Justified outrage, but the question as to why is left aside
Corporations: the undemocratic core cell of Western democracies
China: when the state acts like a business corporation
What distinguishes states from corporations? Should experts rule?
Musk & Co.: when a business corporation acts like a state
The state – a moral end with technical means
Justified indignation, but the question as to why remains unanswered
The Economist put it in a drastic way: „The man who screwed an entire country“. Armin Thurnher, the Austrian co-founder of the weekly magazine „Der Falter“ says it his own way. „In the person of Silvio Berlusconi, much of what drives our post-democratic societies out of democracy’s arms was revealed. His beauty-operated face became the emblem of the mass goofiness typical of late-stage societies: sports and games, debauchery of manners, the entanglement of organized crime, mafia, and official power… All this is what the catchword ‚Berlusconization‘ means, indicating that powerful people with media alliances are undermining democracy for the benefit of their private interests… De mortuis nil nisi bene? De mortuis nil nisi veritatem.“
That a man has been honored with a state funeral who demonstrably had ties to the mafia says a lot about conditions in Italy, but not merely about its elites. It is the masses who helped the sham or rather anti-democrat to power three times, and they still admire him today. Enlightened, intelligent readers of the Economist, the “Falter” and other liberal media shake their heads in disbelief or outrage. But they rarely ask the crucial question. Why is democracy so easily unhinged, not only in Italy but even in the United States? Any reasonably intelligent person could see at a glance how far behind in knowledge and intelligence a man like Donald Trump is when compared to his predecessor Barack Obama, and how far above him Joe Biden is in moral integrity! Nevertheless, it is by no means improbable that the world’s oldest democracy will fail because of the re-election of the notorious liar, misanthrope, and illiterate moron Trump. Why?
Why democracy, after all? Not only dictators like Mussolini or Hitler asked themselves this question. It remains on the minds of their smaller or larger successors, people like Victor Orban, Marine Le Pen, the Russian Putin, the American Trump and the Chinese Xi.
For liberal thinkers like those of the Economist or Armin Thurnher, the editor of the Falters, there is of course a rather solid reason why they would never flirt with a dictatorship. They know that Putin would dispatch them to Siberia and that Trump would muzzle them. As to myself and many others who find it difficult to refrain from independent-critical thinking, even personal irrelevance would hardly save us from a similar fate. Nevertheless, fear of personal consequences cannot be a sufficient reason to avoid the crucial question: Why democracy, anyway?
Corporations: the undemocratic core cell of Western democracies
Please, we must ask ourselves this question, because even in democratic states there is a basic institution that does not in the least care about democracy. As is well known, the modern industrial enterprise was democratically organized only in a few exceptional cases (e.g., in the former Yugoslavia and in the first postwar decades in Japan). I assume that the editors of the Economist would be the last to see this as a deficit, especially since it may well be argued that this core institution of the West and meanwhile of the entire world, owes its extraordinary success precisely to the fact that it is not democratically constituted. The voices of the people working in a company have by no means the same weight when it comes to defining operational goals and their concrete implementation. What counts in efficiency-orientated institutions is expert knowledge and the ability to enforce it with rational consistency to achieve a preset goal. The industrial enterprise, as the economic energy cell of all modern states, is a deliberately anti-democratic, hierarchically determined organization which, by its mere omnipresence, represents a counter-model to political democracy. Virtually no one protests against this, because the anti-democratic constitution of this core institution is obviously reasonable, indeed downright necessary. The voice of a layperson must not carry the same weight in a rationally managed enterprise as that of a trained expert.
From this requirement it follows inevitably that the classic family business is at best a prudently managed autocracy for the benefit of its employees, and at worst a ruthless dictatorship. The modern corporation is no exception. It is under the control of share holders, but that hardly makes things any better, since as a rule it is supposed to serve predominantly their welfare. The consequences of this undemocratic constitution reach even further. Those who defy the directives of the management are not banished to Siberia, locked up in prison or even killed, as is the rule in dictatorships. The company takes a simpler approach: dissidents or incompetent staff are fired. But the principle remains the same. Just as in a political dictatorship, the dissident is banished from the ranks of accepted members.
