Book Cover

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

Hard/Softcover/Kindle - 5 May, 2004, Available on Amazon.com

Ray Carey presents the theory and practice of democratic capitalism by coupling his experience with a synthesis of the thought of Adam Smith, Karl Marx, and John Stuart Mill.  The empirical evidence is clear: democratic capitalistic companies produce superior results, and nations that support economic freedom and keep money neutral improve the lives of their people.


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Course 1:1

Wise Men Showed the Way                      

The opportunities for society in the 21st century can be examined in Owen’s advice at the beginning of the 19th and the combined wisdom of Mill, Marx, and Engels in mid-19th-century. They presented a moral system that also maximized profits based on the worth of each in an environment of trust and cooperation.

Owen contrasted his democratic culture with the working conditions in most mills  in which workers, including children, were brutally exploited. The downsizing of millions during the last quarter century demonstrates that many workers are still treated as disposable cost commodities.

The domination of the economy by finance capitalism was demonstrated at the time of Owen when the government deliberately slowed the economy. The intent was to protect the riches of the few, the result was great damage to the livelihood of many. This domination by finance capitalism is not only still with us but inequality has reached record levels.

The opportunities for reform, however, have never been better. The knowledge workers of the Information Age make the democratic work culture a competitive necessity. The workers are now capitalists through their pension savings and other ownership programs. This workers’ capital includes shares that could be voted to change corporate governance and votes that could change political policies.

Democratic capitalists have access to over $3 trillion of their money in Wall Street and close to $3 trillion sitting in corporate surplus at home and abroad. Citizens should invest this money in job growth and infrastructure repair. They do not need to occupy Wall Street they need to evacuate it and leave the 99% trading casino behind.   

Dale and Owen

Robert Dale (1739-1806) was a devout member of the local Presbyterian church where he learned of the worth of each individual in an environment of trust and cooperation. Dale naturally brought this morality to his spinning mill as the foundation for the workplace culture. Dale validated his commitment to the workers by continuing their wages after a mill was destroyed by fire.

Robert Owen (1771-1858) was still a teenager when he became manager of a large mill.  Owen visited Dale near Glasgow, bought the mills, and married his daughter.   Dale had derived his work culture from religious principles, Owen learned what works best by years of talking to the people on the factory floor. Owen also validated his commitment to the people by continuing their wages when their supply of cotton was interrupted by Jefferson’s ill advised embargo.
Dale demonstrated how a moral environment builds and distributes more wealth; Owen demonstrated how training and motivation in a democratic workplace maximizes profits:

If due care of your inanimate machines can produce beneficial results, what may not be expected if you devote equal attention to your vital machines, which are far more wonderfully constructed. Your time and money so applied would return you not five, ten, or fifteen percent, but often fifty and in many cases a hundred per cent.1

Owen thought that the English Establishment would share his excitement at the discovery of a system that could produce and distribute enough wealth for everybody:

The period is arrived, when the means are obvious by which without force or fraud of any kind, riches may be created in such abundance, that the wants and desires of every human being may be more than satisfied. In consequence, the dominion of wealth and the evils arising from the desire to acquire and accumulate riches are on the point of terminating.2

Owen toured other mills but found instead of his democratic work culture a condition of brutal exploitation:

Greed of gain had impelled the mill-owners to greater extremes of inhumanity, utterly disgraceful to a civilized nation. Their mills were run fifteen hours a day with a single set of hands, and they did not scruple to employ children of both sexes from the age of eight. Overseers carried stout leather thongs, and we frequently saw even the youngest children severely beaten. In some large factories one-fifth of the children were either cripples of otherwise deformed by excessive toil or brutal abuse.3

Owen tried to get Parliament to shorten work hours and prohibit the labor of young children. The government listened instead to the financial establishment. The bankers and politicians conspired to slow economic growth by choking off the supply of money. They knew that this action would hurt the people through unemployment, lower wages, and higher prices, but it accomplished their mission to restore the asset value of the wealthy:

When, after the Napoleonic Wars, the United Kingdom had to face the problem of reforming its currency, it chose the return to the pre-war gold parity of the pound and gave no thought to the idea of stabilizing the exchange ratio between the paper pound and gold.  Calamitous economic hardships resulted from this deflation; they stirred social unrest and begot the rise of anti-capitalistic agitation from which Engels and Marx drew their inspiration.4

The Mercantilists continued treating the workers as cost commodities, and the government continued to cooperate with the finance capitalists to make money on money.

