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What is Economic Democracy?
Economic democracy is one philosophy of socioeconomics. Socioeconomics is the study and exploration of economics when viewed in the context of human social values, behaviors, and interactions. Within this context, economic democracy advocates taking power away from the rich minority and giving it to the people. Essentially, it is a form of economic socialism in which the workers control production.
Models of economic democracy can take many forms, both in a theoretical framework and when applied to real-world situations. Yet all approaches share basic core values. The philosophy dictates that all people should have access to common resources such as land, water, and raw materials. Artificial scarcity fabricated by big business should be removed, and consumer purchasing power should be increased.
The basic economic problem as defined by the economic democracy philosophy is that society as a whole does not earn enough money to purchase everything it produces and manufactures. The reason for this is that a small group of people hold a majority of the wealth. They use that wealth, not for the well-being of their workers, but to make themselves and other shareholders even wealthier. This inequality, according to the philosophy of economic democracy, leads to poverty, unemployment, and starvation.
Approaches to how to solve this problem vary in intensity and scope. Many proponents of the grassroots approach to economic democracy believe that they can escape the capitalist model by forming workers' cooperatives. A group of people who share similar skills join together to run a business. Each member of the cooperative will own or rent part of the building, pool money for utilities and advertising, and gain an equal share of the profits. Most workers' cooperatives today are run by groups of farmers or artists.
A more radical approach to economic democracy involves restructuring local, national, or world governments. Instead of controlling only their small cooperative, workers would essentially share ownership in every business. Property would not be owned by anyone and therefore could not be bought or sold. It could, however, be rented. The value of all land would be determined by how it is used.
Under this approach, banks will also be socially owned. Every person would have a right to a part of the profits made by businesses. Everyone works, but instead of getting paid, they get an equal share in the wealth. In this way, proponents argue that poverty, hunger, and war will virtually disappear.
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![Economic democracy philosophy dictates that all people should have access to common resources such as land, water, and raw materials.]()
By: michaeljungEconomic democracy philosophy dictates that all people should have access to common resources such as land, water, and raw materials. -
![Under economic democracy, banks would be socially owned.]()
By: PefkosUnder economic democracy, banks would be socially owned.
Discussion Comments
I think economic democracy makes a lot of sense.
When I think about it, people are always left out of decision making in the economy. People working at a company do not have a say in their work. I, as a consumer, also don't have a say in what I get to buy at the store.
I think that economic democracy would solve this problem. And aren't we supposed to have economic freedom? I thought that economic freedom is one of the major reasons why we have a capitalist system and not something else. So our systems should give us the opportunity to contribute to decisions on how we work and what we buy.
I don't know too much about this, but it sounds to me a lot like Communism. Wasn't this how businesses were run in the Soviet Union?
I'm just a bit shocked that it is called economic democracy. I assumed that it was a theory within capitalism, not socialism.
How did this emerge and what is the U.S. government opinion on it?
Knowing how we fear socialist policies and too much government control, I cannot see this as something that the U.S. government could ever enforce even if it wanted to.
I think that we are still in the process of figuring out what exactly economic democracy means.
Some people think that it means making changes in how labor works. This means using new and alternative methods to make the workers happier while producing more.
For others, it means that the workers will also become the managers. They will take part in making decisions and they will benefit from profits.
Especially in the U.S., we are reluctant to try these methods. But some European countries like Norway and Sweden already have them in place and have benefited from them.
I doubt that this will happen soon in the U.S. There are a lot of ideological and political concerns associated with economic democracy. We would have to sort through those first and see what the public thinks and what decision makers are willing to do.
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