The importance of democracy does not lie in its functions within the modern state, but rather in its ability to organize collective action in a decentralized way and thus be in competition with the market.

By the time the 21st century arose, it seemed that the only important debate in public life was between the model of the state and the model of the market, one total yet centralized while the other was partial and decentralized. The state offered the chance for equality, and the market offered the chance for freedom. This debate was strongest in regards to the economy and the allocation of scarce and abundant goods. In fact, the nature of scarcity was redefined by this debate, appearing as artificial yet necessary in the market and seen as a vital factor in the state only in regards to propaganda that would marginalize the other as an enemy of the people. The limits of the state were in fact revealed, through a market-based critique, by the constant surfacing of scarcity whenever centralized or total planning of the economy was put forth. However, because the scarcity in question was artificial, the market model offered a decentralized alternative that failed to satisfy all parties involved. In other words, someone had to go without in the market, while the state offered universal access but in predetermined amounts for all involved. Both models, when set up against each other in comparison, failed to be adequate to the social body in providing both freedom and equality at the same time. The contrast of the failings reveal that democracy, as a primal form of collective action, can exist outside of both the market and the state while fulfilling the needs of those in the social sphere.

One usually looks at democracy as a subset of government and thus a part of the modern state. However, there is the possibility of economic democracy that can be practiced in private life and offers a strong alternative to capitalism as both an exclusive ownership of the means of production and the reliance on the market. Examining capitalism can illustrate the stark differences between democracy and the market. Within capitalism one would find precluded choices internal to the market, choices that offered limited variety through the predetermination of what could be turned into a commodity with a price set by supply and demand. At the same time, capitalism is also a hierarchy of power in collective groups, as seen by the emergence of the corporation within the market arena. Anything that could possibly happen has to happen within the borders of the market and what it considers valuable, while the demands of market efficiency organizes workers as costs of production in a vertical system of control and command. On the other hand, democracy is the original choice of a society external to the market, where all options are possible, and democracy insures an equality of power in collective action. Rather than a uniform objectification of all aspects of social relationships that occurs with the commodification of the market, democracy is able to deal with unique characteristics and the first premise that there is equal access alongside equal participation in the society. The market at first appears to be a decentralized system to communicate value, as proposed byFriedrich Hayek in opposition to the centralized planning of the state. The state, according to Hayek, can attempt to take into account all of the various factors of an economy but will always fail in its planning and coordination. The information needed is too diverse. This estimate in itself is true, that a centralized state will be structurally lacking in complete knowledge, but the market as an alternative to communicate value and coordinate economic action fails as it encompasses larger groups and limits choices to commodities. Democracy proves to be a better decentralized network, relying on multiple ways to convey information and coordinate action beyond generalized supply and demand. In fact it could be said that when the market on its own actually works, in very local settings, that it emulates democracies as they work on multiple levels of size. And larger types of markets that deal with trade can only fit the ideal of a decentralized network if the businesses within them are organized as economic democracies, in order to prevent the rise of corporate hierarchies.

A democracy, whether political or economic, creates an environment where there is an equality of power among the participants. Equality of power, as a symmetric formation of ability where there are no dominant and subservient social positions, has precise examples. Equality of opportunity is one mode of equality of power, where the potential for individuals to act freely is not hampered by any accumulation of power by one individual or a group. Those who advocate for the market also speak about equality of opportunity, but never connect the chance to act with a necessary symmetry of power among participants in a social body to make it happen, instead implying that luck or personal traits insure that opportunities are acted upon. Opportunity, however, is meaningless if it is not coupled with equality of access to the necessary tools, resources, or methods that allow potential freedom to be actualized. To slightly alter the old saying about “give a man a fish and he will eat for a day, but teach him to fish and he will eat for a lifetime”, equality of opportunity may be the knowledge of fishing but being able to have a fishing pole is equality of access. Both equality of opportunity and equality of access are set by an equality under the law that checks any inequality of power that may arise and negatively affect the individual freedom of those in society. Inequalities are not addressed through a basic redistribution that can itself result in a reversal of fortune where the tables have turned but the inequality of power remains. Nor does equality of power mean an absolute equality of identity, where each individual is made to conform to a universal uniformity and thus restricted in expressing their unique desires through the agency of freedom. Equality of power does not address personal traits, but instead deals with the environmental conditions in a society that make it harder for individual freedom to be expressed. To make another analogy, in a foot race if equality of opportunity is that each runner begins at the same line at the same time, and individual difference is the different skills or physical abilities of each runner, then equality of access is the equal time each runner has to train and prepare for the race. Obviously, there would be unequal results when only one runner finishes first, but equality under the law would mean that the other runners would not have to be punished through execution for not winning the race. The other runners would have the ability to try to win other races through equality of opportunity and equality of access. Instead, a legal framework of equality justifies a democratic structure to collective action where equal access is guaranteed in public life, and the public sphere is that area in which people have the ability to express their freedom equally.

