Democratization is the process by which the power to govern is equally dispersed across a population. There are significant numbers of businesspersons and economists who have taken to calling the ability to purchase stock in a company the democratization of the markets. In many ways, this is offensive as those enjoying greater wealth and larger stakes in given institutions possess greater power, which is thoroughly undemocratic.
That said, America does need to see the democratization of our economy for our Nation’s economic interests to be better served. The distribution of wealth continues to narrow as the household incomes of average Americans stagnate or even shrink. Excess wealth allows individuals to invest in our economy through the stock markets and other financial vehicles. The true democratization of the economy would mean individuals would have the leverage they need to negotiate larger incomes and greater access to financial opportunities, thereby allowing the economy to reach equilibrium instead of creating artificially accelerated inflation and bubbles. The consequences of a far more democratized economy would translate into our financial institutions being compelled to better serve the interests of the American People.
Businesses exist solely because they serve a purpose in our society, yet there are far too many incidences were the interests of big businesses have conflicted with the interests of Americans to the point these institution caused harm to communities and our broader society. As the world saw after the Great Recession, our society has grown incapable of punishing the harmful practices of businesses. Part of this stems from the amount of influence corporations have gained over the legislative process as well as their increasing economic power.
If the US economy would start experiencing a democratization of our financial institutions, the interests of the American People, i.e. our society, would be far more relevant. By focusing on the means by which our economy, versus government, distributes wealth, more Americans would enjoy greater leverage in our economy. Beyond putting more dollars into people’s pockets so they can have increased purchasing power as consumers, average Americans must have expanded ownership of publicly traded firms. It is the nature of big businesses to put their interests before the interests of all others, even if ignoring the broader interests of our society hurts them, while it is in the interests of our politicians to cater to the interests of those who fund their campaigns and post large financial gains every year.
Moreover, the US economic is more and more failing to serve the interests of the American People. The strength of democracy, i.e. its long-term potential to continually recognize and address the interests of an entire population, can help ensure an economy runs smoothly. Consequently, our modern economy needs to be truly democratized in order for our “free” market system to function properly. Focusing on getting more money into the hands of the majority and incentivizing the deliberate investment of excess funds will allow for increased socioeconomic stability and improved economic growth.
Read old posts