Most people probably don't think much about economics. They may have a notion that “supply and demand” sets wages, prices and interest rates. They have heard of the Federal Reserve but they don't know what it is or does.

Economists are supposed to guide the economy and keep it all from crashing. These economic elites want us to believe that economics is a science with laws and inviolable principles. The free market is the most “efficient” way to manage the economy and will maximize the benefits for everyone. Government regulations and interference simply get in the way of markets.  

But if you have lived through the frequent economic crashes, you know this is not how the real world works. The bankers, CEO's, Wall Street speculators, and economic elites are lying to us. The economy they have created is a shell game rigged in their favor.  

This quasi-religious belief in the infallibility of free markets is really a rationalization for maintaining the status quo. It justifies the existing inequality for many people and the wealth and privilege of the few.

As economist John Kenneth Galbraith wrote many years ago, “The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.”  

Nick Hanauer is a wealthy venture capitalist and founder of the Pitchfork Economics podcast. He says the standard economic thinking teaches that “the forces of supply and demand essentially create a perfect world because everyone gets paid exactly what they deserve, and all products cost exactly what they should, and all resources get allocated to their best uses.”

He says this is a “misuse of very simplistic models from first year economics to try to make claims about the world, claims that are politically convenient to some people...[but] virtually never hold true in the real world.”  

Economics is not an exact science. The economy – the way we carve up the pie – is a political process. Like with all politics, there are winners and losers. There are policies, strategies, and economic structures that can produce more equality, more stability, and a more broadly shared prosperity. To achieve these goals we need more democracy and less plutocracy.  

A more democratic economy would allow important decisions to be made and power to be balanced through the democratic process. The well being of the majority would be the primary goal. The benefits of the economy would be more evenly distributed.

A democratic economy is what Paul Wellstone, a former U.S. Senator from Minnesota, described when he said, “We all do better when we all do better.”  

In 1953, John Kenneth Galbraith described the features of a democratic economy. In American Capitalism: The Concept of Countervailing Power, he said economic power must be subject to checks and balances just like political power. Strong unions are needed to balance large multinational corporations. Government is essential to provide a fair playing field and to protect workers, consumers, farmers, small businesses and the environment.  

Today Joseph Stiglitz is a Nobel laureate economist who has written extensively about the limitations of free markets and the influence of political power on economic decision making. He asserts the huge economic inequality in our country is the result of the political power of the very wealthy. He say, “politics have shaped the market, and shaped it in ways that advantage the top at the expense of the rest.”  

We can see the lack of economic democracy in current issues, policies and the rhetoric of politicians.   The wrangling over the debt ceiling is an example. It is all about politics and not sound economics. There is no compelling economic reason the federal government can not run a budget deficit. It has done so for most of its existence. The debt ceiling is a purely artificial, political limitation. The problem is not the debt but what we get for it. Most of the deficit comes from tax cuts for the wealthy, corporate subsidies and the cost of wars. None of this is wise investment in a future economy.  

In a more democratic economy private banks and the unelected bankers at the Federal Reserve would not have as much power. Currently they set interests rates and control the money supply. They are not accountable to the public and mostly serve the interests of Wall Street and large banks.  

The wild speculation on the various financial and commodities exchanges would be controlled. “Casino capitalism” would not be allowed to create market crashes or price inflation of important assets like housing.  

Member-owned cooperative credit unions and local savings and loans would have a larger market share of the private consumer banking business. Worker owned companies, cooperatives and non-profits would be more common. Public services, utilities and especially healthcare would be nonprofit.  

In a democratic economy unions would be actively promoted and represent a much larger percentage of the population. Labor representation would be required on corporate boards and government oversight agencies.   Anti-trust laws would be enforced and too-big-to-fail businesses would be broken up. A few big companies with large market share would not be allowed. There would be more real competition in the market place.  

Maintaining full employment would be a major objective. People would be guaranteed a job or a living income. Child care would be affordable and widely available. Job training and education would debt free.   In a democratic country money would not speak louder, or have more power, than the people. Buying politicians would end and elections would be publicly funded to prevent corruption   

We know economies work better when the markets are free to do what they do best (seek profit, innovation, consumer satisfaction, etc.) and government does its job (making and enforcing the rules) plus providing public services that markets do not do well (health care, education, public infrastructure and social needs, etc). We know a mixed economy of private and public works best.   

You may think this is a pipe dream. The rich have always ruled for the benefit of the rich. But a more democratic economy is possible. People don't have to be dominated by the one percent. For this to become a reality people need to stop voting for the politicians who don't believe in democracy or a democratic economy.