New Book Explores Democratic Capitalism

Ray Carey's new book, Democratic Capitalism: The Way to a World of Peace and Plenty, is a comprehensive look at the concept of capitalism, both in terms of how it is now practiced and how Carey thinks it must be reformed. Carey starts with a detailed and well-informed review of 18th and 19th century theories of economics, from Adam Smith to Karl Marx. His discussion of Adam Smith is especially trenchant, pointing out that Smith was one of the first proponents of what we would now call workplace involvement. Smith also was no fan of paying workers the least the market would bear. Carey lauds Marx for pointing to some of the right problems, but Carey likes the solutions of John Stuart Mill much more. Mill was probably the first major intellectual figure to argue vigorously for employee ownership as a systemic reform.

Unfortunately, Carey notes, Mills' ideas remained largely an economic footnote to what Carey calls "ultra-capitalism," the modern system of capitalism that focuses more on greed and excess than anything Smith, let along Mill or Marx, would find appealing. Carey does not want the government to solve the problem with regulation and redistribution, however. Instead, he proposes what he calls "democratic capitalism," a system based around various approaches to worker ownership, profit sharing, and employee involvement. Like Louis Kelso, he argues that capital should pay a high dividend rather than simply accumulate value. Unlike Kelso, who argued that the key to democratic capitalism was reform of the way growth is financed, Carey argues the key is for institutional investors to realize that democratic capitalism would be a far better solution for the beneficiaries of their investments.

Carey is now director of the Carey Center for Democratic Capitalism, created to promote these ideas. He is the former CEO of ADT, the largest home and business security systems company in the country (now a division of Tyco, whose business practices later became a notorious example of "ultra-capitalism"), where he implemented many of these ideas. The 540-page book is available at http://www.democratic-capitalism.com/.