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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 5:10

Hypothesis #10—The Ideal of World Peace:  Democratic capitalism will result in a rising standard of living and a growing sense of economic common purpose worldwide, which will provide the environment for the United Nations, backed by the United States of America in a cooperative role, to displace violence with law in the relations among nations.  


The ideal of a world of plenty through the means of economic common purpose is placed as hypothesis #1 because democratic capitalism must be demonstrably spreading wealth worldwide before the ideal of a world of peace, hypothesis #10, can become attainable and perceived as attainable. The repositioning of American foreign policy to be a strong team player within the United Nations must be supported by a clear demonstration that America is leading the world towards the benefits of economic freedom.

The full capacity of capitalism to provide basic comforts to the people of the world has never been realized.  The opportunity for nations to substitute law for violence has never been accomplished. Underlying these two persistent failures is the perception of inherent tension between capitalism and democracy. Democratic capitalism that draws its strength from an inherent synergy between capitalism and democracy has been obscured because most have believed that commerce is inherently immoral, or amoral at best.  Lacking a unifying ideal, many have concluded that idealism is dead and violence inevitable.

One might argue that stopping the violence could have a quicker effect on improving the condition of the world, but the cycle of violence is so institutionalized in human affairs that the cycle will be broken and the reciprocal atrocities will cease only when the standard of living is steadily going up throughout the world.

In my studies, I found a correlation among many of the great thinkers regarding the enormous potential of people in a world free of want and violence. Many of these great thinkers over many centuries emphasized the same virtues that I had learned from experience, the direct correlation between improved performance and trust and cooperation.  These great thinkers also observed the interconnected impediments to social progress: the concentration of wealth and violence among nations and people.

Confucius, for example, knew that a world of law, not violence, begins with trained and virtuous leaders, though he was realistic in his awareness that the elimination of violence would be a long process:

When the great principle prevails, when the world becomes a republic, they elect men of talents, virtue, and ability; they talk of sincere agreement and cultivate universal peace. After a state has been ruled for a hundred years by good men, it is possible to get the better of cruelty and do away with the killing.

Mencius (371-289 B.C.), one of Confucius’s interpreters and a teacher of universal love, denounced war as a crime against humanity:  “There are men who say ‘I am skillful at marshalling troops, I am skillful at completing a battle.’ They are great criminals, there never has been a good war.” Mencius marveled that a thief who steals a pig is condemned and punished, whereas an emperor who invades and appropriates a kingdom and enslaves its citizens is called a hero and is held up as a model for posterity.
 
Young Edmund Burke (1729-1797), before he became a famous British Parliamentarian, pondered the human failure to stop the violence. He asked these questions:  Why has every human effort to structure society for peace and plenty been a failure?  Why does the only animal capable of reason kill more of its own species than does any other animal? Burke included in his litany of civil society’s failures the exploitation of the poor by the rich, and then, after viewing them in their demeaned condition, the conclusion by the rich and powerful that ordinary people are incapable of participating in their own governance.

German philosopher Immanuel Kant, later in the eighteenth century, searched for the perfect constitution that would allow humans to reach their full potential.  Kant’s “Eighth Thesis” was his elaboration upon “a perfectly constituted state as the only condition in which the capacities of mankind can be fully developed, and also bring forth that external relation among states which is perfectly adequate to this end.” Kant, in his seventies, took a dim view of the quality of truth-seeking then being practiced in international relations:

[Kant expressed] …a certain indignation when one sees men’s actions on the great world stage and finds, besides the wisdom that appears here and there among individuals, everything in the large woven together from folly, childish vanity, even from childish malice, and destructiveness.