Why, in fact, political democracy, when the core cell of even democratic states is anti-democratic and owes its extraordinary efficiency to this very fact? Even in democratic Western states, two central institutions – the political order and the economic enterprises – stand in stark opposition to each other and try to extend their respective organizational principles to the whole of society. The trade unions succeeded in achieving a democratic say in a narrow area, namely working conditions and wage bargaining, yet the probability of the democratic principle spilling over into the economy is almost nil – especially in our time when expertise is in greater demand with each passing day. But the reverse process, i.e. the spilling over of the hierarchical undemocratic corporate structure into the political order, is always a real possibility and a constant danger. This is more than just a theoretical conclusion – the tendency is proven again and again by history. Yes, history even teaches us that a political dictatorship may – under certain conditions! – function as successfully as a modern industrial enterprise.
China: when the state acts like a business corporation
In any case, it hardly seems possible to deny the Chinese one-party system and its leadership an almost sensational historical success. Within a few decades, China has catapulted from a bitterly poor agricultural country to the rank of superpower, threatening to topple the reigning alpha state, that is, the United States. The secret of this success is as clear to see as in any well-run business. First, a goal must be set; in the case of a company, this is profit maximization. In the case of a state like China, it is a matter of determining the goal in such a way that the state leadership can count on maximum agreement among the majority. Second, the course of action to achieve it in the shortest possible time at the lowest possible cost must be determined according to rational criteria. In the case of a company, the course of action usually consists of introducing a new product that finds favor with the population (favor with the “market”). In China, the goal has been and continues to be the elimination of poverty until the country reaches Western levels of prosperity and beyond.
However, the transfer of the anti-democratic operating model to political reality only succeeds if a state can set itself a simple goal and also realize it in a comparatively simple way. Precisely this condition applied to China. The goal that has determined all political action since Mao is called „development,“ and this is understood simply as taking over and, by extension, surpassing the Western standard of living. The Chinese never forgot the humiliation of their country, which for two thousand years saw itself as the center of the world (Zhong-Guo = realm of the center). In the meantime, China has almost reemerged as the world’s new center, because it is well on its way to overtaking the West economically – and in the near future probably also militarily. The communist leadership has never made a secret of this ambitious goal to its population. So great was the support from a majority that it has been able to trample all resistance ruthlessly in order to achieve it. Conquered minorities like Tibetans and Uyghurs, preferred to cling to their ancestral traditions rather than submit to the dictates of the Chinese leadership. But against all resistance that questioned the unity of the country and thus the development program imposed from above, the party proceeded and continues to proceed as mercilessly as any company when employees do not fulfill the prescribed tasks. The leadership’s promise never changed during the last decades: „We will make all of you a little more prosperous with each passing year, but we can only accomplish this ambitious task if you follow our instructions to the letter. If you do not, you will be enemies of our advancement, and we will destroy you.“
To date, the Chinese leadership has made good on both parts of its promise: a meteoric rise – as well planned and as detailed as in any successful corporation – and, on the other hand, the merciless persecution of all dissenters and dissidents who stand in the way of its execution. As long as the Chinese government continues to consistently realize the first part of its promise, a majority remains on its side, and the regime can feel secure.
