Who Gets a Vote in Capitalism?
Why the debate between capitalism and socialism is missing the more important question.
Something curious has happened to the American political vocabulary. We talk about democratic socialism constantly — debate what it means, argue about whether Scandinavian countries qualify, and attach the label to politicians, policies, and generations. We fight over whether Medicare for All is socialism, whether public ownership is necessary for something to count as socialism, and whether the word represents the resurrection of an old economic ideology or merely a more muscular version of the welfare state.
Meanwhile, another phrase sits neglected in the corner like somebody who was invited to the party but never introduced: democratic capitalism. Which is strange…if democratic socialism deserves serious consideration as one possible answer to the failures of contemporary capitalism, then democratic capitalism deserves at least as much consideration as an attempt to reform capitalism itself.
Gallup reported in 2025 that 54% of Americans viewed capitalism positively, down from 60% in 2021. Socialism remained less popular overall, at 39%, but among Democrats the relationship had inverted: 66% viewed socialism positively while only 42% viewed capitalism positively.[1]
Something is moving beneath the floorboards. But before we start hauling capitalism to the ideological landfill, perhaps we should ask a more interesting question: Which capitalism are we talking about?
Capitalism Is Not One Thing
Our political arguments have an irritating habit of reducing complex systems to binary choices: capitalism or socialism, government or markets, workers or businesses, regulation or freedom. Pick your jersey and report to the appropriate cable-news studio.
Actual political economies have never worked that neatly. The capitalism of contemporary Denmark is not the capitalism of the United States. The capitalism of postwar Germany was not the capitalism of Gilded Age America. The capitalism of Franklin Roosevelt’s America was not Ronald Reagan’s, and Reagan’s was not Dwight Eisenhower’s.
Markets exist inside institutions. Property rights are defined by law, corporations are chartered through law, and courts enforce contracts. Competition depends upon rules against fraud, coercion, and monopoly. Labor markets depend upon education, transportation, and social institutions. Capital markets depend upon disclosure requirements, accounting standards, currencies, and public confidence.
There is no immaculate conception of capitalism occurring somewhere beyond government — only different ways of governing markets.
That brings us to democratic capitalism.
What Is Democratic Capitalism?
The phrase has a longer intellectual pedigree than our contemporary conversation generally acknowledges.
Political economist and theologian Michael Novak described democratic capitalism as the interaction of three relatively independent systems: a free economy, a democratic political order operating under limited government and the rule of law, and a free moral-cultural system composed of civil society and its institutions.[2]
More recently, Financial Times chief economics commentator Martin Wolf has described democratic capitalism as the operating system of the modern Western world: a dynamic market economy characterized by property rights, competition and entrepreneurship combined with liberal democracy, representative government and the rule of law.[3]
The essential insight is deceptively simple: Capitalism distributes economic power whereas Democracy distributes political power — and neither can safely be permitted to swallow the other. When political power completely dominates economic life, markets become vulnerable to patronage, corruption and authoritarian control. But when economic power becomes sufficiently concentrated to dominate political life, democracy begins developing problems of its own.
The danger runs in both directions. Democratic capitalism therefore rests upon a negotiated tension between two extraordinary human inventions: markets for coordinating economic activity and democracy for legitimizing political authority.
Markets answer one kind of question: What do people value enough to exchange resources for? Democracy answers another: What rules should govern those exchanges, and what obligations do we owe one another regardless of purchasing power? Those are different questions, and a functioning society needs answers to both.
Then What Is Stakeholder Capitalism?
This is where another increasingly familiar concept enters the conversation: stakeholder capitalism.
R. Edward Freeman’s stakeholder theory, developed prominently in his 1984 work Strategic Management: A Stakeholder Approach, challenged the assumption that corporations should be understood principally through their relationship with shareholders. Businesses create — and sometimes destroy — value through networks of relationships among investors, employees, customers, suppliers, communities and other constituencies. The corporation, in this formulation, is less a vending machine for shareholder returns than an ecosystem of mutual dependencies.[4]
Klaus Schwab similarly describes stakeholder capitalism as a system in which companies seek long-term value creation while considering the interests of their stakeholders and society rather than optimizing exclusively for short-term shareholder returns.[5]
Then came the rather remarkable moment in August 2019 when the Business Roundtable — hardly a hotbed of proletarian insurrection — redefined its statement on the purpose of the corporation. Its 181 CEO signatories committed themselves to delivering value to customers, investing in employees, dealing fairly with suppliers, supporting communities and generating long-term value for shareholders.[6]
The shareholders, capitalism, and profit all remained — what changed was the definition of whom the corporation exists to serve. That is stakeholder capitalism, and this is where I think our vocabulary needs refinement.
