How Media as a business infringes with Democracy

Today, the business of media exists in the capitalist market like any other form of business. It is privately owned, it sells one commodity, and it has a target market. As any other forms of business, the business of media lies at the workings of the free market. Yet, I will explore discrepancies of liberal capitalist theory and conservative capitalist practice - how: the price mechanisms, the incentives to reduce costs, the inequality of players, and lastly the commodity that is sold, fail to work regularly in the business of media. Despite liberal capitalist beliefs that businesses left at the grip of the “invisible hand” work most efficiently, due to the particularities that arise when media functions as a business, the business of media attempts against the democracy of a country.
The commodity: Information
In a capitalist society, those without capital have one ascribed asset to sell: their labor power. According to Adam Smith, in a capitalist society a man can “be rich or poor according to the quantity of that labour which he can command, or which he can afford to purchase” (Wealth of Nations). The difference between having to sell or being able to purchase labor, then depends on the ownership of the means of production, the source of inequality that created “two great classes directly facing each other”, according to Karl Marx (Marx 79). Even though problematic, the inequality created a symbiotic relationship between the upper and lower and class; the owners depended up to a certain extent on the workers to manufacture the goods that were later to be sold, and the workers depended on the owners for a wage of life.
Like labor power, another abstract notion was commodified: information. Various historical occurrences contributed to the commoditization of information as we buy it today. First, with the written practice, information became tangible. It moved from the abstract sphere of thought and discussion into the concreteness of an inked piece of paper. Furthermore, the paper and the information it contained could be transmitted for the duration of the lifetime of the piece of paper without the time constraint of the brief duration of the pronunciation or conception of an idea. Secondly, with Gutenberg’s invention of the movable type, information became mass-produced. It moved out from the exclusivity of the slow monks’ hands into the availability of the public sphere. Thirdly, with the fall of the dominion of the Catholic Church, the information sold and bought in the Western World did not belong anymore to the realm of high celestial matters but to the realm of the daily and the popular. Habermas described it accurately when he said that the daily prayer had been replaced with the daily newspaper at our breakfast table.
Information as a commodity is most predominantly sold by the business of media in the forms of news. The business of distribution of information also creates a top-down polarization between the owner and non-owners of means of production. In this particular case, even though those at the top are those who own the means of production, those at the bottom do not depend on them for a salary. Yet, those at the bottom –generally the public- do rely on those at the top –media corporations- for the relevant and accurate distribution of news.
The public relies on the business of media for information, as it relies on any other business for a number of commodities. Yet, unlike other commodities, information has one particular and special attribute: power. Information envelops the power of education. It is through information that the public can become educated of the occurrences of their country. It is through information that political awareness is forged. Then, how well information is disseminated plays a crucial role on the maintaining of democracy for popular votes are educated through information.
Price Mechanisms:
In capitalist societies, the price mechanism “transmits information… [and] provides an incentive to adapt to methods of production that are least costly” (Friedman 14). First, prices provide information to the customer. The high price of a commodity may indicate: scarce supply or popular demand. Low or dropping prices then indicate the opposite. Adam Smith asserted that prices emerged from “voluntary exchanges in the market” (Friedman 13) that result in an affinity between the value of a commodity suggested by the selling party and the value of the commodity perceived by the customer, in order for the transaction to take place. Then, secondly, prices provide information for the consumer. High supply and low demand of a product informs the producer that the price of his good is not acceptable in the market for customers, which then might lead to a motivation to alter the price. Milton Friedman asserts, in his book Free to Choose, that: “one of the beauties of a free price system is that the prices that bring the information also provide both an incentive to react to the information and the means to do so” (Friedman 18). In the case of discrepancies between suggested and perceived value of a commodity, any regular business would have the incentive to change something about the process of production of the good to lower the costs. This process may then account for the self-regulating characteristics that liberal capitalists attribute to the free market. Nevertheless, the source of revenue of media and its content interfere with the pricing theory and furthermore with the incentives.
The main source of revenue for media outlets are not the sales of circulation but the advertising space that is sold to advertising corporations. This frees the media of the “burden of sales” (Chibber, Lecture). Then, the price mechanism does not act as a vehicle of information in the way it would in other forms of business. For all other businesses, the price mechanism works in the relationship of the business an the entire public; in the media, the relationship is between the media and the select group of advertisers. Because the media are not constrained by their sales of circulation, their incentive to provide news that reflect the general interest of the public does not come from the price mechanism, but from the drive to report news. It is important to note that the media does have an interest in circulation, I just emphasize that its sustainability is not dependent on it. Furthermore, this does not mean that what is reported is completely narrow and subjective; it means that it could be broader and more objective.
The fact that advertising sales are the main source of revenue for media outlets, affects the pricing system stripping it from its characteristics of mechanism of communication between the public and the providers of information. Because in the media business the pricing system does not function as a regular vehicle of information, the providers of information do not have the incentive to act to their fullest capacity in response to the public.
Consequences on the quality of the information:
Recalling Friedman on the functions of the price mechanism, he argued that the price mechanism produced an “incentive to adapt to methods of production that are least costly” (Friedman 14). There are two ways in which a change might alter the price of a product. The first is to directly lower the suggested price. This occurs as items are placed on sale. The reduction of the price brings closer the suggested value with the perceived value and may end up in a business transaction. The second way is to reduce the costs in the process of making a product, to avoid losing money as the suggested price for the commodity is lowered. Reduction of costs in the process is reflected in less quality in the product. This is true for any type of business as it is also true in the case of media.