Why democracy, anyway, when the transfer of the undemocratic corporate model to the political level works so well in China (and is being emulated by more and more developing countries around the world)? It is likely that many people in the West are asking this question as well – for instance, leading business bosses especially when they are doing business in Russia or China. Nor can there be any doubt that the freedom to express one’s opinion on any subject in public is an intellectual luxury that means little or nothing to the majority of people, namely all those who live in poverty. They are happy to forego this freedom if a regime promises them material advancement in exchange. Between 1924 and 1928, the percentage of votes for the Nazis had shrunk from 6.6 to 2.6 percent – the Germans were gradually getting better again. Then the Great Depression of 1929, which had spilled over from America into Europe, hit Germany, wiping out in one fell swoop the modest economic recovery of the previous four years. Between May 1928 and September 1930, the number of unemployed soared from 270,000 to about 1 million, as if overnight. By 1933, it had increased fivefold from 1 to 5.5 million. Misery made people cry out blindly for a savior. The Nazis‘ share of the electoral vote skyrocketed from 18.3 to 43.9 percent in those three years. The freedom that democracy promised – and until then largely granted them – didn’t matter to family men lining up in front of public soup kitchens. They were willing to follow any populist who promised them salvation. Democracy had lost.
In the United States, the outsourcing of the past thirty years has caused a substantial part of the once dignified working class to drift into the precariat. For these people, Donald Trump is a messiah who promises them salvation like Hitler, Mussolini, and other great seducers. But the contrast between the super-rich power elite and the broad masses is expressed not merely in income and wealth, but also in education and the opportunities that result from it. Some of America’s universities remain among the world’s best, but the broad mass of Americans read less than a single book per year. Donald Trump is a representative of this class. A minimum of education, however, is a prerequisite for any functioning democracy.
So why democracy in the first place? The question seems difficult to answer in the case of China, because as long as the one-party dictatorship keeps its promises, it will continue to be able to rely on a majority – we cannot simply dismiss this as deception. In the case of Mussolini, Hitler, Putin, and Trump, however, our judgment is unambiguous because we either know the consequences from the past or foresee them for the future. In a democracy, a bad statesman can be voted out of office; in a dictatorship, this replacement is only possible after catastrophically lost wars or their terrible civil counterparts. Certainly, an enlightened despot – there have been quite a few in the past – can prove to be a stroke of luck because he is able to implement reforms more quickly than democratic states. But such a stroke of luck cannot be relied upon. As a rule, despotism means nothing other than that an entire people must pay for the madness of a single man at its head. This difference alone weighs so heavily that democracy – to speak with Winston Churchill – though being the worst of all forms of government, is still the best of all that have been tried so far.
What distinguishes states from corporations? Should experts rule?
But can’t we overcome the difference between democracy and dictatorship by following China’s example of putting the state in the hands of scientists and running it the way Western companies have always been run, that is by professionals with expert knowledge? For a developing state, as China was twenty years ago, this question can certainly be answered in the affirmative. For the people there, no higher goal existed than the elimination of unbearable poverty. And expert knowledge can certainly provide reliable answers as to the means how to improve this situation as quickly and efficiently as possible. By and large, the Chinese government has been as successful as any strong, assertive company management that sets guidelines for its workforce, which then implements them consistently and systematically. No wonder that the annual party congresses of the Communist leadership in Beijing so much resemble the meetings of a corporate management, which defines the tasks at hand and passes them on to various departments for execution.
But is it correct to equate a state with a company? One major difference is immediately apparent. A company can replace its employees at any time because they are no more than functions in the service of predefined tasks. If they no longer fulfill these tasks or do not fulfill them well enough, they must leave. There is no legal claim to membership. This reduction of human beings to bearers of functions constitutes the essence of economic enterprises and all other organizations such as bureaucracies, where predefined goals are realized by rational means. Entirely different rules apply to a state. It cannot choose its citizens, let alone replace them with others. They have a legal claim to membership.
Certainly, states too constantly set themselves goals that can be achieved only by rational means – in this respect, they resemble companies and, especially in our time, manage less and less without the knowledge of experts. If a single clearly definable goal determines state action, for example the imperative of economic growth to overcome poverty, and this goal then pushes all others into the background, a state may indeed behave very much like a company. While it cannot exchange his citizens, it can put them in jails or even execute them if they defy the state’s dictates. This is still happening in contemporary China.
