Macroeconomic Democracy as a Framework for Long-Term Growth: Resolving r>g Dynamics Within the Model of Cooperativism

In contemporary political economy, the concept of democracy is frequently reduced to formal political procedures or vague, populist rhetoric, while economic and political democracy are analyzed in isolation. This presentation introduces macroeconomic democracy as a novel, integrated theoretical framework designed to bridge this divide. We define macroeconomic democracy as an empirically assessable property of economic organization, measuring the degree to which economic positions are shaped by accountable decision-making and demonstrable contribution rather than inherited privilege, concentrated ownership, or structurally insulated power. The framework is decomposed into five core, interacting dimensions: capital ownership, income distribution, inheritance, democratic corporate governance, and the market mechanism.

In the first part of the presentation, I will reinterpret macro-historical evidence to challenge mainstream growth theories that view productivity through isolated factors like technology or deregulation. I will show a systematic historical association between higher levels of macroeconomic democracy and stronger long-term productivity growth. Crucially, none of these dimensions works in isolation; sustainable productivity emerges as an emergent property of their coherent institutional interaction. Macroeconomic democracy does not replace markets; it provides the very environment where innovation can thrive over the long run.

The core contribution of this talk, however, moves beyond diagnosing productivity to deliver a concrete solution to Thomas Piketty’s fundamental imbalance: the long-term divergence where the rate of return on capital exceeds economic growth (r > g). I will demonstrate how the model of cooperativism operates as a closed macro-institutional system that simultaneously influences both parameters of this inequality. On one side, the high level of macroeconomic democracy acts as the engine to accelerate economic growth (g) through enhanced productivity. On the other side, the model directly decompresses the rate of return (r) by weakening the speculative and rentier mechanisms embedded in our financial architecture. By shifting money issuance to the public sector, transforming commercial banking into savings intermediation, reducing dividend leakages, and stabilizing housing affordability, the model structurally minimizes the rentier component of r.

Ultimately, this presentation will outline a logically consistent theoretical mechanism for achieving long-term convergence between r and g, offering a rigorous roadmap for systemic economic transformation.