Democratization of Capital

a bourgeois conception that arose in the late 19th century and after World War II (1939-45), becoming one of the elements of the theory of “people’s capitalism.”

The concept of the “democratization” of capital asserts that the broad dissemination of small shareholding among the population will supposedly lead to the dispersion of property in capital; it reduces to the false conclusion that differences between the working class and bourgeoisie will be eliminated. The acquisition of shares, which gives shareholders the formal right to participate in the annual stockholders’ meetings and to direct the management of the corporation, allegedly turns even small shareholders into proprietors of capitalist enterprises. As a result, the capitalist economy is democratized and transformed into “people’s capitalism.” The concept of the “democratization” of capital aims at proving that with the replacement of the individual capitalist by the collective capitalist —the corporation —private property dissolves and its former socioeconomic significance is lost.

In reality, changes in the form of capitalist property do not change its nature. The domination of capital is preserved, whether it is capital of “the individual capitalist, the combined capitalist, or joint-stock societies” (see K. Marx and F. Engels, Soch., 2nd ed., vol. 23, p. 345). The joint- stock form of capital hides and disguises the economic domination of finance capital and helps to strengthen it. In legal terms, all stockholders with voting rights have the right to control over the activity of the joint-stock company. In reality, however, the majority of individual shareholders —in particular, all the small shareholders —are deprived of the ability to exercise their rights. The existence of a great number of small and medium shareholders dispersed throughout the country not only fails to eliminate the domination of big capital but, on the contrary, gives the capitalist magnates who possess the controlling shares the ability to dominate vast corporations.

In the USA in the 1960’s, shareholders constituted 15 percent of the total population. Only 2.6 percent of industrial workers and 0.3 percent of farmers and agricultural workers owned shares. The average annual dividend of the worker who owns shares is equal to about two days’ pay. The fact that there is a small quantity of shares among workers does not change their position in society and does not turn them into capitalists.

The social purpose of the theory of the “democratization” of capital is to create among workers the illusion of a commonality of interests between labor and capital in order to prove the senselessness of the workers’ struggle against the bourgeoisie.