Workforce Education: The Nexus Between Capitalism and Democracy
Penn State University
With few exceptions, capitalism and democracy seem to be the goals of nearly the entire world. Nations strive for these social systems because capitalist thinking has led to a higher standard of living for more people than any other economic system known today. In addition, democracy has brought more freedom for individuals to enjoy that higher standard of living. Despite the goal to achieve both capitalism and democracy, the reality is that the beliefs of these two social systems seem to be incompatible and appear to be contradictions of one another. The freedom of choice in a democratic society makes it inefficient because it goes against the principles of a market economy. Furthermore, capitalistic and democratic views are radically different regarding the distribution of wealth.
Democracy strives for an equal distribution of power: one person, one vote. Focus is placed on individuals and their equal opportunity. Although Americans refer to their form of government as a democracy, no nation has ever been a pure democracy, where all people contribute equally to the government. It would be impossible for politicians to hold a referendum every time a decision was needed. Because of this, we are governed by a representative democracy, where an elected official executes the wishes of his constituents.
Generally, capitalism implies that power goes to those who are successful in the market. It follows Darwin's theory of survival of the fittest. The main focus of capitalism is to acquire wealth and social efficiency. Capitalists believe that individuals will ultimately benefit with the success of business.
Corruption can result with these differing beliefs. Larger corporation executives attempt to control smaller corporation executives who are trying to become established. Lawmakers, influenced by large corporate lobbyists, may vote against the wishes of the people in order to gain additional resources. Government and business may break democratically decided laws simply to earn profits.
Thurow (1996) referred to capitalism as a process of creative destruction whereby dynamic new small companies are continually replacing old large ones that have not been able to adjust to new conditions. Based on these extremely different concepts, how can these social systems co-exist?
As Thurow pointed out, the middle class is dissolving and these are the people who democratic governments were intended to aid. The rich are getting richer and the poor are getting poorer at accelerating rates. Today's capitalism demands an increase in job skills; however, the size of the lumpen proletariat (unemployable) is increasing. What is the answer?
The nexus between these two systems and the answer to the growing number of lumpen proletariat is workforce education. This may seem somewhat odd because workforce education has two (somewhat contradictory) main goals. The first goal is to increase potential for individual opportunity (labor market advantage) by providing opportunity for career preparation, career preparation for the disadvantaged, and opportunity for career advancement and training. This mission fits nicely into the democratic model. It is concerned with the individual and fairness among all people. The second mission is directed at developing the nation's workforce by preparing a world-class workforce, preventing labor shortages, and making firms competitive. This mission has a more macro-view and fits the capitalism theory, focusing on social efficiency and economic growth.
These differing goals are evident in the thinking of prominent educators such as John Dewey and Charles Prosser. Dewey promoted a general curriculum to lead to democratic choices for everyone. He favored the "equal opportunity" theory. Prosser, on the other hand, promoted a differentiated curriculum whereby individuals were placed into specified tracks in order to promote social efficiency.
These different missions of workforce education and the disparity between democracy and capitalism share a common thread, a need to increase skills, education, and knowledge of our workforce. It is apparent that human capital is now a vital source of national wealth. Although in the past, the success of many firms was based largely on the availability of natural resources, this is no longer true for the future.
The new economic environment will demand a significant increase in job skills. The shift, where knowledge provides the market advantage, will require ambitious training programs to remain competitive. Skills training will be required to increase the productivity and contributions of low-skill third-world migrants.
In order to be successful, capitalists must make the connection between increased skills and increased competitiveness. The successful capitalist must not wait for the public education system to provide the appropriately trained employees. They must be aggressive and take advantage of the rapidly changing economic environment by making investments in their own training and education programs. This is essential, first to upgrade the skills of today's workers for tomorrow's workplace, and ultimately for the economy of the nation.
The Human Capital Development theory states that there is a positive relationship between training and productivity. To endorse this theory, there must be a shift from capitalism based on physical capital to capitalism based on human capital. Development of human capital is key for both individual potential and social efficiency.
In conclusion, at first sight there may appear to be a dichotomy between capitalism and democracy, and there are obvious instances where they clash. But the two do survive together and sometimes even flourish. In the past, the coexistence has been possible because (1) it has been possible to convert economic power into political power and visa versa and (2) government has altered market outcomes to produce a more equal distribution of wealth. It is likely that our nation will continue to have an unequal distribution of wealth and income, but distribution of purchasing power has improved due to government actions. Interventions such as anti-trust laws and deregulation to prevent monopolies and the progressive income tax have been an attempt to promote democracy by limiting the inequities in the market.
The future may provide for a more "consumer friendly capitalism" because investments in human capital are beneficial to both the individual and society at large. Unlike capitalism of the past, neither entity will be sacrificed at the expense of promoting the other. It is inevitable that success will be based on the human capital variable. Capitalism without ownable capital will be the trend in the next century.
Gilpin is a Research Associate in the Applied Research Laboratory at Penn State University.
Thurow, L. (1996). The future of capitalism. New York: William Morrow.