For eons, the bigger and stronger ate the smaller and weaker. The surviving smaller and weaker gradually devised a relationship in which they would not be eaten, and named it democracy. (Instead of being eaten, they pay taxes.)
Will economic democracy, in which employees own the companies they work for and share the profits and losses, similarly replace capitalism?
I hope so. But if "employees own the companies", it means they're not really employees anymore (which I'm fine with), and it also means that, effectively, they "collectively own the means of production", which is one of the three or four basic tenets of modern communism. And when you say "communism", everyone nowadays seems to picture Stalin's mustache. That's one big stumbling block for this idea to make its way into people's minds.
By the way, I'd argue that the Western "political democracies" aren't any more democratic than Stalin's regime was communist, if we use these words in the strict sense. Sure, you get to vote once in a while, then what? Your other contributions to politics are basically limited to protests and strikes, since the representatives you elected often tend to represent only themselves and corporate interests in their area. Oligarchy would describe these political systems much better than democracy. Or plutocracy - de facto by law now in the US, as all limits on political funding are abolished, one after another, by the Supreme Court. Money rules. And that, too, is a big stumbling block in the face of "economic democracy", as you call it. And I don't see this one budging anytime soon - because, when the interest rate on capital is greater than the rate of economic growth, as it is now in our developed world, it mechanically leads to concentration of that capital (that's by far the main reason why "the rich get richer while the poor get poorer" in constant terms - and there's no way escaping it except renewed growth and/or lower interest rates on capital - but good luck with that one!), so the more it goes, the less likely it is employees will ever own their companies, since these very companies are part of the capital that get concentrated in the hands of the rich few.
You'd need a real revolution for that to happen.
Jaume, one minor point, and then a major point that counters your pessimism.
Since only a few of us elect our oligarchs or, in about half of the states in the USofA, vote for or against ballot propositions written by a few of us, every democracy is at best an oligarchy. The terms plutocracy or corporate plutocracy also describe what the USofA has.
Employee ownership IS NOT state ownership. Wall Street's gambling-addicted investors stir up fear of it by saying it's socialism; a more accurate term would be collective capitalism. An early 1970s Harvard Business Review said such businesses experience less employee theft and are more environmentally responsible.
A book published in 2007 says the USofA has more than 11,000 employee-owned companies. Many are small; at least one is a former investor-owned grocery chain. Most are owned via employee stock ownership plans (ESOPs), in which the actual decision making varies from democratic to oligarchic. I have heard that Federal tax law (I have not seen the specific section) gives favorable treatment to the owners of businesses who upon retirement sell their businesses to their employees.
The terms plutocracy or corporate plutocracy also describe what the USofA has.
Since the 2010 (Citizens United) and 2014 (McSomething - can't remember the name - McCurmudgeon?) rulings of the Supreme Court, I think it's become more than just a "corporate" plutocracy, since these rulings also affect the social sphere. Yeah, social plutocracy, that sounds both new and neat.
Employee ownership IS NOT state ownership.
It's interesting you wrote that in response to my comment. Is it because I brought up the points of "collective ownership" and "communism"? While, actually, I wrote
they [i.e., the employees] "collectively own the means of production"
which I thought made it clear that in my mind, this collective ownership was the employees', not the state's (and since another fundamental - albeit often forgotten - tenet of communism is statelessness, "state ownership" is - or should be - a meaningless concept under that doctrine anyway.)
As for the rest of your comment, these 11,000 employee-owned companies (more like 14,000 today, according to a study I read earlier this year), I know they exist but they're still a drop in the ocean - they account for what, less than 1% of the US total economy, something like that? (I may remember incorrectly here, so don't quote me on that.)
It's not that I believe this economic model is inefficient, on the contrary: the most striking example I know is that Mexican fishery on that Pacific island (which name I forgot) that's entirely employee-owned, and that makes better profits than the traditional capital-owned other fisheries around. Plus, since they're responsible guys, they make sure they never overfish and now have to keep patrols to prevent their competitors (who depleted their own waters) to come pillaging their fishing spots. Sustainable and profitable, how can't it be good?
