at lawyers-challenge-occupy-evictions/.