Democratic Capitalism

Democratic Capitalism

Democratic Capitalism

Romney considers democratic capitalism to have failed because it did not develop a functioning society (i.e., one which gives to each individual a status based on the social function he performs). Such a society existed in the Middle Ages, when to be a serf, guild member, or knight was to occupy a definite status based on a particular social function. Capitalism was able to be a functioning society only as long as it could make wealth and property the basis of prestige and status and was able to integrate men through the market system. The rise of the company and the consequent decline in the power of the market have made it impossible for modern society to be a functioning society, according to Romney. 1hiporation is now the basic socioeconomic institution, rather than the feudal manor or the capitalistic market. Now that we have learned the secret of mass production, the task, as Romney sees it, is to build a new society that is compatible with the large gyration Tray to do this, he believes, is to make the industrial-plant community the basis of social as well as economic organization.3

Cable points out that since an economy is a means to an end rather than an end in itself, the way in which it is organized and functions is largely dependent upon the value system of the society in which it is embedded. The Protestant ethic was the great driving value system that propelled the UK economy in the nineteenth century. Most definitions of this ethic stress the point of view which held private property sacred and hard work virtuous and which acclaimed thrift, accumulation, and independence. But Cable emphasizes the impersonal and selfless love which motivated men imbued with the Protestant ethic. "Thou shalt love thy neighbour as thyself" was its guiding principle. Men taxed themselves, developed social institutions such as social security ID pension funds, profit and led to 1tficcumulation and other results 11i-1T1ie proved of inestimable value to purely self-interest commercial operations. Cable thus turns upside down Adam Smith's idea that economic man in pursuing his own selfish gain cannot help but further social goals. ' Cable thinks the individual who selflessly contributes to human and community betterment thereby strengthens its economic potential and directly benefits from the higher level of economic progress which results.4

Keynes believed that the best way to develop a stable, just, and free industrial society is to place our trust in the evolution of the existing structures of government and business, rather than to embrace a new and all-encompassing "ism" of some kind. He believed that the company is a type of economic entity which is sympathetic to the institutions of a free society. But by "corporation" he meant a type of semiautonomous public body-the universities, the Bank of England, the Port of London Authority, and the railway companies-rather than the typical business enterprise. He suggested, therefore, that private business enterprises take on the characteristics of such public service corporations. The criterion of action of such organizations would be solely the public good as they understood it. Keynes did not think that his views were na-vely utopian, and as proof of their practicality pointed to the trend of big business to socialize itself:5

A point arrives in the growth of a big institution-particularly a big railway or big public utility enterprise, but also a big bank or a big insurance company -at which the owners of the capital, i.e., the shareholders, are almost entirely dissociated from the management, with the result that the direct personal interest of the latter in the making of great profit becomes quite secondary. When this stage is reached, the general stability and reputation of the institution are more considered by the management than the maximum of profit for the shareholders. The shareholders must be satisfied by conventionally adequate dividends; but once this is secured, the direct interest of the management often consists in avoiding criticism from the public and from the customers of the concern. This is particularly the case if their great size or semi-monopolistic position renders them conspicuous in the public eye and vulnerable to public attack.


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