But a goal as clearly defined and one-dimensional as overcoming excruciating poverty can, at best, supersede all other goals in developing states. As soon as man’s elementary needs are satisfied, other goals come to the fore – and these are predominantly not rational and therefore cannot be realized by rational means. People want to be respected, to feel good, to have a say and to participate in decision-making. They want to open new horizons of knowledge and experience them for themselves and for others. They become concerned about the distribution of wealth, rights, and duties, and want to have a say in the process. Such moral choices precede all knowledge – they are a common quest of all men. Democracy, when it functions properly, is a form of government that grants its citizens the final say in moral matters. Experts have a say wherever such moral choices must then be realized by rational means; but they must remain silent when these choices themselves are concerned. And that is the case with almost all issues and problems that move the public in developed states. Whether, for example, same-sex marriage should be legally equated with that between a man and a woman, or whether gendering in language is permissible; what distribution of wealth should be considered permissible – these and almost all questions concerning human happiness or unhappiness elude the grasp of rationality. They express moral or aesthetic preferences or, conversely, aversions that elude rational justification. Decisions are, of course, always made: In a dictatorship by arbitrary ukase from above. In a functioning democracy, the majority of citizens decides, and this is perceived as just.
Musk & Co.: when business corporations act like states
Google, Facebook, Twitter, Amazon, and Starlink are privately held, but for several decades the entrepreneurs who run them have wielded a wealth of power equal to that of medium-sized states. Elon Musk enjoys a private fortune of more than $200 billion, compared with $354 billion in tax revenues for the German state in 2021. This comparison is misleading in several respects, but the extent of real power in the hands of a private entrepreneur like Musk is demonstrated by the fact that he is courted by prime ministers and presidents worldwide like a peer state leader. But we become even more aware of private power when we are told that Ukraine owes its survival as an independent state precisely to this man. In the first days of the Russian invasion on February 24, 2022, the Ukrainian Internet was virtually paralyzed by Russian attacks on its infrastructure. Under these circumstances, a centrally directed defense was all but impossible. Russia would almost certainly have put its plan to completely subjugate Ukraine into action within quite a short time. It was prevented from doing so by Musk. The latter provided Ukraine with the close-meshed Starlink satellite network he had created. The communication channels between headquarters and the front remained, and a centrally directed Ukrainian defense became possible.
We may wonder, though, what would have happened if this man’s personal preferences had been more on Russia’s side? Meanwhile, Musk has made it clear that he could not agree to the use of his satellites if Ukraine used the Internet connection to retake occupied territories. Nor is it a secret that Elon Musk abuses his private power to exert massive political influence and pressure in his own country. Twitter will once again be available to Donald Trump as a propaganda portal.
In this way, one powerful individual makes himself the moral standard and thereby unhinges democracy. One single man decides the fate of nations through an excess of private power. That does not bode well for the future.
The state – a moral end with technical means
All state action is ultimately shaped by moral (plus aesthetic) ends, which make use of rational expertise only as an – often indispensable – means. This remains true even when a state like China acts as systematically rational as a large corporation. The moral end governing this vast growth machinery, the absolute good, so to speak, is, as already said, the eradication of poverty and the rise of a once unforgivably humiliated nation to the greatness and power it possessed for two thousand years. As long as the leadership not only enriches itself through corruption but also provides the population in the remote provinces with greater prosperity year after year, we may call China a technocratic dictatorship committed to the common good. This is reflected, among other things, in the fact that the regime keeps big companies – their managers or owners – on a tight reign. A man like Elon Musk, who can impose his own will on the state, or at least influence it massively, has so far no chance. Yes, the Far Eastern country commits serious crimes against human rights, but in this respect it protects the common good better than the West. In others, the common good as understood by the regime is, however, quite narrowly defined. It is true that knowledge is massively promoted by the Chinese state, but only to the extent that it is „useful“ technical knowledge. On the other hand, knowledge is consistently suppressed as soon as it relates to man (political science, psychology, sociology, anthropology) and is incompatible with the view held by the communist party.
