Of all the hundreds of blog posts I have written since 2003, the one that sparked the most interest was this one from ten years ago, about the closure of the milk bar at the corner of Barkly and Canning Streets in Carlton. The post made it into one of Andrew Leigh’s books, and for years afterwards I was contacted by locals wanting to know more. Milk bars were part of growing up in Australia for anyone now middle aged or older, and I think the post resonated because it tapped into childhood nostalgia.
In 2009, I put the milk bar’s demise down to the redevelopment opportunities of a prime piece of Carlton real estate. The same people who in the 1970s would indulge themselves spending 20 cents on a bag of sweets at the milk bar were now willing to pay over a million dollars to live in the inner city. But that turned out to be an optimistic thought.
Instead the old milk bar has, apart from the occasional squatter, now been vacant for a decade. Today, it is boarded up and covered in graffiti. I expect there is some story that explains ten years of inactivity, and why someone would forgo rent on the milk bar or the large amount a developer would pay for the land. But if we can’t have our milk bar back, a new house or apartments would be better than the current eyesore.
Barkly and Canning street corner ex-milk bar, 22 December 2019
Barkly and Canning street corner milk bar on its last day, 20 December 2009
(This review is cross-posted at Goodreads.)
Theorists of the left and the right argue that there are tensions if not contradictions between democracy and capitalism. Left-wing theorists argue that business has undemocratic power, buying influence through political donations and altering policy by threatening to invest elsewhere. Right-wing theorists argue that democratic majorities vote for taxes and regulations that weaken incentives and undermine the efficiency of capitalist enterprises.
Judged by the normative standards of these theorists, these critiques have something to them. But judged by some other standard, such as elected governments maintaining capitalist economic systems with widespread high living standards over long periods of time, the ‘advanced capitalist democracies’ discussed in Democracy and prosperity: reinventing capitalism through a turbulent century, look very successful compared to other political and economic combinations.
One contention of the book’s authors, Torben Iversen and David Soskice, is that a symbiotic relationship between democracy and capitalism contributes to the success of these countries. Although business and rich people may, at least initially, resist the increased taxes that democracies impose for social policy programs, often in the long run these programs contribute to economic success.
For example, education is electorally popular and provides business with the highly-skilled workforces they need. Government unemployment, health, and retirement programs reduce workers’ uncertainty about their future welfare, reducing short-termist behaviour and industrial conflict. Workers are less dependent on their employers.
In turn, key constituencies in advanced capitalist democracies depend on a successful economy for their own jobs and the tax revenues that support social programs. They support political parties that competently deliver economic growth, limiting the political potential of parties that would damage the capitalist economy. The rejection of Jeremy Corbyn’s Labour in Britain is an example. Continue reading “The symbiosis of capitalism and democracy”