The Carey Center for Democratic Capitalism                            
www.democratic-capitalism.com / careydcntr@aol.com

This is number 2 in a series of articles which summarize proposed reforms

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2. What Is Democratic Capitalism?       

 
          Democratic capitalism is the economic-political system based on the worth and potential of each in an environment of trust and cooperation. Performance improves because profit sharing and ownership opportunities motivate wage earners, while leadership harmonizes individual development and the cooperative work culture. By contrast, finance capitalism concentrates wealth and slows growth, and collectivism redistributes wealth through government and impedes growth.
          For some “ employee ownership” has a threatening connotation as though it is a new form of socialism. It is rather the ownership by wage earners though their retirement savings and stock purchase plans such as the one I implemented at ADT (see Democratic Capitalism pp. 39-47), in which the employees buy ownership through payroll deductions. More direct forms of ownership include cooperatives, and Employee Stock Option Plans (ESOPS).
          China and India took 500 million out of extreme poverty in a decade demonstrating democratic capitalism’s productive capacity to feed, clothe, shelter, educate, and provide good health care and hope for the world’s 6.4 billion humans, including more than 2 billion living in misery on less that $2 a day. The European Union demonstrated that people can unite in economic common purpose and reverse the 20th century’s barbaric retrogression in which 160 million soldiers and citizens were killed by governments.
          Democratic capitalism needs little from government except peace and the control of currency and credit for the general welfare. Violations of these minimal conditions by policies lobbied by Wall Street, however, have caused economic disasters from the Panic of 1818 to the Panic of 2008. Out-of-control speculation with borrowed money in the past decade inevitably climaxed, crashed, and did extreme damage to ordinary people. The mistakes of Wall Street and Washington, however, have been so egregious that angry citizens are demanding a better alternative..
          Companies like Costco, Toyota, and Fortune’s “100 Best” share democratic capitalistic features that include a morality broadly understood, customer and employee loyalty, generous retirement benefits from pensions and stock ownership, high levels of productivity and innovation, job security, meritocracy, minimal and decentralized structure, action orientation, and a fair compensation system.
          The following benefits of economic freedom, promulgated by Information Age communication, will stimulate young people in all cultures to move from tyranny to freedom:
 

  • A method to invest savings in the job-growth economy for the long term (as advocated by Warren Buffett)
     
  • A release of the cognitive power of people in Information Age industries (as described by Peter Drucker in The Post-Capitalist Society)
     
  • A cooperative culture in which the Japanese build better cars at lower cost than America’s worker- management alienated relationship (as taught by W. Edwards Deming)
     
  • Improves lives in both democratic and authoritarian countries (as demonstrated by Singapore and China)
     
  • Investment in wage earners as the most important asset in contrast to finance capitalism’s treatment of workers as a disposable cost commodity
     
  • Distributes a “capital wage” in dividends that benefits economic growth and employees’ retirement instead of hundreds of billions of dollars of pension savings wasted on stock buy backs
     
  • Regulation of financial services because of inherent instabilities, not the “liberation of capital markets” that ignored the instabilities (as warned by George Soros)
     
  • A democratization of the work place that simplifies the organization (as described by Gary Hamel in The Future of Management)

          Democratic capitalism has functioned at a fraction of its potential because its capacity to eliminate material scarcity and unite in economic common purpose has never been assimilated by the intellectual community and translated into government support. My examination of this superior alternative in the “Introduction to Democratic Capitalism.” articles on www.democratic-capitalism.com.

 

  • According to Adam Smith, economic freedom functions best when workers are well-paid participants, and speculators can’t deflect capital from the job-growth economy (see # 4)
     
  • Robert Owen demonstrated that investment in the people, not exploitation of them in brutal working conditions, produced greater profits (see # 9)
     
  • Karl Marx theorized about the “free development of each” in an environment of cooperation (see # 10)
     
  • Marx theorized that this system would unite the world in economic common purpose and render the Warrior State irrelevant (see # 11)
     
  • J.S. Mill integrated Marx’s vision with private property and competition in a manifesto that combined material and spiritual benefits

          The 18th-century Enlightenment issued a challenge to apply scientific truth-seeking methods, validated in the natural sciences, to improve the organization of human affairs. The intellectual community has, however, failed to respond to this challenge for reasons described in article # 12. As a result, human folly and violence continue. Now, however, angry citizens can collaborate in reforms that shift support to democratic capitalism.