The New York Times “Sunday Review,” opinion section, May 13, 2012, had an article titled “Capitalists and Other Psychopaths,”1 with comments such as “capitalism is predicated on bad behavior,” and “capitalist values are antithetical to Christian and democratic ones.” It is this type of ignorance about the alternatives within generic capitalism that limit the spread of democratic capitalism while causing a political vacuum for finance capitalists to lobby their greedy privileges and destroy the economy.
Democratic capitalism is based on the worth of each individual in an environment of trust and cooperation. Each individual is provided the training, facilities, and motivation to reach for full potential. The environment of cooperation makes the whole greater than the sum of the parts, while integrity makes maximum decentralization and minimum structure possible. Thousands of self-taught democratic managers have discovered democratic capitalism in their search for increased profits in a humane environment.
An environment of integrity reduces expensive turnover of workers and customers; the long-term cost of capital; and it draws on the productivity and innovation of workers to improve routines such as material handling and worker safety. In the words of John Stuart Mill:
It places the laborers in a relation to their work which would make it their principle and their interest-at present it is neither-to do the utmost, instead of the least possible, in exchange for their remuneration. It is scarcely possible to rate to highly the material benefit which yet is nothing compared to the moral revolution in society, a new sense of security and independence in the labouring class; and the conversion of each human being’s daily occupation into a school of the social sympathies and the practical intelligence. 2
Marx and Engels also had a vision of this work culture. Marx wrote of an economic system:
Which alone can form the real basis of a higher form of society, a society of the full and free development of every individual. 3
Engels’s vision was one in which:
The political domination and intellectual leadership by a particular class of society had become not only superfluous, but economically, politically, and intellectually a hindrance to development. 4
Marx and Engels had an appreciation of the power of what they called “socialized production.” This was the democratic work culture but the Marxists tried to force it into a political structure that had all of the fatal flaws of centralization, including de-motivating the workers.
Welhelm Ropke advised West German Chancellor Ludwig Erhard in the “Economic Miracle” from the Marshall Plan which was no miracle but rather the application of free market principles. In his appropriately titled Humane Economy 5 he wrote:
Free markets are preferable to tyranny not because they enrich us but because they moralize us…a humane economy is only, in the end, a shadowy reflection of the Divine one.
These are economic philosophers who understood a work culture that feels good and works better, a system that produces more wealth because it is moral.
Educators interested in such capitalist alternatives will benefit by studying the experience of Robert Owen in his New Lanark spinning mill near Glasgow. Owen proclaimed to anyone who would listen:
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. 6
Owen had eight years experience of managing on the factory floor before he bought New Lanark in 1798 and demonstrated the profit potential from investing in people.
Along with the work culture, the other critical component of democratic capitalism is a way to share the improvement with the people who have produced it. Broadly distributed wealth is also the way to trigger the multiplier effect, add to overall economic growth, and reduce the inequality of wealth. Mill wrote a whole chapter on ways for the worker to build ownership. 7
Organizations around the world have re-discovered Owen and help spread the work culture and worker ownership. They include National Council of Employee Ownership, The Beyster Foundation, WorldBlu, and the European Foundation of Employee Share Ownership.
Joseph R. Blasi Ph. D. of the Rutgers School of Management and Labor Relations was honored with the J.Robert Beyster Chair, the first in employee ownership. SMLR in 2012 also offered a course in Democratic Capitalism taught by Chris Mackin Ph. D., the Carey Fellow at Rutgers.
Americans today have a feeling that all is not right either materially or spiritually. The material problem can be solved by taking retirement savings back from Wall Street speculation. In so doing, we will find trillions of dollars of the peoples’ capital available for long-term investment in companies who offer ownership opportunities, infrastructure bonds to rebuild America, and education of the work force.
American culture lacks a unifying value system. For many today, all values are considered subjective and relative. Democratic capitalism based on the worth of each in an environment of trust and cooperation, however, demonstrates a value system that, contrary to the NYT article, strongly supports Christian and democratic values. This economic value system should spread because it is not only humane but also maximizes profits.
1. William Deresiewicz
2. Principles of Political Economy 1848
3. Capital 1848
4. Socialism, Utopian and Scientific, 1892
6. A New View of Society, 1818
7. Principles of Political Economy, Chapter VII, Book IV.