Today’s United States too is a technocracy. But the freedom of scientific research applies to the technical as well as to the human sphere. The US owes its leadership in almost all fields of knowledge and research foremost to this fact. It is only in the last two decades that freedom in the second field has been increasingly restricted, namely by „political correctness“ and „cancel culture“. However, it is not likely that a majority of the population will protest against this curtailment of scientific freedom any more than the people of China.
But it is a further feature of the American understanding of freedom that raises concern and could very well shake the country’s social stability. Today’s U.S. is a technocratic formal democracy committed to the private good. The world-historical crash at the end of the 1920s, the Great Depression, which plunged not only America but also Europe into disaster, was a direct consequence of this misorientation. It took President Roosevelt to overcome this evil and achieve a moral reorientation. The New Deal once again placed the common good at the center of government action and thus made possible the three golden postwar decades in America as well as in Europe. But this reorientation came to an end in the eighties and finally in the nineties. Since then, freedom was again misunderstood as the unrestrained pursuit of private welfare, even if this kind of freedom comes at the expense of common welfare. This regression resulted in the outsourcing of industrial production to low-wage countries – a manna for the leading corporations, a calamity for the once quite self-confident U.S. workforce. The rise of Trump and the weakening of American democracy emerged as a predictable consequence of this shift away from the common good toward a state-honored plutocracy characterized by an unbelievable concentration of power in private hands.
The reaction of the masses was entirely predictable. When the disadvantaged classes do not expect the established parties to improve their situation, they call for a „leader“ who will smash the system. The original meaning of democracy as rule by the people is lost when it no longer serves the common good – the good of the people.
Democracy and dictatorship are two extremes between which political reality is positioned as if on a scale with open ends. There is no pure democracy and no absolute dictatorship; dictatorial tendencies are inherent in every democracy; on the other hand, every dictator depends on a loyal following, i.e., on some sort of participation. We know that all Western democracies rest on a broad base of undemocratic economic organizations, whose pattern constantly threatens to spill over into the political sphere. As long as a majority is largely satisfied with the existing conditions (foremost the distribution of wealth and the opportunities for advancement), the moral dimension of state action is tacitly accepted. The task of the state then seems to be solely technical: it is expected to support and promote these conditions as effectively as possible by rational means. If, on the other hand, a majority perceives the existing conditions as burdensome (no opportunities for advancement and a distribution perceived as unjust, acute threat to living standards from new dangers such as climate change, etc.), then again the moral dimension comes glaringly to the fore: the question of justice, the legitimacy of the state leadership, etc. In the best case, a man like Franklin D. Roosevelt will then appear, who expressis verbis criticized the rule of monopoly (the plutocracy) in his country and steered the institutions back in the direction of the common good. Moral impetus and the ability to put it into practice by rational means balanced each other out under his government. Democracy and the common good were reunited.
Today’s dictators like Vladimir Putin and would-be leaders like Donald Trump call just as loudly for moral revival, and this is precisely why they appeal to the masses. But the American real estate speculator could hardly be more different from his great predecessor Roosevelt: he completely lacks the moral and rational qualities to make America great again. The man is indifferent to the common good, and even private welfare concerns him only insofar as it affects his own person. As to the new Russian czar, the man in the Kremlin knows very well how to use and promote expertise, but with him the moral impetus has taken on an archaic form. Like the Germans for Hitler, so for him the Russians are the chosen people who may claim for themselves the right to force others under their thumb. His diabolocracy is much more dangerous than modern American plutocracy. Putin is a true successor to Hitler, and like Hitler’s brutal rule, his rule too will last only as long as he can rely on the unconditional loyalty of his followers. In this way, he is losing many people whose expertise would be important to his country. Russia is suffering from intellectual emaciation. Once again, the madness of one man is dragging an entire nation into the abyss.