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 analyse 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&rsquos 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 acommon 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 don&rsquot 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 ofthe term other than describing the free market economy, where there isprivate ownership of property, and the economic freedom to buy, sell, ortrade 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 wereproperly 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