Term Paper on "Democracy & Economy Democracy and the Economic"

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[EXCERPT] . . . .

Democracy & Economy

Democracy and the Economic Order: Chapter 3

In Chapter 3 Dahl argues that a good economic system is one that promotes democratic values, equality, and liberty. It should also be just, which goes beyond distribution "of rights, duties benefits disadvantages, opportunities, and claims" (85). A just system is one in which economic fairness is present. The system itself should be efficient for both consumers and producers, and work should be "a source of deep and daily satisfaction for most of us" (87). A good economic system would promote "virtue and intelligence" in the people and "foster various desirable qualities, moral and intellectual" (Mill [1861] 1958, 25 cited in Dahl 87). Personal economic resources that result would be sufficient for a good life, and the individual would be free to pursue economic opportunities whenever they presented themselves.

At this point, the author assumes that "bureaucratic socialism," the kind formerly in use in Eastern Europe, would not achieve these goals because of inefficient central planning. Planning and economic decisions need to be made at "the level of the individual enterprises" (90), and a market system would be necessary for efficiency. However, coordination would be needed and a regulatory framework to achieve the goals. The author suggests a system of self-governed enterprises where employees own the enterprise and each employee is entitled to one (and only one) vote. Each firm would be like a little country in which the workers are participating citizens who decide how revenue is to be spent. They determine wages, how much should be distributed to the citizens, and how money is to be reinvested. Such a system, he argues, would promote democratic values, make better citizens, and foster economic equality. The adversarial relationship between management and employees would be eliminated because employees would hire managers. Enormous differences in income, status and power would be reduced. Every worker would be concerned about the firm's well-being. Self-governing workplaces would "foster human development, enhance the sense of political efficacy, reduce alienation, create a solidary community based on work, strengthen attachments to the general good of the community, weaken the pull of self-interest, produce a body of active and concerned public-spirited citizens within the enterprises, and stimulate greater participation and better citizenship in the government of the state itself" (93). Economic equality would not be produced by the State, but would emanate from the structure of the system itself.

Some possible problems that could arise in all this that Dahl doesn't address. For example, if investors don't get a share of control, they might be less likely to invest in enterprises. How then would the enterprises be set up?

Lack of worker discipline might also be a problem without managers to oversee the work. With more power, workers might sacrifice efficiency for their own personal benefit. For example, they might put forth less effort, or improve the working conditions without improving work performance. They might resist labor saving devices, or guarantee employment at the expense of efficiency.

Workers might also be biased against reinvestment, preferring to reap the benefits of surplus revenue themselves now as opposed to building up the firm for later employees; thus, the net-revenue would tend to be distributed to the workers, rather than re-invested in the business. Workers might demand this because their benefits would be limited to their period of employment.

Another problem could develop if workers maintained employment stability at the expense of efficiency.… READ MORE

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