He made his comments in a keynote speech to commemorate the historical student uprising at the Oct 14 Memorial at Khok Wua intersection on Monday.
Mr Thirayuth said that since the change of the country's administration in 1932 from an absolute to a constitutional monarchy, only a handful of military and civilian personnel and some politicians had benefited from what is called "democracy".
Even after the Oct 14 uprising in 1973, he said students, intellectuals and middle-class Thais lavishly and wastefully exploited the state of democracy, opening the opportunity for groups of capitalists who were freed from military and police control to wreap the benefits for themselves.
He said such Thai capitalist groups pay no attention to democracy, but cling firmly to the royal institution and the armed forces for business interests.
On political culture, Mr Thirayuth said Thailand is a society plagued by the patronage system or, in harsher words, is a society of servants.
He said since Thais like to use the word "khee" (shit) to describe people, former prime minister Thaksin Shinawatra can be described as the "khee kham" of Thai politics. He said "khee kham" is a hardened lump of faeces that blocks the rectum and is hard to remove.
Prime Minister Yingluck Shinawatra can be described as "khee yong" or "khee bae", Mr Thirayuth said. He explained "khee yong" is usually used to describe a young woman who likes to be well-dressed and always looks beautiful, while "khee bae" refers to those who appear easy going and not serious about anything.
Mr Thirayuth said that to recover from 40 years of "lost opportunities" people must no longer consider problems involving Thaksin Shinawatra, red-shirts or yellow-shirts as a crisis.
The problem with Thaksin is not a crisis of democracy, but of a lack of good governance and proper mechanisms to get rid of corruption, he said. Attempts to solve these problems with a coup had proved to be a mistake, he added.
Populism, which is likely to enable the Pheu Thai Party to repeatedly win elections, is also not a problem with democracy, but is an economic issue, he said, urging business groups or people who stand to lose out as a result of populist policies to protest.
He said politicians, thinkers, non-governmental organisations, and people everywhere should join hands to take economic, political and cultural power from the high- and middle-classes and redistribute power to ordinary people.
Doing this may lead to a solution to the current conflict between the red and yellow-shirts, he said.
Mr Thirayuth asked why the red-shirts, who claim to represent ordinary people, do not ask the ruling party to decentralise power, and why they never discuss the weak and strong points of populist policies.
He said the yellow-shirts, who are regarded as representatives of the conservatives, should accept true decentralisation of power to the people, so as to bring about reconciliation between the two political colour codes.