Vol. 5, No. 1, December 2003

Editor's Note:

In the Spring 2003 Newsletter, an incorrect version Lisa Penaloza's article was published without references. Here is the correct, complete version. My apologies to Lisa.--DC

The Capitalist Challenge to Democracy in U.S. Multicultural Society*

Lisa Penaloza

Leeds School of Business, University of Colorado, Boulder

Crisis points, although difficult, are vital in defining what we stand for as a nation and people. 9-11 has been that for us, and in various ways journalists, politicians, intellectuals, businesspeople, workers, housewives, men, women, and children have struggled to understand what our nation has come to represent to ourselves and others across the world.

The business of America is business, we were told almost immediately after the towers came down. Go shopping. Consuming had become a patriotic duty, second perhaps only to supporting troops in wartime-most recently redefined as preemptive bombing. As a professor of marketing who specializes in consumer behavior, hearing all this is very interesting, especially in contrast to the larger history of our nation in standing for freedom and democracy.

How is it that capitalism and democracy have become so intertwined, I wondered, turning this into a question for research and classroom discussion. In talking to students last fall and spring, I listed the two terms on the chalkboard, and asked the students what they brought to mind. Opportunity to get ahead, many said, opportunity to make money, to have a better life. Freedom to do what we want. Students who had traveled compared the U.S. to other countries. Economic concerns were central, and perhaps to be expected from business students. Still, I remained puzzled as to why freedoms of speech, press, assembly, due process, and religion were not raised until much later, after I prodded them that only the left column, capitalism, had been addressed; with the right one, democracy, empty. The lopsidedness of this exercise made me wonder whether the one, capitalism, has overtaken the other, democracy, in contemporary U.S. society.

In doing much reading, I have come to understand better how deeply capitalism and democracy have been intertwined historically. The Latin words forum (town center) and marcellum (market) were indistinguishable over two thousand years ago (Frayn 1993), an inheritance from Greek and Middle Eastern societies we retain in our contemporary understandings of the forum as the birthplace of democratic governance. Since then, claims for general political liberties have sprung alongside specific economic gains, leaving both domains inextricably connected. For example, take our own revolution from Britain. The war cry, "No taxation without representation," went well beyond the indignation of merchants, to fuel popular consciousness in mobilizing our leaders to build a more free, more just nation (Wood 1991).. Roughly a decade later, French calls for "Liberté, Egalité, Fraternité" captured public imagination well beyond the interests of the bourgeoisie in keeping more of their profits from oppressive aristocrats (Lefebvre 1971).. In both cases the significance of these battles has been anchored in immediate economic gain, yet has transcended it, in providing the basis for more general human rights.

Democratic impulses in the U.S. since the late 1700's took a decidedly social turn from their early economic origins, in providing what we recognize today as the basic rights and freedoms of more and more people. Important landmarks include the freeing of African and African American slaves in 1865, enfranchising women in 1920, and providing those of all religions, races, and ethnicities from unequal treatment before the law by 1965. Notably, social movement activism has played an integral role in bringing about each subsequent wave of political enfranchisement, in the efforts of African-American, Asian, Chicano/a, Women, and Gay and Lesbian activists. However, as Taylor (1992) notes, these political rights are fundamentally individualistic in nature, which has proved to be an obstacle to the extension of rights to cultural groups.

So what is the nature of this capitalist challenge to democracy in multicultural society? The market is organized in ways distinct from our political system, even as both are conflated today. More specifically, both market capitalism and political democratic systems recognize people in different ways, and in doing so, reproduce and disrupt existing social relations and hierarchies. For example, common laments in multicultural societies such as the U.S. are fragmentation and the loss of a sense of collective unity, such that the nation is breaking into groups divided in ways of life and values, and unable to live together. It is not clear how much of this resistance is due to multiculturalism in the market, as opposed to government enfranchisement. Others suggest that the problem is not enough democracy-that while "minorities" have been recognized by government for decades, and are increasingly recognized and targeted by firms, the people within these neighborhood enclaves cum consumer niches remain outside our collective sense of what it means to be American, and subordinated socio-economically.

Ironically, capitalist markets have less trouble recognizing groups, as one after another major corporations have scrambled to target the Black, Latino/a, and gay markets (Gabriel 1994; Davila 2001; Penaloza 1996). Dramatic demographic shifts in the social fabric of the nation are a key factor in stimulating managers to develop increasingly specialized and inclusive economic activities. Latinos and Blacks will one day soon constitute the new mainstream of our nation. Already these two groups together outnumber Whites in most of our major cities.

However, the reformist solution for more inclusion in social institutions, such as schools, health care, and government services does not acknowledge the nature of the mainstream resistance mentioned earlier (see San Juan Jr. for an excellent review and critique of these positions). Arguments such as "minorities are the future of this country, the future of whole towns and cities, schools, and even Social Security" fall on deaf ears when too many Whites cannot imagine a shared fate with ethnic/racial/gender minorities.

