A liberal regime does not imply a democratic regime. As Hayek put it,
“We have no intention, however, of making a fetish of democracy. It may well be true that our generation talks and thinks too much of democracy and too little of the values which it serves. It cannot be said of democracy, as Lord Acton truly said of liberty that it ' is not a means to a higher political end. It is itself the highest political end. It is not for the sake of a good public administration that it is required, but for the security in the pursuit of the highest objects of civil society, and of private life.' Democracy is essentially a means, a utilitarian device for safeguarding peace and individual freedom. As such it is by no means infallible or certain. Nor must we forget that there has often been much more cultural and spiritual freedom under an autocratic rule than under some democracies – and it is at least conceivable that under the government of a very homogeneous and doctrinaire majority democratic government might be as oppressive as the worst dictatorship.” (“The Road To Serfdom”, p 52)
The function of a liberal regime is to protect that most important bourgeois freedom, the freedom to acquire private property, and in particular capitalist private property. It is to facilitate the accumulation of capital. It may seem ironic in societies where the concept of liberty has become synonymous with the concept of democracy, but the dictatorships of Cromwell, Bismark, Napoleon, Louis Napoleon can all be described as liberal, because these regimes facilitated the acquisition of private property, and capital accumulation.
The same can be said of those Bonapartist regimes in Latin America in the 19th century such as that of Simon Bolivar. As Lenin describes, in his analysis of the development of capitalism in Russia, the Tsarist regime could in no sense be described as democratic, but the Tsarist governments, via its Ministers such as Stolypin carried forward a liberal agenda of facilitating the acquisition of capitalist private property and capital accumulation. In the 19th century, the feudal regime of the Mikado in Japan also set about the modernisation of the economy, by introducing similar liberal measures to facilitate the accumulation of capital.
Liberal ideology seeks to minimise the role of the state for as long as the bourgeoisie itself does not have complete control over it, a control that can only arise when the bourgeoisie is itself strong enough as a class, and when the economy itself is dominated by capitalist production, so that the state is forced to further the needs of capital in order to further the needs of the economy, and of the state. As soon as the bourgeoisie has such strength, it can seek to utilise the state for its own ends, to establish a liberal state, but such a liberal state, as the above examples show, does not have to be a liberal-democratic state.
If we consider society as a box, it may be divided horizontally according to class and status. If these are the only divisions in society, so that the classes themselves are fairly homogeneous, then once the bourgeoisie is large enough, and strong enough, and has overcome the resistance of the old ruling class, it can utilise the state to further its own ends, and in doing so it can establish a bourgeois democracy that reduces the costs of its rule, and gives it more direct and effective control over that state. As Lenin put it,
“A democratic republic is the best possible political shell for capitalism, and, therefore, once capital has gained possession of this very best shell... it establishes its power so securely, so firmly, that no change of persons, institutions or parties in the bourgeois-democratic republic can shake it.”
But, not all societies are divided simply along these horizontal lines (cleavages). Some societies are also characterised by vertical cleavages whereby the whole of society irrespective of class, is divided by ethnicity, religion, tribe and so on. Where societies are characterised by such cross-cutting cleavages, it becomes much more difficult to establish bourgeois democracy, be it a liberal bourgeois democracy or a social democracy. That is why, in many such countries, for example, in the Middle East, Bonapartist regimes of one sort or another become the most effective means of keeping the vertical cleavages contained, so that the accumulation of capital, and acquisition of private property can be facilitated, so as to bring about social and economic development.
To take up Hayek's point referred to above, in a society dominated by one large group, a democratic regime might be tyrannical. For example, a large fundamentalist Christian population, might utilise its numbers, in a democracy, to impose its beliefs on the minority. We see something of that in Iraq, in Turkey and so on. But, where minorities, in such situations, are themselves significant forces, they are unlikely to accept such democratically sanctioned tyranny without a fight, and the greater the number of these vertical cleavages, the greater the tendency to social unrest, which creates the worst conditions for capital accumulation.
