See “Democratic capitalism is an oxymoron” for my earlier thoughts.
I finally finished “American Umpire” by Elizabeth Cobbs Hoffman. Her frequent use of “democratic capitalism” inspired the blog entry above. She uses the term on her final page.
Reading that led me to think that a democracy can lead to capitalism but capitalism doesn’t always lead to democracy. In a democracy, the implied individual freedom can lead to the raising of capital for various projects. In a capitalistic society, the power structure can more easily lead to an oligarchy than a democracy. Unfortunately, the world is filled with oligarchic capitalism. Will the United States and other countries we call democratic move to oligarchic capitalism? Your voting in every election can prevent such a change.
See also “Oil companies, Fortune 500, and U.S foreign policy”.
Showing posts with label democratic capitalism. Show all posts
Showing posts with label democratic capitalism. Show all posts
Thursday, April 17, 2014
Wednesday, November 13, 2013
Democratic capitalism is an oxymoron
Democratic means government by the people. It is commonly understood that each person has one vote.
Capitalism is raising money for an enterprise with the contributions of a few people or thousands of people. Each contributor of capital to the enterprise has as many votes as the number of shares he or she holds. One can argue that this is fair; the person who put one million dollars into the company had a greater interest than the person who put one hundred dollars into the company.
In practice, capitalism becomes distorted to the rule of a few. Capitalism leads to a plutocracy both in the enterprise and in the various governments.
In the enterprise, members of the board periodically award themselves and the top executives shares in the enterprise, thus increasing the number of votes they have, at no or low cost.
In government, the executives and other large shareholders put a lot of money into lobbying government for laws in their favor and into campaigns of political candidates who they believe will be sympathetic to their interests. Regular readers of this blog know what Adam Smith thought of that influence. See "The Invisible Adam Smith".
Capitalism, when there are many companies with similar focus, is a very good idea. It means that there are many people working on bringing new or lower cost products to the market. This doesn't mean that government can't produce good ideas; it just does not have enough resources to produce as many good ideas as are needed. And often government is needed to encourage good ideas in certain fields or to curtail bad ideas that are harmful to the public. In fact, corporations fall all over themselves to get government contracts to build roads or build more lethal weapons.
You might be able to come up with a better blended phrase that reflects the need for both democracy and capitalism. My best shot today is balance of democracy and capitalism. Now the next question is: when will this balance be achieved?
Capitalism is raising money for an enterprise with the contributions of a few people or thousands of people. Each contributor of capital to the enterprise has as many votes as the number of shares he or she holds. One can argue that this is fair; the person who put one million dollars into the company had a greater interest than the person who put one hundred dollars into the company.
In practice, capitalism becomes distorted to the rule of a few. Capitalism leads to a plutocracy both in the enterprise and in the various governments.
In the enterprise, members of the board periodically award themselves and the top executives shares in the enterprise, thus increasing the number of votes they have, at no or low cost.
In government, the executives and other large shareholders put a lot of money into lobbying government for laws in their favor and into campaigns of political candidates who they believe will be sympathetic to their interests. Regular readers of this blog know what Adam Smith thought of that influence. See "The Invisible Adam Smith".
Capitalism, when there are many companies with similar focus, is a very good idea. It means that there are many people working on bringing new or lower cost products to the market. This doesn't mean that government can't produce good ideas; it just does not have enough resources to produce as many good ideas as are needed. And often government is needed to encourage good ideas in certain fields or to curtail bad ideas that are harmful to the public. In fact, corporations fall all over themselves to get government contracts to build roads or build more lethal weapons.
You might be able to come up with a better blended phrase that reflects the need for both democracy and capitalism. My best shot today is balance of democracy and capitalism. Now the next question is: when will this balance be achieved?
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