Does Democracy Go Hand in Hand With Capitalism?

Capitalism provides incentives to succeed but can also divide the classes.

In the United States, Americans hold fast to the idea of freedom. This freedom allows American citizens the right to participate in their government and elect the leaders they feel will properly represent their beliefs and their best interests. This process is known as democracy. Americans also have the freedom to pursue opportunities that will determine how personally successful they can be. Both democracy and capitalism play a huge part in these freedoms, but they are not mutually exclusive or exclusively beneficial. Democracy and capitalism do walk hand in hand, but they do not walk alone.

Democracy vs. Republic

Democracy is a type of government that empowers its people by defaulting to the majority rule. The danger in this is that the rights of the individual come second to the desires of the majority, which actually works in contrast to the purposes of capitalism. The United States was instead created as a republic and operates as a constitution-based federal republic, using strong democratic tradition. This form of government protects the right of the individual while still allowing the majority to make decisions on policy through their elected officials. By this definition, a republic would be more compatible to the individual freedom that drives capitalism.

Capitalism and Democracy

A capitalist economic system gives the individual the right to amass his own wealth and property, and this right empowers the individual to control his own destiny through his own hard work and determination. This provides the incentive for the individual to succeed or fail on his own merit rather than worry about the needs or desires of a larger group. Capitalism, therefore, is not always compatible with the theory of democracy, which defaults to the majority rather than any one individual and can depend entirely on the economic landscape of the country at any given time.

Limitations

Like democracy, capitalism has its limitations. Neither system is completely perfect, which is why compromise is often needed. It is true that capitalism motivates the individual to work harder, and this affects quality and drive. The market drives wages, which can be very beneficial when times are good. In dire circumstances, such as the stock market crash and following Great Depression in the 1930s, the government had to step in to create safety nets to meet the needs of those who fell through the cracks. The economic boom that followed in the 1950s was prompted in large part by more socialist policies, as the government gave returning veterans a leg up to create their own capitalist successes with the G.I. Bill.

No Perfect System

Relying completely upon capitalism can dangerously separate the classes and create negative conditions for the majority, and these conditions demand that democracy intervene. Some consider this intervention to be "socialism" -- which is an economic state that takes away individual rights to own property and amass individual wealth in favor of "sharing" wealth among the community. However, as President Franklin D. Roosevelt proved with The New Deal, socialist policies can work in conjunction with both capitalism and democracy by reinforcing and protecting the individual, which ultimately benefits the majority.

References

• Merriam Webster: Dictionary: Democracy
• Central Intelligence Agency; World Facts; United States
• International Debate Education Association: Capitalism vs. Socialism
• Lex Rex; An Important Distinction: Democracy versus Republic
• Daily Mail: Capitalism in crisis, a warning from history
• Collin County Community College District: The Great Depression and New Deal, 1929-1940s