Capitalism is Undemocratic
Why is capitalism inherently undemocratic and promotes sociopathology? Plus, why true socialism is more democratic than capitalism, and how we can learn to govern from worker-owned cooperatives.
Dear Ponders,
This newsletter is a collaboration between me and Jay at . As Jay is based in Germany and I’m based in the U.S., you can call it an international collab. While Jay commented on my recent article on the role Corporate America plays in weakening our democracy, they ignited new concepts that I had not thought about, and helped me connect the dots in my distant memory of growing up in Colonial Hong Kong. This exchange led us to find a common thread linking Germany, Hong Kong and America. Here’s our discovery…
In my recent post, The Corporatization of America Plays a Critical Role in Undermining Democracy, I highlighted my observations on how Corporate America’s labor practices have conditioned employees in such a way that they’ve become disconnected from the civic society, and become numb and unaware of the intimate impacts of political decisions on their personal lives.
Over the past few decades, I’ve seen a steady erosion of the civic mind through the shrinking of citizens’ roles to the narrow confines of employees and consumers. We have been entrained to think of the environment we live in as “the marketplace”—one that’s ruled by invisible hands, instead of a society or community comprised of real human beings with real feelings. But whose invisible hands are they? They are Corporate America’s.
Why is it crucial to understand the role corporations play—more so than the superficial dividing factors—in the demise of democracy in this country?
I continue to lay out the practices within Corporate America that normalize dominance, coercion, top-down decision making and even violence.
In this essay, I want to build upon my own thesis, and ask this question:
Why is capitalism—the foundation upon which the American economy is built —undemocratic to begin with? And why is it ultimately a menace to humanity?
The Architecture of Power
Before I dive into the above question, let me share a sharp observation offered by Jay at
after they read the above-mentioned essay. Their perspective, born out of Germany’s modern political history, sheds light on how the American Broligrachy power grab has been made possible by the complicity of Corporate America. Here’s what Jay has to say:What you describe—the corporatization of American life, the loss of civic agency, the seduction and betrayal by capital—is real, visceral, and immediate. I’ve seen it too, from a different vantage point. And what I’ve come to believe is this: the roots of what we’re seeing stretch far beyond the U.S. political theater. They are embedded in a much older architecture of power—specifically, in the traits of Germanic culture that have been exported, mutated, and ultimately gone awry.
I write from Germany, born of this legacy.
The trauma of Großmannssucht (translation: megalomania)—this obsessive need for dominance, order, and expansion—has run through centuries of European empire-building. And while it’s convenient to look only at Rome or Greece as ideological sources, the truth is: the U.S. inherited much from the Germanic systems that shaped both the British monarchy and its colonial enterprise.
Queen Victoria, George V, and the House of Saxe-Coburg and Gotha (rebranded as Windsor during WWI) were ethnically and ideologically steeped in Germanic frameworks: hierarchy, bloodlines, order above dissent. When the British Empire expanded into places like Hong Kong, it wasn’t just a British system being exported—it was a Germanic-British hybrid of imperial control, shaped by Protestant work ethic, legalist bureaucracies, and disdain for democratic pluralism. What you experienced in Hong Kong wasn’t incidental—it was imperial residue.
The U.S. Constitution, in contrast, was built to restrain that kind of power. The founders—many of them traumatized by monarchic overreach—designed a system to prevent the rise of oligarchy. But starting with Reagan in the 1980s, those original safeguards began to erode. Deregulation, union-busting, tax-slashing, and the entanglement of health care and employment were not just economic shifts—they were a cultural reversion to the very dominance structures the Constitution meant to contain.
And yet, even that Constitution—so often mythologized as a beacon of freedom—was never built for equality. It was written by white, land-owning men, many of them slaveholders, who embedded into its core a patriarchal, neo-feudalist, pseudo-Christian hierarchy that explicitly excluded the vast majority of the population. Women had no right to vote or own property. Enslaved people were not seen as human under law. Rights were tied to land ownership, and land ownership was tied to race and gender. It was a system designed to protect wealth and control labor, not liberate the many.
What we are seeing now is not an aberration—it is a regression toward that original structure, stripped of modern amendments and civil rights gains. As safeguards vanish, the U.S. is reverting to its foundational logic: a society where only a small elite—white, wealthy, male, landholding—holds power and rights, while the rest are controlled, commodified, or erased.
Under Trump, we now witness the Americanization of Großmannssucht: oceans renamed, territories eyed for annexation, universities silenced, immigrant students “disappeared.” This is not incompetence. It’s ideology. And it’s hauntingly familiar to anyone who’s studied pre-Weimar authoritarianism or post-Habsburg imperialism.