In bringing forth our desired mix of capitalism and democracy, it is important to get past the hype of markets and seriously examine what they can and cannot do in terms of their impacts on our respective communities and to our nation overall. Take Latinos/as today. Market attention has its pluses and minuses. Look at J. Lo or Ricky Martin. An informant in my study of Mexican Americans in San Antonio refers to it as "Pop Mexican." My cousin tells my grandma how cool it is to have a Spanish last name. It was not always so cool. San Antonio is a nice city, maybe you've been there, gone down to the River Walk, or to the Mercado (marketplace).. Tourism is all about Mexican and Mexican American culture, yet it appears limited in its ability to develop the local Mexican and Mexican American communities.

We must reconsider the role of government with respect to business in our increasingly multicultural society and global economy. Many have convinced us over the past twenty years that what we need is less government and more markets. Freedoms historically associated with the political arena, like Freedom of Speech, Press, and Assembly are increasingly played out in the market, with the dollar compared to the vote, and polls and focus groups increasingly used as the basis for political legitimization (Laufer and Paradeise 1990).. This is especially noteworthy when viewed from the perspectives of Latinos/as and Blacks. For many of our freedoms have been hard fought at the level of government-Civil Rights Legislation, and Affirmative Action; even as much of the early civil rights activism was directed at businesses-lunch counters, retail stores, the media, and workplaces (Penaloza, 1995). Upon closer examination, the temporal sequence is significant. These recent economic inclusions have taken place after political incorporation accomplished by very strong social movement activism.

Freedom today is increasingly equated with consumer choice. Yet, a close examination reveals the former far exceeds the latter. It was political freedom, after all, that motivated people to tear down the wall in Berlin, not consumer choice, although again both were implicated. When the wall came down people proclaimed the triumph of capitalism. At the same time, we built a wall between the U.S. and Mexico. This is the other side of that triumph; keeping people out of the U.S., versus keeping them in East Germany. The questions this wall raises regarding the nexus of capitalism and democracy are much harder, namely why our foreign and domestic economic policy supports free capital flows and free product flows in globalization, but not free flows of people? Technically, free markets require all three.

But then, "free markets" are neither. Historically capitalism has required an exorbitant amount of government intervention to function, in our nation and elsewhere (Chua 2003). Subsidies in building the railroads and freeways, airplanes and the World Wide Web have built our infrastructure, helping make U.S. commerce so effective. Also critical have been military efforts alternatively paving the way for, and protecting investments and market development, beginning with the genocide of Native Americans, and continuing through the collateral damage in Iraq ten years ago and more recently in Afghanistan. Over time regulations, legislation and federal agencies such as the Antitrust Acts, the Federal Deposit Insurance Corporation, and the Social Security Administration have been integral in tempering the excesses of markets; holding businesses to our economic ideals of competition, as well as to social ideals of justice and inclusion. Today we are again appreciating their importance on an almost daily basis in government attempts to deal with the Enron/Anderson/Worldcom scandals.

Yes, markets are needed to develop communities. Yet if we have learned anything from the accounting scandals and stock market losses of today, it is that markets require political oversight to be fair. A growing number of people in the world also believe they should be just. They are located worldwide and organizing for democratic participation and more equitable distribution of resources in the International Monetary Fund and World Bank (Danaher 2001). To hold markets to the highest political and economic ideals may well turn out to be the most radical act of all.

We can work towards greater consistency between our democratic, political ideals and our capitalist, economic ones, but only so long as we understand the differences between these two important domains. Our rightful place in world political and economic leadership should be based on understanding markets at the level of lived experience, with a profound sense of the role of government in ensuring political and economic justice, such that the powerful ideals of freedom, equality, and opportunity are not rendered caricatures in the service of the market order, but rather so they ring true to the democratic ideals held dear throughout this nation and by others with whom we share this planet.

*Author's note: Portions of this column are taken from the article, "Multiculturalism in the New World Order, forthcoming, in Elusive Consumption: Tracking New Research Perspectives, Karin Ekstrom and Helene Brembeck, eds. Oxford, UK: Berg Publishers.


Chua, Amy (2003), World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability, New York: Doubleday.

Danaher, Kevin (2001), Democratizing the Global Economy, Monroe, ME: Common Courage Press.

Davila, Arlene (2001), Latinos, Inc.: The Marketing and Making of a People, Berkeley, CA: University of California Press.

Frayn, Joan M. (1993), Markets and Fairs in Roman Italy, New York, NY: Oxford University Press.

Gabriel, John (1994), Racism, Culture, Markets, London: Routledge.

Laufer, Romain and Catherine Paradeise (1990), Marketing Democracy: Public Opinion and Media Formation in Democratic Societies, New Brunswick, NJ: Transaction Publishers.

Lefebre, Georges (1971), The Coming of the French Revolution, first printing 1939, translated by R.R. Palmer, Princeton, NJ: Princeton University Press.

Penaloza, Lisa (1996), "A Critical Perspective on the Accommodation of Gays and Lesbians in the U.S. Marketplace," Journal of Homosexuality, 31:1/2 (Summer) 9-41.

______(1995), "Immigrant Consumers: Marketing and Public Policy Implications," Journal of Public Policy and Marketing, 14:1 (Spring) 83-94.

San Juan, E. Jr. (2002), Racism and Cultural Studies: Critiques of Multiculturalist Ideology and the Politics of Difference, Durham, NC: Duke University Press.

Wood, Gordon S. (1991), The Radicalism of the American Revolution, New York: Vintage Books.