When one speaks about the public sphere, one tends to assume that this is the territory of the state. But there is another type of public life, and that is of the commons. The commons becomes a very vital component to the operation of democracy outside of the state. The commons can either be finite such as the commons of nature, or infinite such as the commons of ideas. Both commons have been under threat of enclosure in the modern era through the ideology of capitalism. This disruption of the commons did not happen once in the past but is an eternal process, justifying economic hierarchy and artificial scarcity. The privatization of the commons was supported by the claims of the “tragedy of the commons” which demonstrated that participants would each overuse a finite commons out of fear that other participants would overuse and thus limit the access to it for everyone. The only solution was to break up the commons into private property, claiming that private ownership would be the only way to insure responsible use. Elinor Ostrom showed that the supposed tragedy is true only if the participants do not communicate with each other and thus coordinate their use of the commons. She then demonstrated through research that actual commons in reality are regulated by local rules set up by those who participate. Therefore, democracy is the organization of the commons just as it is the organization of any collective action, where all who are involved shape the rules that all must follow. Within the history of the factory system in the modern era, one will find that in the workplace there are two simultaneous things going on. First, the space of work is the space of cooperation of labor. Second, the space of work is the space of control of capital. In order for workers to get things done on a day-by-day basis, they need to work together through cooperation, but imposed on this scene is the fact that modern work is subdivided into specialized functions that are regulated by owners and their representatives in the workplace. Here is the conflict in microcosm of what occurs in society overall between the commons and the private sphere. The commons, as the background of democracy, creates an atmosphere of equality and cooperation to get collective goals accomplished. The privatization of the commons, as the main method for capitalism, develops into hierarchy and social competition among alienated participants to achieve goals that in the long-term benefit those in the dominant position of power the most. A democracy making use of the commons means that there is both equal access to resources and a protection of those resources from artificial scarcity through the democratic process itself.

Examining collective action also requires understanding the relationship between individuals and collectives. There are fears and apprehensions that a collective would subsume all individual characteristics while demanding an absolute conformity and restriction of freedom. The gap between individuals and collectives defines collective action as an inherent limit of individual freedom rather than a methodology to express individual freedom in a group setting. Individuals obviously do not exist in isolation, so there needs to be some way to coordinate collective action in a society. Within a society, an internal hierarchy is a direct contradiction between individuals and collectives. On the other hand, an internal equality is a direct reciprocity between individuals and collectives. Democracy acts as a vanishing mediator between individual identity and collective identity, setting the stage for a relationship of reciprocity. With reciprocity, individuals would have the freedom to enter and leave collective formations, both individual and collective identities existing at the same time. On a psychological level the fear of collective conformity, where individual self interest is limited, blocks humans from working together to achieve obvious universal goals. AsMancur Olson discovered, humans are more willing to form small finite collectives that are created to achieve concrete goals that would only benefit those in the small group rather than a universal abstract goal. This small group formation, Olson proposed, is what occurs in terms of special interest groups that lobby a legislature to pass specific laws. This small group formation, as special interests, is viewed as negative by Olson in that it detracts from the common public good. Olson’s flaw was that he failed to see finite collectives as the basic building block for all collective action to be achieved. In reality, the universal mass must be divided up into the subsets of small groups in order to make sure that goals are achieved and freedom is preserved. In small groups, the democratic process is at its most efficient and effective in expressing the will of its participants, and each individual can participate in multiple overlapping finite collectives in order to avoid conflict of interests between the small groups. Since democracy is a far better communication of value, the communication of value is thus the primary group interest of finite collectives. Overall, collective action becomes important for those who are unable to achieve individual goals. It becomes vital that the collective action is organized democratically, and this democratic organization develops an equality of power within the finite collective. An equality of power in collectives compensates for a lack of power in individuals. This lack of power in individuals results in an external stability of large groups. However, an equality of power in collectives is also a direct expression of power in individuals. The power in individuals, aggregated in finite collectives, is an internal stability controlled by participants. Implementing collective action through finite collectives insures equality of power in the control of how the small group in question operates, making the best use of the commons.

