Capitalism And Democracy Essay ⋆ Political Science Essay Examples ⋆ EssayEmpire

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Capitalism is a system of exchange that depends on the economic freedoms to own private property and to buy, sell, and invest the property as one wishes. Unless people can own and exchange property without worrying that a central authority will confiscate it, they will have little incentive to save and invest. Unless they can keep most of the fruits of their labors, they will also have little incentive to work hard.

Democracy is a system of governance that depends on the political freedoms to vote, speak one’s mind and practice one’s beliefs, assemble with others, and live without fear of arbitrary searches or punishment. Unless people feel secure in exercising these freedoms, they will be reluctant to criticize or oppose a government or its policies or to seek political change.

The Connection Between Capitalism And Democracy

Capitalism and democracy are closely aligned. Capitalism emerged in Europe in the fourteenth century, and democracy emerged in the sixteenth century. With the collapse of Soviet communism, starting with the fall of the Berlin Wall in 1989, capitalism emerged as the dominant form of economic organization in most nations of the world, and democracy emerged as the dominant form of political organization. By the start of the twenty-first century, most major nations protected both the economic and the political freedoms of their citizens. As such, they exemplified democratic capitalism.

However, capitalism and democracy do not necessarily coexist. Capitalism is almost certainly a precondition for democracy, and economic freedom does seem to require political freedom. This is because the exercise of political rights requires that citizens possess a degree of economic dependence. When people have no choice but to depend on government for their sustenance, they are likely to be wary of dissenting from official orthodoxy out of fear that government could retaliate by taking away their livelihoods. No democracy in the world exists today that is not also capitalist.

Yet democracy may not be essential to capitalism. As China illustrates, economic freedom does not always require political freedom. Although China does not officially call itself capitalist, by the start of the twenty-first century, the country had emerged as the world’s second largest capitalist nation after the United States. China’s economic success stems in part from the economic freedoms it protects. However, China has not given its people political freedom.

Democratic Capitalism Versus Authoritarian Capitalism

Some observers believe that capitalist nations inevitably become democratic over time because they generate middle classes that eventually demand a say in how they are governed. The history of capitalist development in England and the United States between the seventeenth and nineteenth centuries lends some support to this theory. As economic freedom and wealth spread first to major landholders, then to gentlemen farmers, and then to an emerging class of businessmen, these groups demanded ever-greater political freedom. Much the same pattern can be seen elsewhere around the world since then. Starting in the 1980s, as both Taiwan and South Korea gained wealth through trade and investment, their middle classes grew to the point that they sought political rights. By 2010, both nations were robust democracies.

Some believe on this basis that China will move toward democratic capitalism. But it seems just as likely that China’s emerging middle class will not want to risk political instability that may threaten its economic gains, and will continue to support a leadership that is technically competent and committed to continued growth. China may thereby represent a new kind of system, authoritarian capitalism, that offers economic freedom without political freedom. The contest for the dominant form of economic and political organization in this century may be between democratic capitalism and authoritarian capitalism, just as it was between capitalism and communism during the latter half of the twentieth century.

Democratic capitalism appears to be in the lead. More nations than ever before call themselves “democracies. ”While in 1970 only about a third of the world’s nations held free elections, by 2010 that number was closer to two-thirds. While in the 1970s fewer than fifty countries possessed the sort of civil liberties now associated with democracy, by the start of the twenty-first century nearly ninety did. Yet some of the places that call themselves democracies, such as Russia, are encumbered by endemic corruption, dominance by small elites, or one-party rule. Other putative democracies, such as Iran, are actually theocracies whose clergy make most important decisions.

Two Scenarios Of The Future

Some observers believe that capitalism may ultimately threaten democracy even in strong democracies such as the United States, as intensifying competition among corporations spills over into politics. By this view, firms and industries seek competitive advantage over one another through laws and regulations that favor them over their rivals. They employ ever-increasing numbers of lobbyists, mounting campaign contributions, and costly media campaigns. This escalating arms race drowns out the voices of average citizens. It overwhelms political parties, voluntary associations, and nonprofit groups on which citizens previously depended to communicate their views to elected officials. Under this scenario, politics comes to represent the interests of companies and financial institutions and their executives and investors, more than the interests of ordinary people.

A more optimistic scenario holds that democracy will be enhanced by the instant-communication technologies of twenty-first century capitalism, such as the Internet, cell phones, blogs, text messaging, and social networking sites. These offer inexpensive means of connecting large numbers of people free from state control—allowing them to confer with one another, criticize political leaders, report abuses, mobilize opposition, and monitor vote rigging. Many observers attributed the surprise victory, in June 2008, of Lebanon’s pro-Western March 14 movement over the pro-Iranian Hezbollah coalition to the widening use of new communication technologies, especially among younger people. Protests following Iran’s election, soon thereafter, were similarly facilitated by new technologies. On the other hand, such technologies may give authoritarian states greater capacity to control their people.

It is impossible to know whether capitalism will overwhelm or strengthen democracy. What’s certain is that the two systems interact in important ways and should be understood together.

Bibliography:

Braudel, Fernand. The Wheels of Commerce: Civilization and Capitalism, 15th–18th century, vols. 1–3. New York: Harper and Row, 1979.
Friedman, B. The Moral Consequences of Economic Growth. New York: Knopf, 2005.
Friedman, M. Capitalism and Freedom. Chicago: University of Chicago Press, 1962.
Reich, R. Supercapitalism: The Transformation of Business, Democracy, and Everyday Life. New York: Knopf, 2007.
Yergin, D., and Stanislaw, J. The Commanding Heights: The Battle between Government and the Marketplace That Is Remaking the Modern World. New York: Simon and Schuster, 1988.