The terrifying twist is that corporate capitalism has become the vehicle for this modern imperialism. Where kings once wore crowns, CEOs now hold shareholder reports. Where emperors once invaded, billionaires now restructure global labor. The constitutional frame was never designed to withstand this form of techno-corporate rule. And without a reckoning, it may not survive.1
Like you, I’ve stared into the wreckage and tried to understand how we got here. What I keep finding—again and again—is that the spiritual sickness we’re living through has historical fingerprints. Germanic fingerprints. And if we don’t name that, we risk repeating it.
Jay’s nuanced and in-depth commentary made me stop and think about my experience growing up in Hong Kong and having my worldview shaped by the British colonists. Suddenly, disparate dots in my mind were connected, linked by threads that straddle the West and the East.
In Colonial Hong Kong, I saw first hand the results of a seemingly benign and hidden policy of preventing school children from learning about any conflicts targeted at the colonial government. Most people in my generation grew up being apolitical. Their focus was solely on surviving the daily grind and making money. The ambitious ones strived to make a killing, which became all consuming. The general lack of political engagement in civic society and the strength of the easily-co-opted business community provided fertile ground for the Chinese government to exploit the weakness of the land and attack its rule of law and freedom of expression.
In retrospect, although there was freedom of expression in Hong Kong during the 150 years of colonial rule, and its economy was once the freest in the world, the colonists never introduced a democratic system of government. It was only at the very tail end of their governance, that Gov. Chris Patten worked to lay the groundwork and introduced the very first democratically elected Legislative Council.
From the early days of the British rule, in the mid-1800s, Hong Kong was used by the British colonists to set up a trading post, enrich themselves and launder proceeds from the opium trade with China. Over time, they built it up as Asia’s financial hub using capitalistic principles. The exploitation of the working class was normalized as a built-in feature of society. Disproportionate income disparities were (and still are) the norm.
The upper class was consisted of the colonists, other white “expats” and the local professional elites. These elites lived in a world that was unreachable and inaccessible to the working poor. The socio-economic divide may not be as extreme as in apartheid South Africa, because a middle class had emerged during the economic expansion in the 70s and 80s. But as a child of parents who fled from China with the equivalence of just a few dollars in their pockets, I had understood how the rich were disconnected from the rest of society and unaware of our struggles.
Because Hong Kong was the escape hatch for people who fled Communist China, the ideology of Communism or Socialism was highly unpopular and even condemned. And so, inequality was widely accepted as how things were and always would be.
Today, I see a similar dynamic between the have’s and have-nots in America (which I wrote in length in this post). The income gap has become so extreme, that the billionaires in this country will never be able to consume the money they own in millions of lifetimes. Similar to Colonial Hong Kong, socialism is condemned as the source of all evil.
The oligarchs—hidden behind their faceless corporations (which the law has ironically recognized as persons2), came into power using tactics like intimidation, domination and coercion. Of course, in modern-day Corporate America, these tactics are dressed in shiny, beautiful garbs, so that employees easily fall under their spell of submission. Once they’re in, layoffs and other cost-cutting measures occur, and those who are spared from the chopping board would obediently tow the line.
When we look at how wages have stagnated over the past three decades, how workers have to get side hustles or work multiples jobs to make ends meet, and how a quarter of all households (and almost 40% of lower-income households) live from paycheck to paycheck,3 it isn’t hard to see how the capitalist class has amassed total control of labor and workers’ rights à la colonial model. Just another form of Großmannssucht, isn’t it?
Why Socialism is Actually Democratic
Now, back to my opening question: Why is capitalism undemocratic to begin with?
It is undemocratic due to the labor structure. The purpose of an enterprise in a capitalist system is to extract profits for the capitalist class. In America, the dominant culture celebrates maximum extraction of profits with minimum costs as one of the highest forms of success. You cannot be successful in this framework without finding ways to minimize labor cost (a main “cost of doing business”). But when an employee earns one-tenth, one-hundredth or even one-thousandth of what the CEO earns and can’t even pay for the basics of life, the CEO will not look at that employee and feel concerned about how she is able to get by and how much she suffers seeing her children starve or freeze to death (yes, this actually happens in America).
How do top corporate leaders live with themselves knowing their employees suffer while they enjoy an insulated and comfortable life? Well, the answer is, they don’t care. Why? Because, deep down, they have limited, and in some cases, zero, empathy.
Think my statement is too extreme? Let’s have a listen to mental health counselor Dr. Harriet Fraad:
In this video, Dr. Fraad explains how capitalism rewards certain traits in people that could pose harm to others when they’re taken to an extreme. These traits include greed, lack of empathy and cruelty. According to Dr. Fraad, capitalists who have “mastered” these traits are mentally ill. That’s why capitalism is so dangerous to our collective health and safety.
I highly recommend watching the full video, as this mental health professional cares deeply about democracy and humanity, and provides the perfect answer to my question at the beginning of this post: Why is capitalism a menace to humanity?
