Book Cover

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


Capitalist Alternatives

Thomas Piketty proposed in Capital that because the rate of return on capital exceeds the rate of economic growth, capitalism automatically generates inequalities which, in turn, undermine the values of democratic society. Piketty later argues that inequalities are not automatic in capitalism, but rather subject to economic and political changes.

Such study would identify two forms of capitalism competing for domination in the twenty-first century: “Stakeholder or democratic capitalism” is responsible to workers, owners, customers, suppliers and community. “Shareholder Capitalism” has responsibilities only to shareholders measured by the short-term price of the stock. This deflects capital away from the job-growth economy towards speculation and is almost total. Trading is now 99% of Wall Street activity, but capital investment in economic growth is less than 1%!

ERISA (Employee’s Retirement Insurance Security Act) was the law that made workers capitalists with trillions of dollars of pension funding. Owner motivation should have increased profits and spread wealth broadly. The political process, however, was dominated by Wall Street. Bob Rubin, Secretary of Treasury, and Alan Greenspan, Chair of the Federal Reserve, in the Clinton administration successfully led in deregulation of finance capitalism and prevented regulation of derivatives. 

Excessive liquidity from the workers’ capital helped Wall Street over-leverage their bets with the risk going up until the housing/credit bubble popped. The political process that Piketty refers to, has not yet designed the government support necessary for democratic capitalism; instead, it has concentrated on putting Wall Street’s “Shareholder Capitalism” back together.

Wall Street dominates the economic process and uses the money to dominate the political process. This cycle has persisted from the beginning of the republic, but never before had it used trillions of dollars of workers’ capital. This obscene contradiction requires real reform. Will the citizens finally express their “will and wisdom,” as they must in a democratic society, or will the Wall Street lobby continue to dominate the political process?

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.