Because media corporations do not profit of their sales of information, but of the advertising space they provide, an easy way to reduce costs was to reduce the cost of the search of information. This could translate in shorter investigations or the utilization of common sources of information such as the Associated Press.This accounts for the decline of investigative reporting in the media. In his book Flat Earth News, Nick Davies asserts that modern journalism is characterized by a “penny-pinching newsroom”- product of “overbearing owners, influential advertisers and market forces” (Davies 2008).
Even if the pricing mechanism affects the quality of the news, this is limited by another facet of the free market: competition. The presence of competition restrains media outlets from publishing completely shallow and biased information. Advertisers spend the money that becomes the main source of revenue for newspapers, with the goal of reaching the most amounts of people in mind. Then, media outlets because of competition must report enough information to be considered the best out there, in comparison. Yet it must be noted that competition creates the need for relative goodness.
Inequality of actors: Oligarchy of Media Conglomerates
The liberal capitalist view asserts that the distribution of income (and therefore power in the form of social leverage) is dependant on the price of an actor’s contribution to society. Any given actor’s chance in the market is dependant on the accumulation of “physical capital in the form – of factories, mines, offices… [and] human capital- in the form of increased knowledge” (Friedman 21).
Even though Friedman recognizes that an individual’s chances on the market are also affected by social backgrounds or even luck, he does not delve into how, for example, the background of our resources play an important role in the market. An actor in the market who is limited by his conditions to a certain type of education and a limited networking tree, stands almost no chance in the playing field against an actor who (for example) might have inherited the capital and the meritocracy to attend elite schools. Then the supposedly free market is not “free”- it is open for the participation of those who can afford to play.
Consequences on the content of information:
Robert McChesney writes passionately about how the media infringes with democracy in his “Corporate Media and the Threat to Democracy”. According to McChesney, democracy works ideally when three factors are in place. The first is that in society there [should not be] “significant disparities in wealth and property” (McChesney 5). Significant disparities in wealth are common in almost every type of business, and a great example being the business of media. There have been “significant mergers” that have unified and created mega media corporations- Time Warner and Disney/ABC are just two to mention. In total, there are six mega media corporations that make billions of dollars in profit- each individually makes more profit than the rest of the media corporations combined (Friedman 22).
Even though mergers, mega corporations, or oligarchies may not present a dangerous consequence in other forms of business it does so in the media. First, the oligarchy of ownership of influential media outlets has the opportunity to report news without taking into consideration the voice of the majority of the public. Second, because it is a business based on capitalist competition, even if there were a general discontent with the workings of the influential media outlets, smaller competitors without the possibility of mega resources would fail to communicate, as they would be driven out of business by the larger media corporations. This second consequence has been diminished with the advent of the Internet. A space where no capital is needed to publish has become essential in the rise of new media reporters –bloggers- who can now for the first time, speak up.
Nevertheless, this occurrence has an impact on the content of the information transmitted. When only a few own the means of distribution of information, the information available is then very much aligned with the interests of just a few (Chibber, Lecture). This has a direct impact in the political sphere. In his book, “Who rules America?”, William Domhoff writes that in United States there is a tendency for choosing the images of politicians rather than their political agendas. The media more than anything, plays a key role in the portrayal of the images that are presented to the voters. By offering more information about one political view than another, or criticizing more harshly one political party rather than the other, the public’s opinion which is dependant on the information that they receive through the media is then biased to the availability of the information.
Infringement of democracy:
The capitalist model may work for some businesses but when applied to the media as a business, it refrains it from achieving its duties. A criterion for the preservation of democracy is that “there be an effective system of political communication…that informs and engages the citizenry (McChesney 5).
The entire society suffers as the media can: answers first to a select group of advertisers; reduce costs by reducing investigation, therefore not presenting the general voice of the nation; and survive in oligarchies, that furthermore reflect the voice of a select group of the population. When the media functions as a business that revolves around making profit but is able to disregard the general public as consumers, it cannot perform its duties as an accurate system of communication. Furthermore, the ineffective system of communication works in a perpetuating cycle that affects both the democracy and the general wellbeing of society. The transmission of accurate information is crucial for the healthy development of a country. According to the article “The role of Media in Democracy”, published by the Center for Democracy and Governance, the role of the media in the preservation of democracy can be exemplified by two reasons. First, it allows the citizens of a country to make educated and informed decisions. Second, it serves as a monitoring service that ensures that elected officials perform the duties they were elected to do. As the media detaches itself from a relationship of dependence of the general public, in a way it also allows the government to detach from answering to the general interests of society. When the media acts as another business in a capitalist society, its interests of report are not necessary aligned with its duties as a service to the people.
The effects on democracy are not seen in the relationship between the media and the public, but between the public and the government when the information between them is mediated by a business. The problem is not only that the voice of the majority of the people is not heard, or that the information is shallow, biased or incomplete. The problem is that without the proper information, the public becomes informed on political candidates that then become elected if their profiles were “news fit to print” not necessarily if their ideas fit the needs of the majority of the citizens.



Bibiliography:
McChesney, Robert. “Corporate Media and Threat to Democracy”. Seven Stories Press. New York.
Davies, Nick. Flat Earth News. Chatto and Windus. New York.
Friedman, Milton. Free to Choose. Harcourt Brace Janovich. New York