that should be democracy with a small d. Stross wasn't referring to any particular system, polity, or party. he was talking about the general philosophy of political power that is based on the assumption that sovereignty is intrinsic to the people and that governments are granted legitimacy due to consent of the governed.

I also don't see Stross assuming that democracy is an end in itself. I think he is commenting on the projected future of existing nominally democratic systems of government.

I do agree with you that Stross assumes that increasing imbalance between labor and capital is a bad thing. I agree with Stross though. We've seen the political and economic damage that can occur under regimes with excessively high inequality. We should try and learn from history and not repeat past mistakes.