We live in a time of the most intense peacetime economic crisis in history. It has brought to the surface, and made blatantly obvious, the many MANY flaws of our system. The flaws of crony capitalism—the flaws of democracy itself—but most of all, the naïvety of the masses. We heard it from the Wall Street 99%, we heard from rioters in Greece, and we hear it now from protesters in Slovenia—a call for ”direct democracy” as the ultimate solution.

Representative democracy vs. direct democracy—the wrong dilemma.

I wholeheartedly agree with some of the points brought up by the dissatisfied masses of protesters. The anger at ”the ruling elite” is justified—up to a point. There is an almost omnipresent wish to be heard and to be included in the decision-making process. Which is logical, I suppose. None of us wants to live according to rules and regulations that are imposed on us, against our will by a ruling minority. Yet I believe this a wrong course of thinking, a diversion that misses the core issue. For it is not in the representative part where the problem lies with democracy. It is in this fallacy of trying to co-decide everything instead of leaving a great majority of decisions up to the individual.

Imagine a system of direct democracy (or a somewhat more feasible system of liquid democracy ) was actually put in place…

How would it be better? What would the individual gain? Do we need for others to co-decide things that are none of their business? More importantly, are we really such a megalomaniac-infested society that we demand to co-decide and regulate how everyone else lives their lives? I hope that at least for a large segment of the people, the answer is a resounding no. The recognition that the solution is not in everyone deciding on everything, but in each of us deciding for themselves is only a step away from realising that what you are actually asking for is small, limited government, where citizens are largely free from the chains of state. You are essentially making the case for liberty. And yes, in this context, the concepts of direct democracy may well work, but the crucial point is that taken out of this context these ideas can bring about an even worse and more oppressive system of government.
 

The unjust comparison: crony capitalism vs. socialism

More often than not the protest movements combine their wish to be heard with a critique of ”the capitalist model” and suggest a wide variety of socialist notions to replace it. In Slovenia (and Greece) for example, some are even going as far as to suggest the oxymoronic ”democratic socialism”. To which I respond that trying to save democracy with socialism is like trying to put down a burning house with dynamite. You’ll put down the fire, alright, but you’ll be putting down the house with it.

On the other hand the criticism (mis)directed towards capitalism usually has very little connection with free-market capitalism. Instead it focuses on things that, as a rule, easily fall under the umbrella term crony capitalism. A good example are bailouts of banks and companies. With companies an unfair competitive advantage is given to an (obviously) inferior business model, and with banks the risk versus reward balance is shattered completely allowing (at the very least) the issue of speculative loans where, if successful, the profits are sown by the bank’s owners while if unsuccessful, the losses are ”collectivised”! Such absurdities have nothing to do with free-market capitalism! They are a typical consequence of large government which spawns corruption and enables an abuse of the power of the state to benefit some groups at the expense of others—capitalism for the poor, socialism for the rich.

If this were true, why on Earth would people in a democratic society allow it? Well, I believe It is not that a great majority of people would want socialism or Keynesianism —it’s that they are made to believe that those are ways to a life they want. This myth is perpetuated, in part, by self-proclaimed experts who don’t know any better, and by politicians offering the easy way (e.g. welfare utopianism ), but most importantly, by powerful lobbies that have a great interest in maintaining the crony capitalism of our present society.

The potential for liberty

Confusion, manipulation and desperation are in abundance, yet there is also an unconscious cry for liberty echoing through the streets of the world—through exposure to knowledge, understanding and the ideas of liberty it can be made conscious!

1 Also known as delegative democracy. Differentiated from direct democracy in that citizens can either take an active role themselves or transfer their voice to a delegate.
2 Still worryingly popular despite being convincingly refuted as far back as 1946 in Hazlitt’s Economics in One Lesson. Accessible online at: http://mises.org/books/economics_in_one_lesson_hazlitt.pdf
3 If you are intrested in a thorough exploration of the failings of the welfare state I recommend Palmer’s After The Welfare State. Accessible online at: http://studentsforliberty.org/wp-content/uploads/2012/04/After-the-Welfare-State-PDF.pdf