Capitalism Vs Democracy Essay
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Capitalism and Democracy From the very dawn of intelligent human interaction to the present day, the concept of capitalism has dominated the way we trade goods andAcquire wealth. Except for the necessity of a simple communist society inPre-modern times, or the noble humanistic notion of a socialist society,The free market has always been the most efficient way to run the economyonce the most basic needs of life have been satisfied. Only during thelast several hundred years has the idea of a modern democracy beendeveloped and applied through the modern state. These two concepts arethought by some to be interrelated, but contemporary critics of theliberal form of democracy seek to separate the two notions of capitalismand democracy. However, when examining the evidence of the relation ofthe two, let us not use the altered conceptions or versions of theseterms, but rather analyze them by their base meanings as we have come tounderstand them. After this analysis of the terms and a resultingstipulation of what their base meanings are, critics may say that anyfurther analysis of the relationship between the two terms would betainted by their supposed definitions. The problem with this is thatwithout a common frame of reference between the two, no comparison wouldbe logically possible without considering an infinite range of possiblemeanings. With this technical matter aside, the analysis will continuewith an investigation into arguments both for and against the separationof the two terms, and then an evaluation of the true nature ofcapitalism relationship with democracy. Specifically the freemarket economy dictating the actions of any democratic regime. After thistask of evaluation is complete, the argument will conclude withillustrating how capitalism will actually lead to a more liberal form ofdemocracy. The first step of this investigation is to make some attempt to achieve a common frame of reference between the two terms. Literally, democracy isthe rule of the people. Specifically, it is the organization in place toallow people of a specified area, through organized elections, to givetheir uncoerced opinion on who they want to represent them in government,or what they want government to do for them. The underlyingpresupposition is that government will always obey the command of themajority of voters. There are many limitations to democracy, such as thefact that people can only vote YEA or NEA on a specific topic area, thusproducing a dichotomy of choices that may not necessarily offer asolution to a problem. Also, people must leave most decisions to thepeople they elect, since they have enough time to continuallyvote. However, the focus of this work is not to delve into this area ofcontroversy, but rather to take this understanding of democracy as thestipulated definition for this work. One critical distinction must bemade regarding Berger&rsquos understanding of the term, and that is thatthe term democracy does not include all the civil and human rightsassociated with liberal democracy. Similarly, by capitalism, this work will not use any other connotation of the term other than describing the free market economy, where there isprivate ownership of property, and the economic freedom to buy, sell, or trade with whomsoever you chose. The critical element of the term is thatthere is limited government in place to enforce contracts and to providea safe trading environment. Another specific meaning given to capitalismis by Friedman, who describes capitalism as economic cooperation, whereboth parties are benefiting from the trade, provided that the trade isvoluntary and informed on both sides. The next step in the investigation is to analyse some of the argumentsthat capitalism is separate from democracy. Dryzek argued that anindividual&rsquos consumer preferences were properly expressed in the economy, while the same persons politicalpreferences were expressed in politics3. This perspective indicates thatthe capitalist economy is a separate entity form the democratic politicalsystem, because these are two different institutions into which anindividual can state his or her preferences, depending on whether theyare economically or politically motivated. On the other hand, history hasgiven many examples of how a person&rsquos economic preferences have beenstated in the political forum, such as voting for a politician that haspromised to reduce taxes or to establish free trade between two states.That same person could only express those preferences in the politicalforum, because they alone would have no power to change the structure ofthe economy such that it would seem advantageous to lower taxes or sign afree trade agreement. On the same note, a person could express theirpolitical beliefs in the economy, by no longer selling their labour tothe firm who employs them, perhaps because they support a particularpolitical party of which the labourer is not fond. If that labourerprovided a service that the employer could not find elsewhere, then theemployer would fold, thus stating a political belief in the economicsphere of influence. The point illustrated here is that the two conceptsof democracy (politics) and capitalism (economy) are not as independentof one another as Dryzek may argue in that example. As Schumpeter argues, the association of capitalism and democracy ispurely coincidental, and that there are no necessary linkages between thetwo4. The support for this position comes from his belief that democracyis possible under both capitalism and socialism, but that a socialdemocracy would not be a liberal democracy5, but logic dictates that thisinterpretation is incorrect on two counts. The first being the fact thatdemocracy (as we have come to understand it) entails that the majority ofthe people will get what they want, and if there is a choice to be madebetween economic hardship through socialism, and economic prosperity forthe majority through capitalism, then the majority will chose to haveprosperity over hardship, because it is common sense. This simple examplepresupposes the historical reality of socialism being economicallyinefficient and having a lower standard of living than capitalism, aswell as the voting public being rational in that they will choose whatoffers them the most material wealth as opposed to an arrangement thatoffers them little material wealth. On the same note, Berger argues thatall democracies are capitalist, no democracies are socialist, but manycapitalist societies are not democratic6. These examples represent only a very small percentage of the argumentsthat support the claim that the concepts of capitalism and democracy arenot related, but their counterarguments do support the notion thatcapitalism and democracy are intrinsically linked. To further theanalysis of why capitalism and democracy are linked, the followingexamples will provide the proof of their immediate relationship, as wellas the ability of those examples to stand up to an honest defence. To begin this examination into the relationship between capitalism anddemocracy, Friedman suggests that it is not possible to decouple the twobecause history indicates that capitalism is a necessary condition forfreedom, but not a sufficient condition in itself7. This begs thequestion of how freedom can be related to democracy when Friedman himselfdoes not like to equate the two. His reasons for not wanting to equatethe two are not the concern of this work, so for the purposes of thisargument, I must use logic to connect the two. Common sense itselfdictates that a rational individual would choose freedom over an absenceof freedom, so if a democracy is made up of a majority that have the samenotion of rationality, then the majority would vote for a state offreedom, therefore Friedman&rsquos use of the word freedom in this casemight reasonably be construed as democracy. To argue from the other side,the word freedom could be linked to democracy in that those who are freewould have democracy as their form of government, because to have totalfreedom would be anarchy, which would include freedom to limit thefreedom of others, and the next logical step down is democracy, which atleast provides for a limitation on this level freedom that could possiblyrestrict the freedom of others, if the majority are rational and insistthat the actions of those who would limit freedom be restrainedthemselves. The argument is dizzying at best, but the logic is necessaryto continue the explanation of how capitalism is necessary for ademocracy to work, but it is not the only element that is needed. Toprove the first part of this statement is correct, namely the need forcapitalism to be in place to have a democratic system of government, onemust look at what capitalism provides to make a working democracypossible. One of the things that capitalism provides to make democracypossible is the affluence necessary maximize free time, or morespecifically, to allow people to concentrate on other matters of interestafter their basic needs for survival have been met. This free time couldbe used educating one&rsquos self, looking into political problems, aswell as becoming a member of a interest group to pressure government. Atthe next level, it gives the individual the capital necessary to givefinancial support to the groups to which he or she belonged, so theycould collectively raise support through lobbying or the mass media fortheir cause. On the third level, the behaviour of providing financialsupport to those groups that represent the individual&rsquos political
beliefs, can be transferred to the behaviour of providing money to groupsthat best represent his or her economic interests, and that is where theconnection is made, and where democracy and capitalism intertwine witheach other. The initial counter argument to this is that...
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