Yet, (and I really, really hope the future will prove me wrong here) I still think this model can't thrive on a large scale on an economic scene where capital concentration is in full swing. Sure, there'll always be exceptions here and there, but I'd be surprised if they were significant. Mentalities need to change, drastically. And not just the mentalities of a few.
Jaume, thanks for your speedy reply.
I hope economic considerations (i.e., profits and losses) result in economic democracy's growing more rapidly than political democracy, with fewer setbacks.
I'm sure that local variations will always exist.
Soon after the Soviet Union and its version of communism collapsed, my sister spent a week in Moscow and a week in Warsaw. She told me of cooperation between shoppers ("You buy 12 cartons of milk and I'll buy 12 loaves of bread. We'll meet here again and each take six of each.") that's rare in the highly individualistic USofA. I concluded that such people might adapt to democracy more speedily than Americans.
I wrote Employee ownership IS NOT state ownership for two reasons.
* The term collectively own the means of production is so ambiguous as to be almost meaningless.
* The term also doesn't account for employee ownership of the goods necessary for production and the goods that result from production. In the Soviet Union, the state owned these.
Before WW2, democracy accounted for a tiny percentage of the decision making in the world. Nuclear weapons appear to have frightened many world leaders into accepting it.
Capital will go where there is profit, even to a Mexican fishery that occasionally needs to borrow.
As to the sociopaths who run parts of Wall Street and some corporations?
They will continue to screw up their own lives and the lives of others. The more criminally-inclined will join those in prison, some 20-25% of inmate populations.
* The term collectively own the means of production is so ambiguous as to be almost meaningless
Well, I can give you that, "collective ownership" is ambiguous when the "owner" is not clearly identified, or without an implicit context (e.g. the Stalinist state.)
Capital will go where there is profit,
Of course it will, but that's not what I'm talking about here.
See, economic growth is, basically, net wealth creation, according to the size of the economy and the growth rate. Part of this wealth goes to the remuneration of capital, through mechanics like interest rates. I think everyone can understand that (although I wish I could say it in my native language, I'm never sure I'm using the right words when discussing technical stuff.)
Now what happens when the economic growth rate is too low or the interest rates on capital too high? It's quite obvious: capital will siphon more wealth out of the economy than is actually created. In a struggling capitalistic economy (that's many Western nations atm), capital still grows, but at the expense of everyone else, who get poorer than they were in constant terms (constant dollars, if you wish.) That's what I meant with "capital concentration" (maybe a poor choice of words? I don't know), and one of its effects is it makes opportunities for everyone to run their own businesses marginally harder to come by. Which goes in the face of "economic democracy".
Whether this "concentrated" capital is invested in Mexico or Mars is an entirely different matter. ;-)
Nothing in your reply refers to how widely the wealth is owned.
When most of it is owned by 1% of a nation's people, the economy depends on their actions and is less stable. Recessions and depressions are more probable and do more damage. And the taxpayers repair the damage.
Such is America's economic history.
Economic democracy will result in the wealth being own by more people, and the economy will be more stable.
Nothing in your reply refers to how widely the wealth is owned.
Implicitly, it did. That width shrinks during recessions (or even just when economic growth isn't high enough to meet the needs of capital.)
It's a natural implication of the concentration process I'm alluding to: even during recessions, capital still gets remunerated before everything else, right? (If it wasn't true, banks wouldn't expel people from their homes and workers would rule over shareholders, which obviously isn't the case.) It naturally follows that most of the wealth goes where most of the capital is (and ultimately, if need be, that big fishes will get eaten by even bigger fishes.)
Now, I'm convinced that economic growth is, mostly, a thing of the past (disregarding the developing/underdeveloped countries here.) Today in the EU for instance, a 2% GDP per capita growth rate would be seen as an achievement, and 3% as a miracle. Meanwhile, interest rates aren't adjusted as they should to reflect this. So I don't see wealth being more widely owned in the foreseeable future here. (Things look a little less bleak in the US atm, I can give you that.)
Economic democracy will result in the wealth being own by more people
I don't contest that. My point is just that, as capital gets more concentrated, the conditions for economic democracy to emerge as a global phenomenon (rather than a marginal alternative) get worse. Then again, as I said earlier, I hope I'll be proven wrong on this.