Can capitalism and democracy coexist?
Source Dave Anderson
Date 13/01/19/12:27
Can capitalism and democracy coexist?
Growing debate over which levels of government should regulate
"fracking" hints at a larger American crisis


If you’ve ever pondered the issues surrounding the tenuous
relationship between democracy and capitalism, most likely, you’ve
considered them as both foreign and abstract (much as the elite media
often does). Are, say, China and Russia authoritarian, capitalist or
both at the same time? Can Middle Eastern countries use their
sovereign wealth funds to build prosperous free-market economies while
those nations also deny their citizens basic freedoms? Do
transnational corporations that operate under the aegis of repressive
regimes prove that capitalism can exist wholly without democracy?

While these are certainly significant questions, they obscure the fact
that the tension between democracy and capitalism is also intensifying
here at home. For instance, taxpayer-sponsored bailouts of — and
direct subsidies to — particular politically connected industries
effectively employ our democracy’s public power to undermine
capitalism’s notion of “creative destruction.” Regulatory and tax-code
loopholes for other industries do much the same. Meanwhile, the
landmark Citizens United decision accelerates the trend whereby
capitalism’s winners are able to wield disproportionate political
power, effectively undermining democracy’s egalitarian notions of “one
person, one vote.”

But in a week that saw the Associated Press expose the all-too-corrupt
relationship between regulators and the natural gas industry, perhaps
the best way to understand the struggle between democracy and
capitalism is to consider it through the microcosm of energy
development. In the intensifying fight over whether local communities
can regulate hydraulic fracturing (“fracking”) in their midst, the
battle between the public’s political rights and the private profit
motive is coming down to a simple question: Can capitalism and
democracy even coexist?

If that query itself sounds extreme, consider the juxtaposition of the
new Matt Damon film “Promised Land” with the stunningly honest
declaration this month by a fossil fuel executive.

The film’s dramatic fulcrum is the assumption that towns still retain
the ultimate power to vote to prevent fracking from happening within
city limits. But as National Public Radio reports, “In the real world,
there’s almost never a vote.” That’s thanks to the legislative power
of a natural gas industry whose views on democracy were perfectly
summarized in the New York Times by industry executive John C. Holko.

“Why should I put money in the ground if any one of the towns can say
no at the next town meeting?” Holko told the Times in a piece about
whether New York Gov. Andrew Cuomo, D, will do the bidding of the
industry by overriding local voters’ right to regulate oil and gas
drilling. “The issue of home rule is the demise of the industry.”

It doesn’t get any more stark than that, does it? At a moment when the
ascendant natural gas industry is gaining ever-more political and
economic power, Holko is asserting that municipalities’ age-old
democratic rights to regulate internal commerce (“home rule”) can no
longer peacefully coexist with fossil fuel corporations.

The insinuation, of course, is that those democratic rights should now
be summarily abrogated, which is exactly what the fossil fuel industry
is right now trying to do.

In Pennsylvania, the same state whose industry has publicly
acknowledged the health risks of drilling saw its own 2012 Legislature
preempt local communities from regulating fracking. In New York, Cuomo
and his Legislature will ultimately decide whether to allow fracking
in the state — and, along with the courts, whether to follow industry
demands and bar local communities from passing their own drilling
ordinances. Meanwhile, in Colorado, where an overwhelming and
bipartisan vote banned fracking in Longmont, the industry is now suing
in court to definitively eliminate local voters’ right to regulate
fracking in their communities. Fossil fuel firms have a powerful ally
in Democratic Gov. John Hickenlooper, who endorsed such lawsuits after
raking in $76,000 in campaign contributions from those companies.

Noting that communities that have banned fracking still use natural
gas, Slate’s Adam Briggle has derided an undeniable strain of
NIMBY-ism in some of the local bans. However, as ugly as NIMBY-ism can
be, even it, unto itself, is a proxy for the all-important battle
between democracy and capitalism. NIMBY-ism, after all, is all about
whether a city is allowed to use democracy to limit certain forms of
capitalism inside the community.

Additionally, in the fracking fight, there are other, more nuanced
questions being raised, the most significant of which is what kind of
democratic forces are most appropriate for regulating capitalism, the
local or the statewide? Is it best for a relatively small handful of
elected representatives and their non-elected appointees in regulatory
agencies to dictate drilling policy to local communities? Or is it
better for the people who will actually be affected by drilling to
decide on their own what they are most comfortable permitting?

Anti-fracking activists say the latter, arguing that municipalities
are in the best position to know what is right for them. The industry
argues the opposite, probably for two unstated reasons: 1) it is
easier to convince a small, physically isolated set of lawmakers to
support a particular policy if they themselves do not have to
personally face the consequences of such a policy, and 2) it’s much
simpler to buy off a small group of all-powerful lawmakers and
industry-connected regulators than to wage town-by-town campaigns.

Tactically, the industry’s calculations are accurate on both counts.

When it comes to the consequences of drilling, human health
consequences could, indeed, be severe. The Environmental Protection
Agency, Duke University and even some fossil fuel industry groups have
provided ample evidence that fracking could have serious human health
ramifications for local communities — ramifications that legislators
and regulators in distant state capitals don’t have to worry about for
themselves or their families.

As evidenced by the Associated Press’s revelations this week, those
distant legislators and regulators are all too often willing to ignore
problems that aren’t affecting them personally.

Likewise, it’s a truism that the fewer policy makers there are, the
simpler it is to influence public policy. It is also correct, as
Hickenlooper recently told an approving group of energy executives,
that letting each community regulate drilling could create “an
intensely balkanized, patchwork quilt” of different laws and force
natural gas firms to engage voters town by town to try to get its way.

But, then, that’s it right there: At the root, Hickenlooper’s talking
point is capitalism arguing against democracy. More specifically, it
is capitalism (gas companies and their puppet politicians) arguing
that democracy (having to convince many different sets of voters to
support a policy) is wholly unacceptable.

Is that really true: Is too much democracy a bad thing for capitalism?
It’s one of the big questions of this moment, and opinions will
certainly differ on the right answer to it depending on the particular
issue at hand. But in order for those opinions to differ we must be
more aware that the question is being asked not just in foreign
countries or academia. Whether in debates over local gun laws,
gambling regulation, drug policy or energy development, it is being
asked in so many different ways right in our own backyard.

David Sirota is a nationally syndicated newspaper columnist, magazine
journalist and the best-selling author of the books "Hostile
Takeover," "The Uprising" and "Back to Our Future." E-mail him at, follow him on Twitter @davidsirota or visit his
website at

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