Condorcet in his summary of the work of the Enlightenment did not miss this vital subject.   Buoyed by his optimism about improving the condition of humankind through universal education and rising affluence, he foresaw the establishment of organizations like the United Nations, “more intelligently conceived than those projects of eternal peace which have filled and consoled the hearts of certain philosophers,” and he believed that these would “hasten the progress of the brotherhood of nations.”  Condorcet expressed his hope that when war departed and peace arrived, “Wars between countries will rank with assassinations as freakish atrocities, humiliating and vile in the eyes of nature and staining with indelible opprobrium the country or the age whose annals record them.”  Condorcet saw a moral society founded on economic principle:

When at last the nations come to agree on the principles of politics and morality, when in their own better interests they invite foreigners to share equally in all the benefits people enjoy either through the bounty of nature or by their own industry, then all the causes that produce and perpetuate national animosities and poison nations’ relations will disappear one by one, and nothing will remain to encourage or even to arouse the fury of war.

Condorcet thus placed economic common purpose as the prerequisite to stopping the violence. A little over a half-century later, Marx arrived at the same conclusion. Marx first emphasized that social progress depends on movement to a superior economic system, and then he concluded that, with the elimination of material scarcity through this superior economic system, the warrior state would lose power.

Early in the twenty-first century, the United States was confused about the kind of capitalism to support and the nation’s proper role in the world.  Was America an example of democratic principles in action, one person, one vote? Or was it a new imperial nation with the responsibility to run the world, one nation, all of the votes? Enormous military might and economic strength was affording the United States all the hard power it needed to be imperialistic, and it so chose in the invasion of Iraq .

At the same time, America also had great soft power through its traditions of American freedoms, comfort for most, work ethic, inventiveness, and rule of law.  Early in the new century, both types of hard power, both economic and military, were securely in place, but America was losing its soft power at the same time that soft power was gaining in importance in our more interconnected world.
Joseph S. Nye, Jr., Dean of the Kennedy School of Government and former Assistant Secretary of Defense, reasoned in his examination of hard and soft power that while America is likely to continue to be number one in hard power, in a world where soft power is more important, America cannot go it alone:

In this global information age, number one ain’t gonna be what it used to be. To succeed in such a world, America must not only maintain its hard power but also must understand its soft power and how to combine the two in the pursuit of national and global interests.

The United States has the hard economic power to lead the world towards democratic capitalism, but it has, unfortunately, used that power to push the world toward ultra-capitalism.  The economic and social damage done by ultra-capitalism has fed anti-American sentiments to such an extent that the U.S. has had to use its military hard power both to fight terrorists and to threaten other countries.

The more the United States tries to “go it alone,” the more other governments such as China , India , Russia , France , and Germany feel pressured to build a hard-power coalition to challenge what most of the world views as America ’s arrogance of power.  China can surpass the United States in economic power during the 21st century.  Their high economic growth rate can benefit the American people in a world united by economic common purpose, but if China is forced to divert growing economic power to build up military hard power, not only will China have squandered its national wealth but also the sense of global economic common purpose will devolve into mutual suspicion. Nye commented on this choice:

Global governance requires a large state to take the lead. But how much and what kind of inequality of power is necessary—or tolerable—and for how long? If the leading country possesses soft power and behaves in a manner that benefits others, effective counter-coalitions may be slow to arise. If on the other hand, the leading country defines its interests narrowly and uses its weight arrogantly, it increases the incentives for others to coordinate to escape its hegemony.

Nye offered this wisdom a year before the Iraq War.  

Senator Robert Byrd (D., West Virginia) warned the Senate on February 12, 2003 , that they were standing by, passively mute, while the nation was lurching toward war, “the most horrible of human experience.” Senator Byrd placed the impending attack on Iraq in this context:

This coming battle, if it materializes, represents a turning point in U.S. foreign policy and possibly a turning point in the recent history of the world. This nation is about to embark upon the first test of a revolutionary doctrine applied in an extraordinary way at an unfortunate time. The doctrine is preemption—the idea that the United States, or any other nation, can legitimately attack a nation that is not immediately threatening but may be threatening in the future—a radical new twist on the traditional idea of self-defense.

Senator Byrd went on to describe the destabilizing effect that this new policy and action would have as nations would now have to judge whether to attack or whether they were about to be attacked. Byrd regretted that these destabilizing actions were under consideration in a world “where globalism has tied the vital economic and security interests of many nations so closely together.” Byrd understood that 9-11 had changed the world, but he commented:

Calling heads of state “pygmies,” labeling whole countries as “evil,” denigrating powerful European allies as irrelevant—these types of crude insensitivities can do our great nation no good. We may have massive military might, but we cannot fight a global war on terrorism alone.