Democratic Capitalism and Stakeholder Capitalism Are Not the Same Thing
They overlap considerably, but they operate at different levels.
Democratic capitalism is a theory of political economy. Stakeholder capitalism is primarily a theory of enterprise governance.
Democratic capitalism asks:
- Who writes the rules?
- Who holds political authority?
- How are markets structured?
- How is economic power prevented from becoming political domination?
- How do citizens participate in determining the conditions under which capitalism operates?
Stakeholder capitalism asks:
- For whom does the corporation create value?
- Whose interests count in executive decision-making?
- What obligations accompany corporate power?
- How should companies balance the interests of shareholders, employees, customers, suppliers, communities and future generations?
One governs the system while the other governs the firm within the system. If democratic capitalism is the operating system, stakeholder capitalism is one of its most important applications — exposing the weakness of stakeholder capitalism when it stands alone.
Stakeholder Capitalism Has an Accountability Problem
There is an obvious question hiding behind every stakeholder-capitalist promise: Who decides whether stakeholders are being served?
Usually, management does…which is awkward. A CEO can announce that employees are stakeholders, customers are stakeholders, communities are stakeholders, and the environment is a stakeholder. Wonderful, but employees generally do not appoint the CEO, communities cannot usually remove the board, customers rarely participate in corporate governance, and suppliers don’t get many votes at the annual meeting. Which means stakeholder capitalism can become benevolent managerialism if it lacks mechanisms of accountability.
The king has announced that he cares deeply about the peasants. Progress, certainly — democracy, not quite. This criticism does not invalidate stakeholder capitalism but rather reveals what stakeholder capitalism needs around it: democratic institutions.
The OECD’s corporate-governance principles provide a glimpse of the bridge between these concepts. They recognize stakeholders’ legal and contractual rights, encourage cooperation among corporations and stakeholders in creating wealth and sustainable enterprises, support mechanisms for employee participation, and emphasize stakeholders’ ability to raise concerns about illegal or unethical conduct.[7]
Now the conversation becomes more interesting.
- Stakeholder capitalism says employees matter, whereas democratic capitalism asks whether employees possess voice.
- Stakeholder capitalism says communities matter, whereas democratic capitalism asks whether communities possess agency.
- Stakeholder capitalism says corporations should behave responsibly, whereas democratic capitalism asks what happens when they don’t.
That last question is governance — where good intentions finally have to put on work boots.
Democratic Capitalism Is Not Democratic Socialism
Both democratic socialism and democratic capitalism accept democratic political legitimacy. Their disagreement concerns the economic order democracy should govern.
Get W. Gray McDowell’s stories in your inbox
Join Medium for free to get updates from this writer.
Democratic socialism generally seeks a substantially greater degree of social or public ownership, democratic control of productive assets, or decommodification of essential goods and services. Democratic capitalism preserves predominantly private ownership, competitive markets, entrepreneurship and private investment, but insists that markets operate within democratically legitimate rules designed to preserve competition, distribute opportunity and prevent concentrations of economic power from overwhelming political equality.
That leaves enormous room for disagreement.
- How progressive should taxation be?
- How powerful should organized labor become?
- Should workers sit on corporate boards?
- How extensive should the welfare state be?
- Which industries constitute natural monopolies?
- How aggressively should government enforce antitrust law?
- What should be publicly provided?
- How should we regulate artificial intelligence?
Reasonable democratic capitalists can answer those questions differently — which is a feature, not a bug. Democratic capitalism is an institutional philosophy, not a twelve-point legislative program
The Missing Word Is Power
We spend enormous amounts of time debating distribution of income while spending considerably less time debating distribution of power, but income frequently follows power.
- Employees with bargaining power negotiate differently from employees without it.
- Consumers with meaningful competition behave differently from consumers trapped inside monopolistic markets.
- Entrepreneurs entering competitive markets face different opportunities from entrepreneurs confronting entrenched incumbents capable of purchasing competitors or influencing regulators.
- Communities with political agency negotiate differently with corporations than communities desperate for any employer willing to arrive.
- Shareholders with transparent information behave differently from investors operating inside opaque markets.
The deeper objective of democratic capitalism, therefore, shouldn’t simply be redistribution after markets have produced their results. It should be predistribution of economic agency before those results are determined. Competition, education, capital access, labor mobility, worker voice, entrepreneurship, consumer power, transparent markets, antitrust enforcement, public infrastructure. Social insurance that makes economic risk survivable rather than catastrophic.
Those aren’t necessarily restraints on capitalism, as many are the institutional scaffolding that allows capitalism to remain competitive rather than becoming feudalism.