Mill, Marx, and Engels

John Stuart Mill (1806-1873) was born to a Scottish family living in London. Home-schooled by his father, Mill was studying Greek at age three, Latin at eight, and economics and social theory at twelve with economist David Ricardo. Mill worked at the East India Company, wrote six books, and served in Parliament from 1865 to 1868 where he promoted women’s rights. 
                                         
Millaccepted the 18th century Enlightenment mission: To determine how the laws of science can form similar doctrine in the moral and political sciences by cementing together fragments of discordant theories and by harmonizing the links of thought. Mill connected the dots in this manifesto of democratic capitalism:

The other mode in which cooperation tends to increase the productiveness of labor, consists in the vast stimulus given to productive energies, by placing the laborers in a relation to their work to make it their principle  interest—at present it is not—to do the utmost,  in exchange for their remuneration.  It is scarcely possible to rate too highly this material benefit, which yet is nothing compared to the moral revolution in society that would accompany it; a new sense of security and independence; and the conversion of human’s daily occupation into a school of the social sympathies and the practical intelligence.5

Karl Marx (1818-1883) was born in Trier, Germany, of a Jewish family that had converted to Christianity. After university, Marx got in trouble with the Prussian government over his revolutionary writings so he moved to Paris where he met his life-long associate Friedrich Engels.  Marx, with his wife and children, spent the rest of his life in London, studying and writing in the British Museum where, with Engels help, he produced Das Kapital.

Marx’s basic insight was that the peoples’ need for adequate food, clothing, shelter, education, and good health depends on a superior economic system. Marx’s related insights defined a work culture that would maximize the building and distribution of wealth. The worth of each individual was a key feature of Marx’s thinking:

We shall have an association in which the free development of each is the condition for the free development of all.6

The second principle of trust and cooperation was included in Marx’s priority for a superior economic system:

Each particular mode of production is the real foundation on which arises a legal and political superstructure and to which correspond definite forms of social consciousness, and that the mode of production conditions the general process of social, political, and intellectual life, the basis of a higher form of society for the full and free development of every individual. This power arises from co-operation itself.7

Marx’s other vision was that people would unite in economic common purpose to end the violence along with the “Warrior State.”
Engels (1820-1895) had written about the dire work conditions in England, but he sustained this vision of the potential workplace:

The division of society into classes will be swept away by the complete development of modern productive forces. This presupposes a historical evolution at which class distinction itself has become an obsolete anachronism. It presupposes, therefore, that the political domination of the culture by a particular class of society has become not only superfluous, but economically, politically, intellectually a hindrance to development.
 
Deliverance from these bonds is the one precondition for an unbroken, constantly-accelerated development of the productive forces, and therewith for a practically unlimited increase of production itself. Nor is this all, the socialized production does away, not only with the present artificial restrictions upon production, but also with the positive waste and devastation of productive forces that are at the present time inevitable and reach their height in the crises. Further, it sets free for the community at large a mass of means of production and of products, by doing away with the senseless extravagance of the ruling classes of today, and their political representatives. The possibility of securing for every member of society, by means of socialized production, an existence  not only fully sufficient materially, but an existence guaranteeing to all the free development and exercise  of their physical and mental faculties-this possibility is now for the first time here.8

Engels and Marx’s “socialized production” is the same as democratized capitalism, but lacked two critical aspects that Mill pointed out: private property and competition. The first was key to motivation, the second monitored the process. 

Marx and Engels had the same problem that Robert Owen had a generation earlier: The ruling elite could not be convinced of the benefits of democratic capitalism. Marx and Engels concluded, probably accurately at the time, that political change would not be evolutionary but had to be revolutionary. The result of imposing a political solution on an economic problem was centralized management of the economic system that contradicted the whole spirit of worker participation and “socialized production.” It did not work.

Benefits from freeing of the spirit in the workplace, however, are now attainable by coupling the democratic work culture with the private property and competition of capitalism.

1. Robert Owen, A New View of Society, (London: Longman Hurst 1818; New York: AMS Press, 1972), Introduction p.39.

2. Ibid., Appendix. pp.16-18.

3. Robert Dale Owen, Threading My Way, An Autobiography, (first edition 1874; reprint, Augustus M. Kelley, New York, 1967),  p. 126.

4. Ludwig von Mises, The Theory of Money and Credit, (-. First edition published in Austria, 1912,  translation into English, 1934; Indianapolis, Indiana:Liberty Classics, 1980), p. 498.

5.John Stuart Mill,  Principles of Political Economy, With Some of Their Applications to Social Philosophy, (first edition 1848;Fairfield, New Jersey: Augustus M.Kelley, 1987), p.789.

6. Karl Marx and Friedrich Engels, The Communist Manifesto (New York: Penguin Classics, 1985, originally published in London, 1848), p. 105.

7. Karl Marx, Capital, Vol 1, (New York: Penguin Books, 1976) First Edition published in London, 1867), p.126.

8. Friedrich Engels, Socialism, Utopian and Scientific, (Chicago:Charles H. Kerr), pp. 134-139 abridged.

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.


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HANSOME ENERGY SYSTEMS INC.
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Dear Dean Dunlap:

I was very happy to hear about the plans for the “Carey Center” at Hamline University. It has been a source of much frustration to me that business concepts which I have seen working and which I admire have so little visibility in academia.

Ray Carey was Chairman of the Board and CEO of ADT Security Systems Inc. when I joined their Engineering Department in 1973. My specialty was Microwave Transmission Systems, and my previous employers were Bendix Navigation & Control Division and IT&T Avionics Div. Working at ADT was very different from working at either Bendix or IT&T.

ADT had a charter which was taken seriously. We, the employee-associates, were entrusted...

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