Shortly after the Senator’s speech, America and a few allies invaded and conquered Iraq contrary to the wishes of most of the world.

The theory that any nation has the preemptive right to invade another country entails extraordinary implications, for it leads the world in a direction in which each nation would feel responsible for adding to its military capability either to be an attacker or a defender against another’s attack. At the same time the U.S. chooses to arm selected nations, including tyrannical ones, America also decides which other nations are not allowed to be similarly armed, and which ones are to be attacked because they think that they have the same prerogatives for military preparation as the U.S. and its allies.
 
The demilitarization of all nations, not just the ones targeted by American patriots, is an urgent and overdue event that should be managed by the United Nations and led by the United States . Demilitarization of selected parts of the world while adding to one’s own and one’s allies military strength, however, is not only hypocritical but also impossible.  All citizens should be concerned with American hypocrisy in the elimination of weapons of mass destruction. For example, thousands of nuclear-armed missiles in America and Russia are still in the ready position, aimed at each other. With a desperately poor Russia trying to be friends with the United States , why are those weapons still there?

Those weapons would not be there if Soviet leader Gorbachev and American President Reagan, when they met in Reykjavik , Iceland , had concluded their agreement for a sweeping nuclear weapons ban.  According to The Nation:  
That was the 1986 summit where only the panicked intervention of several presidential aides--some of whom advise the current U.S. administration (George W. Bush)--pulled Ronald Reagan back from the brink of agreement.
 
In 1988, Gorbachev tried again in his December U.N. address, a vision of: deep unilateral arms cuts; rejection of ideology in international relations; and a call for a new world order of cooperation in solving such global problems as poverty, pollution, crime, and terrorism. (Emphasis added)  

President Bush, the senior, was well known for his disinterest in   “the vision thing,” and the Cold War warriors in his Administration had not assimilated the opportunities for a world relieved of that bipolar confrontation.  The leaders of Russia , the country destroyed by that confrontation, had the vision; the leaders of America , the country with the power to put the vision into practice, continued, instead, on its path to more folly and violence.

In a world of reason and vision, preemption might have a place in a long-term U.N. plan to demilitarize the world. Force would be occasionally necessary, but the need would diminish rapidly as the world witnessed a coordinated, determined plan to convert the trillions of dollars wasted on military expenses to education, good health, and economic development.  Those few madmen who opposed this movement would provoke the moral and military might of the rest of the world.

Where did this extraordinary new policy of preemption come from?  With its enormous ramifications for the direction of history in the 21st century, it must have been the product of high-quality truth-seeking by people of different disciplines and cultures.  Not at all!  Preemption came out of the minds of a few conservative ideologues. Their new mission began in 1998 when a new, small Washington think tank, the “Project for the New American Century,” wrote President Clinton to urge the elimination of Saddam Hussein’s weapons of mass destruction and, in time, the elimination of Hussein himself. Eighteen concerned people signed that letter, one-half of whom ended up in senior positions in the George W. Bush Administration.

In September 2002, these ideologues now with political power, produced The National Security Strategy of the United States in which foreign policy emanated from the existence of great military power that was left over from the bipolar confrontation between the U.S. and the U.S.S.R., now improved with hi-tech developments.  The policy conclusion is that America has the power and is obliged to use it to run the world.

Robert Kagan’s essay on this subject caused a stir that encouraged him to restate it in a small book in which he concluded as follows:  
The United States remains mired in history, exercising power in an anarchic Hobbesian world where international laws and rules are unreliable, and where true security and the defense and promotion of a liberal order still depend on the possession and use of military might.
  