Where society is characterised by the domination of horizontal cleavages, the bourgeoisie is able to establish a liberal-democratic state to pursue its interests, such as that established in Britain as a result of the 1832 Reform Act, which gave the bourgeoisie the right to vote, and began to end the domination of the political regime by the old landed aristocracy. Yet, for the reasons set out by Hayek, this gave every reason for the bourgeoisie to support the establishment of only a liberal democracy, i.e. a democratic regime, whose main function is to regulate society on the basis of defence of private property, and the accumulation of capital.
As C.B. Macpherson says,
“It was an uneasy compound because the classical liberal theory was committed to the individual right to unlimited acquisition of property, to the capitalist market economy, and hence to inequality, and it was feared that these might be endangered by giving votes to the poor.”
(“Post-Liberal Democracy?” in Ideology in Social Science Robin Blackburn Ed., p 19)
It is only when the bourgeoisie is secure in its control of the state, including all of those other institutions of civil society, such as the universities, the churches, the schools, and the media, so that bourgeois ideas and culture become dominant and all pervasive, and when capital accumulation has proceeded to a sufficient degree, whereby surplus value begins to be extracted on the basis of rising productivity and relative surplus value, so that workers living standards can also rise, that this further contradiction, of society organised upon the principle of democracy, but without the majority of society having the right to vote can be addressed.
It on this basis that social democracy arises. It goes along with a further development of capital from being private capitalist property, to being socialised capital. Under the former, it is the individual, usually small, capitalist that is the personification of capital itself. But, under the latter, it is the functioning capitalists, the professional day to day managers, technicians and administrators who are the personification of capital, and increasingly, these functioning capitalists are drawn from the ranks of the workers themselves, and as public education is extended, and the potential supply of such workers increases, these functioning capitalist themselves obtain wages only like those of any other skilled worker.
On the one hand, these functioning capitalists, are workers, paid wages as the value of their labour-power, or even less than the value of their labour-power; they live in workers communities, members of their families will be ordinary workers, whether skilled or unskilled. On the other hand, their social function is to maximise the production of surplus value, and their position in the production process then leaves them needing to arbitrate the conflicts that then necessarily arise between the need of capital to maximise surplus value, so as to accumulate capital, and the needs of workers to raise their living standards etc.
This leads to the development of a petit-bourgeois world outlook. The same social function of mediating the interests of capital and labour is placed upon the trade union bureaucracy, and the social-democratic politicians. The aim is not to replace the capitalist system, but to facilitate its more rapid accumulation of capital as the best means of enhancing the position of the working-class. As Marx puts it in “The Eighteenth Brumaire of Louis Bonaparte”,
“The peculiar character of social-democracy is epitomized in the fact that democratic-republican institutions are demanded as a means, not of doing away with two extremes, capital and wage labour, but of weakening their antagonism and transforming it into harmony. However different the means proposed for the attainment of this end may be, however much it may be trimmed with more or less revolutionary notions, the content remains the same. This content is the transformation of society in a democratic way, but a transformation within the bounds of the petty bourgeoisie. Only one must not get the narrow-minded notion that the petty bourgeoisie, on principle, wishes to enforce an egoistic class interest. Rather, it believes that the special conditions of its emancipation are the general conditions within whose frame alone modern society can be saved and the class struggle avoided. Just as little must one imagine that the democratic representatives are indeed all shopkeepers or enthusiastic champions of shopkeepers. According to their education and their individual position they may be as far apart as heaven and earth. What makes them representatives of the petty bourgeoisie is the fact that in their minds they do not get beyond the limits which the latter do not get beyond in life, that they are consequently driven, theoretically, to the same problems and solutions to which material interest and social position drive the latter practically. This is, in general, the relationship between the political and literary representatives of a class and the class they represent.”
The ideological foundation of this can be found in Ricardo, as Marx describes in Theories of Surplus Value. It was that the best conditions for workers arise with the accumulation of capital, which raises the demand for labour-power. But, what facilitates the accumulation of capital, it is lower wages. Marx refers to the situation also in “Wage Labour and Capital”.