If you are concerned about the state of our planet, and have understood how relentless industrialization and other human activities are destroying the very Earth that our lives depend on, it would not be difficult to understand why capitalism is a menace to humanity and the planet.
As an alternative economic system, Dr. Fraad cites the example of worker-owned cooperatives in Mondragon in the Basque region of Spain. It is the world’s largest grouping of worker co-operatives. Workers collectively decide how they want to solve economic problems facing their coop, or large-scale economic crisis facing their nation.
An example she gives is: In a democratic way, workers at a factory decided to reduce the number of work days from five to four per week, and everyone would take a pay cut so that all could save their jobs. During that economic crisis, Mondragon demonstrated impressive resilience in helping keep jobless levels in the Basque region to under half the national average.4
Although co-operatives are rare in America, I’ve had the fortune of working in one and observed how it operated. This co-op is Park Slope Food Coop in Brooklyn, New York. It has existed since 1973 and is one of the oldest and largest active food co-ops in the U.S.5
Having worked there as a member for two years, I’ve understood that co-ops actually operate on the socialist model. The goal of the coop is not to extract maximum profit for a small number of owners. Instead, the goal is to benefit all its staff and members, who collectively own the shop, by minimizing the costs of good sold to them.
As every co-op member has to work shifts at the store, labor cost—which makes up roughly 50% of the costs of a typical American grocery store—is gone. This translates into savings for all members, not savings for top executives who already earn more than enough.
One has to actually have experienced this amazing system to appreciate its democratic nature and the camaraderie that exists among the members. The community is one of the most diverse and friendly that I’ve ever been part of.
Such a system appeals to and brings out the best of people. It is built on equality and demands equality—a big contrast to the capitalist system that brings out the worst traits at the top, where power is concentrated.
Some may argue that socialism is a failed concept. “Just look at the former Communist countries!” They’d say. But the failure of these countries are due to the concentration and abuse of power in the leadership class, as depicted by George Orwell’s Animal Farm. Whenever the people at the top amass and abuse their power, they are no longer practicing the pure form of socialism, which promotes an equal and fair distribution of resources. They themselves divide their country into the have’s and have-not’s. In essence, the system they so created is a capitalistic one, with the small ruling class extracting wealth from the working class, which makes up the rest of the country.
Doesn’t that sound familiar?
Coming up next, Lily Pond will be publishing a personal story about her first job out of college—a radio reporter in Hong Kong and her adventures in China in the mid-1990’s. Stay tuned.
All emphasis in bold are mine.
In the landmark ruling of Citizens United vs. Federal Election Commission of 2010, large corporations were granted “personhood” with the protection of the First Amendment rights. This allows them to make contributions to political candidates without any monetary restrictions. Ironically, the protection of such a corporate “person” does not come with an equal measure of responsibility for fairness and integrity.
“Paycheck to paycheck: what, who, where, why?” by Bank of America Institute https://institute.bankofamerica.com/content/dam/economic-insights/paycheck-to-paycheck-lower-income-households.pdf
The Mondragon model: how a Basque cooperative defied Spain’s economic crisis https://theconversation.com/the-mondragon-model-how-a-basque-cooperative-defied-spains-economic-crisis-10193
Wikipedia: Park Slope Food Coop
https://en.wikipedia.org/wiki/Park_Slope_Food_Coop
 | A guest post by
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Thank you, Lily,
for holding space for such depth—and for continuing the conversation with clarity and care. I want to offer a thread that weaves between the poles of condemnation and romanticization. What I see is this: Germany didn’t arrive at a solidaric system by accident. It was shaped by devastation, loss, and a deep reckoning with how economic power had once colluded with authoritarianism. The resulting structure—what we call Solidargemeinschaft—isn’t perfect, and yes, parts of it have been chipped away by the same neoliberal forces that swept through much of the West. Yet what remains is a legal and social architecture still consciously designed to protect labor, equity, and dignity.
We in Germany still live under a system that—however flawed—contains strong protections for the non-dominant population. It isn't limited to queer rights or women's rights. It includes codified protections against discrimination, labor protections with real teeth, and a solidaric structure around healthcare and pensions that centers the idea of communal well-being rather than corporate profit.
Some of these protections have eroded since the 1980s and 90s. That was a period when many local governments, deeply indebted, began selling off public assets—our hospitals, our postal services, even segments of our national rail system. Energy providers once owned by the people shifted into private hands. Everything began revolving around profit, and much of it mirrored the neoliberal shift that took place elsewhere, especially in the U.S.
And yet, the foundations remain different. The overreach of the American system, especially as it has evolved since the founding of the Union, took a different path—one where deregulation and the sanctification of the “marketplace” went largely unchecked. In contrast, Germany’s postwar system was consciously designed to prevent another descent into fascism—not just politically, but economically.
