A New, Improved Capitalism
You never change the existing reality by fighting it.
Instead, create a new model that makes the old one obsolete.
The Information Age brought new opportunities for the people of the world to communicate and find common purpose. Included is the motivation for a democratic work culture needed to release the cognitive power of Information Age workers. The value system built on respect for the individual and an environment of trust and cooperation was now not only the ideal of religion and humanism but also one of competitive necessity in industry. The hypothesis that morality in the work place is economically determined, and that a concentration of companies with this work culture raises the moral level of the contiguous community, has enormous implications, and would, I propose, become even clearer through academic challenge and debate.
This evolution to the superior mode of production is exciting in itself but another powerful force is also at work democratizing capitalism. The Employees Retirement Insurance Security Act (ERISA) of 1974 mandated retirement savings. This vast sum of money--trillions-- became a major source of new investment capital and turned workers into the new capitalists. With the expected rewards from capitalism, wage earners could now live better from both the wages of their labor and a capital wage. The combined benefits of a democratic work culture and financial motivation of ownership participation seemed ready to bring a golden age of capitalism to citizens in America and the world.
It did not work out that way, however. Congress failed to direct this new source of capital into investment in the job-growth economy. Instead, the money stopped in Wall Street and helped fund the various speculative misadventures that have caused the current recession. Wage earners are again being treated as a disposable cost commodity and then forced to watch their life savings shrink dramatically. Instead of being paid a capital wage, wage earners have lost jobs and income.
That, however, is history. The question now is how the American majority can cause government to “promote the general welfare” through support of democratic capitalism. Congress failed to do this in 1974, and the reforms now underway will reset the system back to pre- recession business as usual, an economy dominated by Wall Street.
A better model is available, a superior system that maximizes the building and distribution of wealth in a moral environment. Implementing the following citizens’ agenda will help shift government’s support away from domination by finance capitalism:
- Limit speculation with borrowed money to minimize wealth concentration, asset inflation, and recessions by a coordinated use of reserves, taxes, and risk premiums added to the cost of money
- Reward with tax advantages the distribution of corporate surplus through reinvestment in growth and payment of dividends; tax stock buy backs and deals
- Make dividends tax-free for low- and middle-income wage earners
- Stimulate the economy and rebuild retirement accounts by distributing special dividends of hundreds of billions of dollars now in companies’ surpluses
- Create jobs and provide wage earners a risk-free investment opportunity, a 5% tax-free government bond for $2 trillion of overdue infrastructure repair
Citizens must tell the managers of their retirement funds to shift measurement of corporate performance from short-term to long-term:
- Instead of quarterly earnings per share, use a metric that combines a running average of sales growth, profits, and cash flow against managements’ predictions. This cash-flow protocol would have prevented most of the Enron damage. (see article # 13)
Citizens must ask the colleges and universities to offer students a study of alternatives in capitalism. The curriculum now offered by the Carey Center for Democratic Capitalism can be used and improved. It includes the following:
- “Introduction to Democratic Capitalism” (See the Carey Center for Democratic Capitalism website www.democratic-capitalism.com)
- Ray Carey, Democratic Capitalism: The Way to a World of Peace and Plenty (Indianapolis: AuthorHouse, 2004). (Available on the website and from Amazon)
- Democratic capitalism found in a synthesis of the thought of Adam Smith, Karl Marx, and John Stuart Mill (See articles # 4, 10, 11 in “Introduction”)
- Democratic capitalism’s superiority confirmed in practice by hundreds of companies (See article # 24, Organizations that Promote Democratic Capitalism)
The evolution of modes of production has moved from capital investment in things to investment in people, from demeaning the worker during the Industrial Revolution, to celebrating the worker in the Information Age. The work culture built on the worth and potential of each in an environment of trust and cooperation is innately moral and can unite people in economic common purpose, raise the standard of living, and stop the violence--the pragmatic results of a new, improved capitalism!