Markets Need Democracy for the Same Reason Democracy Needs Markets
Capitalism possesses an extraordinary strength: it decentralizes experimentation. Millions of people can try things, build things, invest in things, fail at things, then try again. No “Ministry of Innovation” has to approve every restaurant, software company, manufacturing process, or ridiculous idea that eventually becomes an industry. That creative disorder is enormously valuable.
Democracy possesses a different strength because it gives people political standing independent of their economic standing. In the marketplace, one dollar equals one dollar, while in a democracy, at least theoretically, one citizen equals one citizen.
Without that distinction, wealth can gradually become sovereignty. The billionaire receives more economic votes because the billionaire controls more capital — fine. The danger begins when those economic votes can purchase enough political influence to acquire more political votes as well, at which point capitalism stops operating inside democracy and democracy begins operating inside capitalism. That inversion should concern conservatives, liberals, progressives, and anyone else who dislikes oligarchy regardless of which billionaires happen to be winning.
Perhaps Stakeholder Capitalism Is the Enterprise Layer of Democratic Capitalism
This brings us back to where we started: are democratic capitalism and stakeholder capitalism the same thing? No, but they belong together.
Stakeholder capitalism provides the microeconomic logic. Democratic capitalism provides the macro-institutional architecture.
At the company level, stakeholder capitalism recognizes that sustainable value creation depends upon reciprocal relationships among investors, workers, customers, suppliers and communities. At the societal level, democratic capitalism establishes the rules, institutions and countervailing powers necessary to ensure those relationships remain reciprocal.
One without the other is incomplete. Democratic capitalism without stakeholder governance can produce politically accountable institutions sitting atop corporations that continue externalizing costs and concentrating economic power. Stakeholder capitalism without democratic accountability can become corporate noblesse oblige: powerful institutions voluntarily promising to behave nicely.
Neither is sufficient, yet together they suggest something considerably more interesting: a stakeholder democracy operating through a democratic market economy.
Stop Asking Whether Capitalism or Socialism Wins
We’re replaying a 20th-century ideological championship game while the stadium is being rebuilt around us.
- Artificial intelligence is transforming labor.
- Platforms are reorganizing markets.
- Capital has become globally mobile while most workers remain geographically rooted.
- Intangible assets dominate corporate valuations.
- Climate risk creates externalities markets struggle to price.
- Winner-take-most dynamics have emerged across technology industries.
- And corporations possess economic resources exceeding those of many governments.
Yet we remain trapped in arguments over whether the answer is “capitalism” or “socialism,” as though somebody misplaced the ballot from 1948.
There is another possibility. We could ask how capitalism itself should evolve. Not capitalism without government, not capitalism controlled by government, not capitalism exclusively for shareholders, and not capitalism administered by enlightened CEOs who promise they have everyone’s best interests at heart. Something harder. Capitalism disciplined by democracy, animated by competition, accountable to stakeholders and constrained by institutions capable of preventing either government or private wealth from accumulating unanswerable power.
Call it democratic capitalism, enterprise expression stakeholder capitalism, or the broader objective stakeholder democracy. The terminology matters less than the architecture because capitalism has never survived by remaining unchanged, and neither has democracy. Both are institutional technologies, both require maintenance, and both require periodic redesign when power accumulates in places their architects did not anticipate.
The real contest of the 21st century may therefore not be capitalism versus socialism but may be something much more consequential: Can democratic societies redesign capitalism quickly enough that ordinary people once again believe the system belongs to them? If the answer is no, democratic socialism will not be the only alternative waiting in the wings.
References
- Jeffrey M. Jones, “Image of Capitalism Slips to 54% in U.S.,” Gallup, September 8, 2025.
- Michael Novak, “Democratic Capitalism,” remarks adapted from the Forum 2000 Conference, Prague, September 15 — 18, 2013, published in National Review Online, September 24, 2013; see also Michael Novak, The Spirit of Democratic Capitalism (New York: Simon & Schuster, 1982).
- Martin Wolf, The Crisis of Democratic Capitalism (Penguin Press, 2023); see also the Financial Times podcast series, “Martin Wolf on Saving Democratic Capitalism.”
- R. Edward Freeman, Strategic Management: A Stakeholder Approach (Pitman, 1984); Stakeholder Theory Project, University of Virginia Darden School of Business.
- Klaus Schwab and Peter Vanham, Stakeholder Capitalism: A Global Economy that Works for Progress, People and Planet (Wiley, 2021).
- Business Roundtable, “Statement on the Purpose of a Corporation,” August 19, 2019.
- OECD, G20/OECD Principles of Corporate Governance 2023 (Paris: OECD Publishing, 2023), https://doi.org/10.1787/ed750b30-en.
