Book Cover

Democratic
Capitalism,  The Way to a World of Peace and Plenty


CCDC #147

This article describes the price/earnings P/E ratio that is now double the traditional level.  The appropriate question is Why?   The experts however don't usually agree on the reasons but the possibility of another "bubble economy" has to be considered.

Who are the Capitalists?

A capitalist invests money in a company with the expectation of future gain. The CEOs and Board members who took $800 billion out of corporate surplus for stock buy-backs (see # 146) are not capitalists as they took capital out rather than put it in.

Workers became capitalists after ERISA was passed in 1974 mandating pension funding much of which invested capital in companies. Besides these capitalists there are the growing number of worker-capitalists who participate in worker ownership plans such as Care and Share that I designed and implemented when CEO of ADT.

The workers are now capitalists but still have limited opportunities to express their views or vote their shares. While the traditional tension between capital and labor should be ended, it is not. Piketty’s book Capitalism for the Twenty-first Century confirmed that capital had a better return than labor. The book received great attention mainly by those looking for any critique of capitalism. Those few who read the book learned that this book on capitalism had over twenty references to Jane Austin but one for Adam Smith and none for Robert Owen.

The structure has changed with capital and labor being the same but the culture has not changed and will not until more companies find that worker capitalists significantly improve productivity as they are motivated as owners. The search for a more humane capitalism is over when the workers are owners. In their freedom to produce and share in the improvements they have the opportunity to reach their potential.

 

 

 

Ray CareyRay Carey

Ray Carey learned through managing companies for 33 years how to change the work culture to provide employees with their best opportunities to develop and contribute. This experience began as a 28 year old plant manager and later president of an electric motor company, and concluded with eighteen years as president , chairman, and CEO of ADT, Inc.

See Carey's autobiography of his work career in chapter two of his first book,

Democratic Capitalism, The Way to a World of Peace and Plenty.

For more information about Ray Carey and his advocacy of democratic capitalism, visit the pages of this website.