Kagan did not reference the success of the European Union in substituting cooperation and law for centuries of killing a large percentage of their people in wars. That example would have supplied experimental verification that such a transition could be made at the world level, if America would put its power behind the U.N.  Kagan called the U.N. “a pale approximation of a genuine multilateral order,” but he did not address how thoroughly the U.N. had been undermined by the U.S. or how badly it needed structural reforms that would come about only with American support.  Instead, Kagan presumed to interpret the level of American idealism this way: 

One of the things that most clearly divides Europeans and Americans today is a philosophical, even metaphysical disagreement over where exactly mankind stands on the continuum between the laws of the jungle and the laws of reason. Americans do not believe we are as close to the realization of the Kantian dream as do Europeans.

A few hawkish, power-adoring ideologues are trying to preempt traditional American idealism. If their view prevails, America will turn even worse folly and violence in the 21st century into a self-fulfilling prophecy. The United Nations will continue to be emasculated by the United States , and the world powers will be forced to build a coalition to challenge America in the worst arms race in human history, and that will include nuclear capability, chemical, biological, and all other weapons of mass destruction.

The policy of these ideologues of military power expressed in the National Security Strategy must become a matter of exhaustive public debate. This madness must be fully examined by the American people.  Give the citizens a clear choice, and they will vote their idealism!

The hawks in the United States need perceived enemies to sustain their enormous military budget. China had become the designated enemy for them since the demise of the U.S.S.R. until Iraq or North Korea—or whoever is next—would become a more inviting target.  Military preparation can become a self-fulfilling prophecy, too.  Thucydides (471-399 B.C.), the Greek historian warned at the time of the Peloponnesian War between Sparta and Athens that a belief in the inevitability of war can be a major cause of war’s taking place.

The group that determined the Iraq agenda violated the same part of Bacon’s truth-seeking process that former Secretary of Defense Robert McNamara identified as the fatal flaw in the team deliberations over American involvement in Vietnam .  McNamara, a pivotal figure in the Vietnam decisions, described what he had learned from that searing experience: “We are not practicing in an international context what we preach, and what we practice domestically—which is democratic decision making. We are not omniscient.”

In both the Vietnam and Iraq wars, the teams responsible for American policy were not sufficiently collaborative, that is they did not have the multi-disciplinary and multicultural participation necessary to neutralize mistakes by those joined by the same narrow cultural conditioning. The Iraq war was another government policy founded on a desirable mission in the abstract but with threatening and unintended consequences for the rest of the century. Massive military expenditures around the world; balance-of-power geopolitics that target one group of nations differently from how other nations are treated; increasing violence, this time to include wide-spread and suicidal terrorism that will bring the battle to North America; and a further denigration of the power and prestige of the United Nations, the only available forum of international dialogue—all of these last-gasp behaviors of a warrior state are now out-moded by the inherent morality and effective promise of democratic capitalism. The new policy of preemption re-ignites the Cold War competition for weapons of mass destruction in a world where eight nations already have 32,000 nuclear weapons.  These nuclear-armed nations include India and Pakistan , contiguous countries consumed by religious and nationalistic passions engaged in war more often than not. Preemption practiced by either of those densely populated nations would result in a human catastrophe beyond measure. 

The Iraq War can have positive effects: American troops can be taken out of Saudi Arabia , oil profits can be directed to the Iraqi people, Israel can get security, and the Palestinians a state. Even if all of these good things happen, these ends did not justify that means, and the residual effects will still be catastrophic.

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

Capitalism produces wealth from market freedom and competition, democratic capitalism maximizes wealth from worker participation. Their sharing in the improvement sustains motivation and adds consumer income that increases economic growth. The value system is trust and co-operation, the impediments are mal-distribution of wealth and violence among nations and people.

Surplus wealth was built by firing workers engaged in growth programs and by not increasing wages for productivity gains. Corporations avoiding taxes left $6 trillion of this surplus sitting in foreign accounts. The distribution of this surplus depends on a critical Board decision. It should be returned to the workers in wages, dividends, and profit sharing that add to economic growth, but managers influence Boards to repurchase shares to hype the value of options while hurting economic growth.

The workers are now capitalists through their pension funding, but they are not yet organized to influence policy. Finance capitalism continues to dominate the economy and influence politicians. Reformers who should correct this capitalist perversion do not understand wealth production from democratic capitalism; instead they concentrate on the political structure that distributes wealth.

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