“And so, the bourgeoisie and its economists maintain that the interest of the capitalist and of the labourer is the same. And in fact, so they are! The worker perishes if capital does not keep him busy. Capital perishes if it does not exploit labour-power, which, in order to exploit, it must buy. The more quickly the capital destined for production – the productive capital – increases, the more prosperous industry is, the more the bourgeoisie enriches itself, the better business gets, so many more workers does the capitalist need, so much the dearer does the worker sell himself. The fastest possible growth of productive capital is, therefore, the indispensable condition for a tolerable life to the labourer.”
The basis of social-democracy then becomes not the replacement of capitalism, and the system of wage slavery upon which it rests, but merely the most rapid and efficient development of capitalist production, as the best means of ameliorating the workers condition, by constant improvements in the standard of living, as the cost of producing increasing quantities and ranges of use values is continually reduced. This reflects also the changed nature of the economic basis of society away from the monopoly of private capital to the domination of socialised capital, and the needs of this large scale industrial capital as opposed to those of other class fractions, such as that of the money-lending capitalists (shareholders, bondholders, and other such rentiers) who then represent the vast majority of privately held capitalist wealth.
The interests of these private capitalists, who now hold their wealth in the form of fictitious capital (shares, bonds, mortgages) and of landed property is antagonistic to the interests of socialised capital. As Marx put, it,
“The credit system, which has its focus in the so-called national banks and the big money-lenders and usurers surrounding them, constitutes enormous centralisation, and gives to this class of parasites the fabulous power, not only to periodically despoil industrial capitalists, but also to interfere in actual production in a most dangerous manner — and this gang knows nothing about production and has nothing to do with it. The Acts of 1844 and 1845 are proof of the growing power of these bandits, who are augmented by financiers and stock-jobbers.”
(Capital III, Chapter 33)
The interests of the large-scale socialised, industrial capital is initially represented by the Liberal Party in Britain, that dragged behind it a long proletarian tail, until the tail broke free, and established its own party – The Labour Party – but, with essentially the same ideological basis. The interests of the financial and landed oligarchy are represented by conservative parties and politicians.
As Engels put it,
As Engels put it,
“The Reform Bill of 1831 had been the victory of the whole capitalist class over the landed aristocracy. The repeal of the Corn Laws was the victory of the manufacturing capitalist not only over the landed aristocracy, but over those sections of capitalists, too, whose interests were more or less bound up with the landed interest-bankers, stockjobbers, fundholders, etc....
Chartism was dying out. The revival of commercial prosperity, natural after the revulsion of 1847 had spent itself, was put down altogether to the credit of Free Trade. Both these circumstances had turned the English working class, politically, into the tail of the ‘great Liberal Party’, the party led by the manufacturers. This advantage, once gained, had to be perpetuated. And the manufacturing capitalists, from the Chartist opposition, not to Free Trade, but to the transformation of Free Trade into the one vital national question, had learnt, and were learning more and more, that the middle class can never obtain full social and political power over the nation except by the help of the working class.”
It was one of Ricardo's disciples, J.S. Mill, who, therefore, represents the pinnacle of liberal-democratic thought, and its transition to social-democracy. As C.B. Macpherson says, Mill refused
“... to allow that the market should determine the value or worth of a man. It put other values higher than market values. Yet, in the end, Mill found himself helpless, unable to reconcile his notion of values with the political economy he still believed in. The world's work had to go on, and he could see no way in which it could be carried on except by competitive private enterprise. He saw clearly that the prevailing relation between wage labour and capital was condemned by his own criterion of good, and he thought that it would before long become insupportable by the wage labourers. His only way out was to the hope that a network of co-partnerships in industry, or producers' co-operatives, might turn every worker into his own capitalist, and so enable the system of enterprise to operate without the degradation of wage labour.”
(“Post-Liberal Democracy?” in Ideology in Social Science Robin Blackburn Ed., p 21-22)
Marx also makes the point, in Capital III, that this socialised capital, be it in the form of these co-operatives or joint stock companies represents a transitional form of property between capitalist property and socialism. For Marx and Engels, these transitional forms of property are the material basis for that transition, but which requires a political struggle by the workers to gain control over those forms. But, for social-democracy, they represent rather the means of containing the contradictions between capital and labour, and thereby as an end in themselves.