Democracy becomes a tool for the expression of freedom in a collective setting, and since humans are social animals this tool becomes very useful. In a democracy there is an equality of power, and this equality of power creates an atmosphere of autonomy. Autonomy is a specific mode of freedom, much more substantial than mere liberty, where individuals are able to create their own laws that affect their own lives. A major part of this autonomy is the voice option and the refusal option. The voice option is the guaranteed ability of individuals to make choices on matters that would affect them in public life. The refusal option is the ability to not participate in a collective action, especially if the choices through the voice option are limited or predetermined. The function of the voice option and the refusal option in a democratic process is to serve as a disruption of absolute minorities and majorities that could form over time and thus prevent real autonomy from being practiced in the democratic structure. Since absolute minorities and majorities lead to hierarchy and the decomposition of a real democracy, the voice option and the refusal option act as a safety measure to insure equality of power at all times. It must be noted that the voice option of some is itself limited by its inability to block the refusal option of others and vice versa. The two aspects are in balance with each other and shows the dexterity of a democracy as compared to the market. This need for a specific mechanism demonstrates that democracy can insure both individual difference and collective cooperation in a much more efficient and effective way than the market. The market, through the transformation of use value into exchange value, creates a contradiction between the general equivalence and the particular difference of commodities. In a mirror image of this process, the market also creates a contradiction between general competition and particular cooperation in terms of the organization of productive labor and consumer use. Democracy bridges this gap that seems to be a contradiction in terms solely of the market. Democracy is both the subsumption of equivalence by difference and the subsumption of competition by cooperation. Unique individuals, never surrendering their diverse traits, are able to engage in collective action and to work together to achieve common goals through a basic democratic process. This democratic process is much more primal to human instinct than market behavior, since the anti-hierarchical organization of tribal societies could be seen as the precedent and foundation for a more formal democracy.

The state is a centralization of organization and a vertical system of integration that implies the market or democracy as decentralized alternatives. But the abilities of democracy tend to be superior to that of the market. Both democracy and the market allow for emergent properties. The market is the emergence of exchange value, but also establishes a severe contradiction between particular use value and general exchange value. On the other hand, democracy is the emergence of collective action beyond the economy, maintaining a reciprocity between individual desire and collective action. Market discipline demands an obedience to an abstract set of exchange values that become detached from everyday use value, while individual desire in the democratic process is able to be a part of collective action at the same time as being distinct from it. In the market, exchange value subsumes the various use values, but there is no subsumption between individual desire and collective action in a democracy. Another difference between the market and democracy is how secondary structures form from both. Corporations have a strong tendency to develop as the transcendence of the market, and these corporations act as a necessary aspect in the market structure. What makes democracy a better decentralized network is the fact that even though the state can be a transcendence of democracy, the state is only a contingent aspect of democracy. Within the market, corporations as hierarchies are outgrowths that occur all the time and are vital for the overall market to function. However, in democracy the state can be a side-effect that does not have to arise, and in fact can be actively opposed and subverted by a democratic process. This concrete characteristic of democracy demonstrates how it is not only a separate form of collective action than the market, but also a separate entity than the state as well. And in the long-term ability for free individuals to cooperate and achieve common goals in a society, democracy is the best method.