It’s important to recognize how deeply corporate complicity ran during the Third Reich—not just among German companies, but international ones as well. This wasn’t incidental. It was structural. American corporations played significant roles in enabling Nazi power, often through a mixture of business interest, political convenience, and devastating ethical compromise.
Just a few examples:
General Motors (Opel): Their German subsidiary produced vehicles for the Nazi war effort. Controversies remain around how much control GM retained over operations during that time.
Ford-Werke, a subsidiary of Ford, manufactured military vehicles. Henry Ford’s admiration for Nazi ideology is not an obscure footnote—his views had global influence.
IBM, through its subsidiary Dehomag, provided the punch-card machines that helped the Nazis catalog and target people, including in the logistics of the Holocaust.
IT&T was involved in Nazi telecommunications infrastructure, and there are allegations of financial support to the SS.
Kodak AG, Kodak’s German arm, not only produced for the war effort but profited from the use of forced labor.
And these examples are just the surface. Financial institutions facilitated transactions, helped sell war bonds, and managed money flows for the regime. Many foreign businesses profited, either directly or through plausible deniability. The full extent of that complicity is still being unraveled by historians.
This is what those rebuilding Germany after the war understood clearly: the economic system that had allowed Hitler’s regime to flourish could not be allowed to rise again unchecked. It wasn’t enough to outlaw fascist symbols or parties. What was needed was an economic structure that wouldn’t lend itself so easily to authoritarian capture. That’s why the principles of Solidargemeinschaft were built into our postwar democracy, and why many of them are protected by the Basic Law—our constitution.
It doesn’t make Germany immune. And it certainly doesn’t erase our history. But it does reflect an effort—a sustained one—to learn from catastrophe not only at the level of memory, but in the very systems that govern our lives. The question, for me, isn’t whether socialism or capitalism is "the answer." It’s whether the lessons of complicity have been integrated into our structures. In Germany’s case, some of them have. And that makes all the difference.
And we must not forget the role of the Allied forces in this deliberate restructuring. The decision to rebuild Germany differently—both politically and economically—was not left to chance. The Allied powers, particularly the United States and the United Kingdom, understood how the unchecked concentration of wealth, land, and power had enabled two world wars to erupt within just three decades. They recognized that rebuilding Germany meant not only dismantling its military but also rewiring its economic framework to make such a collapse into authoritarianism far more difficult in the future.
The United Nations itself was born of this recognition—that no single nation, left to its own devices, could be trusted to self-regulate in the face of expanding greed or nationalist delusion. Yet, paradoxically, while the Allies helped shape a more solidaric and rights-oriented Germany, the United States never made a parallel effort to reassess or restructure its own foundational systems. The very safeguards it saw fit to install abroad were never mirrored at home.
Yes, there have been presidents in the U.S. who attempted to integrate elements of solidarity—Roosevelt’s New Deal, Johnson’s Great Society, even parts of Obama’s policies. But each time, progress has been tenuous. The next Republican administration often focused on dismantling what little solidarity had been achieved. What persists is a cyclical unraveling of civic care, a near-religious deference to free markets, and a refusal to confront the systemic roots of inequality—whether racial, economic, or environmental.
The irony is staggering: the architects of Germany’s postwar safeguards knew that democracy without solidarity is brittle. That economic justice isn’t the result of charity, but of structure. That civic health requires more than ballots—it demands boundaries around power and capital. These are not just German lessons. They are human ones. The question is not whether the U.S. can afford to integrate them, but whether it can afford not to.
From William A. Finnegan @The Long Memo (TLM):
I read this—and while it’s clearly thoughtful and well-argued, I think it misses something fundamental.
The claim that capitalism is inherently undemocratic feels like a category error. At their core, democracy and capitalism are both systems rooted in individual sovereignty—one in the political realm, the other in the economic. You vote with your ballot, and you vote with your labor, your dollars, your risk. That’s not tyranny. That’s freedom.
Yes, when capital is allowed to consolidate unchecked, it can distort markets and political systems. But that’s not a flaw of capitalism—it’s a failure of regulation, of anti-trust enforcement, of civic guardrails. The same could be said of democracy when it’s gamed by authoritarian actors: the tool isn’t broken, the operating system’s been hijacked.
Worker co-ops are great. They should be part of a vibrant capitalist system, not a replacement for it. Socialism, when imposed top-down by the state, has a long track record—and it’s not democratic. Ask anyone who grew up under it.
So no—I don’t think capitalism is the problem. I think concentrated power is. And that shows up in every system, regardless of ideology.
https://substack.com/@billyfinnegan/note/c-108107872?utm_source=notes-share-action&r=1b1pdb