capitalism vs democracy essay

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Do Democracy and Capitalism Really Need Each Other?

• Laura Amico

Scholars from around the world weigh in.

Democracy and capitalism coexist in many variations around the world, each continuously reshaped by the conditions and the people forming them. Increasingly, people have deep concerns about both. In a recent global survey, Pew found that, among respondents in 27 countries, 51% are dissatisfied with how democracy is working. Further, Millennials and Gen Zs are increasingly disinterested in capitalism, with only half of them viewing it positively in the United States .

• Laura Amico is a former senior editor at Harvard Business Review.

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Capitalism and Democracy [part 1]

Professor of Politics, University of Sydney

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Let’s begin with a discomforting fact often forgotten in recent years: ‘free market’ capitalism is not necessarily the best friend of democracy. Since the early years of the 19th century, especially during periods of economic stagnation and mass unemployment, the relationship between capitalism and democracy has actually been a source of great social unrest, state violence and public pressures for institutional reform. That’s why, at various moments during the past two centuries, the modern capitalist system has been charged by its critics with crushing the spirit and substance of representative self-government.

Shortly after World War One, the American economist and sociologist Thorstein Veblen captured the point in a famous formulation. There are historical moments, he noted, when ‘democratic sovereignty’ is converted into ‘a cloak to cover the nakedness of a government that does business for the kept classes’.

The current period of global recession and stagnation, centred in the Atlantic region, has helped revive new versions of this old formula. Thanks especially to the work of prominent European political economists, political analysts and historians, Wolfgang Streeck , Colin Crouch , Thomas Piketty and Jürgen Kocka among them, the subject of capitalism versus democracy is back. Market failures are having political effects; they are breathing new life into an old subject that demands fresh thinking and a new democratic politics that, so far, has not happened on any scale.

One shortcoming of the new European contributions is their general reluctance to engage details of the long history of links between democracy and markets. What can be learned from the deep past? Well, minimally, the famous remark by the historian Barrington Moore Jr , ‘no bourgeois, no democracy’, turns out to be less than plausible. The historical record suggests that things have been more complex, that viable democratic institutions, such as citizens assemblies, public juries, watchdog bodies, political parties and periodic elections, have in fact been contingently related to a wide repertoire of property forms.

The early Greek assembly democracies, for instance, enjoyed a functional but tense relationship with commodity production and exchange. Within these polities, the life of (male) citizens was widely seen as standing in opposition to the production of goods and services by women and slaves in the sphere of the oikos . Politics trumped economics; democracy rested upon slavery. By contrast, the modern forms of representative democracy that first sprang up in the Low Countries, at the end of the sixteenth century, were tightly bound to profit-driven commodity production and exchange. Modern capitalism and representative democracy were twins. The pair often quarrelled. ‘The further democratisation advanced’, the distinguished German historian Jürgen Kocka notes, ‘the more likely it was to find large parts of the bourgeoisie on the side of those who warned against, criticised or opposed further democratisation.’

At the outset, things seemed otherwise. Modern capitalism appeared to be supportive of parliamentary government. Capitalist dynamics helped gradually erode older forms of unequal dependency of the feudal, monarchic and patriarchal kind. The spread of commodity production and exchange triggered tensions between state power and property-owning and creditor citizens jealous of their liberties provided by civil society. Modern capitalism also laid the foundations for the radicalisation of civil society, in the shape of the birth of social democracy backed by powerful mass movements of workers protected by trade unions, political parties and governments committed to widening the franchise and building welfare state institutions.

This much is clear. Yet since early modern times, and especially after 1945, capitalist markets have been a mixed blessing for democracy in representative form. The dynamism, technical innovation and enhanced productivity of 'free’ markets have been impressive. Equally notable have been their rapaciousness, unequal (class-structured) outcomes, reckless exploitation of nature and their vulnerability to bubbles, whose inevitable bursting generates wild downturns. These downturns typically breed populist manias, fear and misery in people’s lives, in the process destabilising democratic institutions, as happened on a global scale during the 1920s and 1930s, and is again happening today, with accelerating momentum.

How can we best summarise the relationship between capitalism and democracy today? Here’s an inexact but pithy formula: in these early years of the 21st century, monitory democracies can neither live with capitalist markets nor live without capitalist markets. The formula is designed to unsettle. It aims to provoke second thoughts and fresh thinking; along the way, it also helps to shed some light on the wildly divergent scholarly and political assessments of the future of capitalism and democracy.

Free markets?

According to defenders of the ‘free market’, more than a few of whom are dogmatic market fundamentalists, political democracy is an unwanted parasite on the body of economic growth. Democracy whips up unrealistic public passions and fantasies. It distorts and paralyses the spirit and substance of rational calculations upon which markets functionally depend; understood as government based on majority rule, democracy is said to be profoundly at odds with free competition, individual liberty and the rule of law. What is therefore required is ‘ democratic pessimism ’ and (Friedrich von Hayek’s famous thesis) the restriction of majority-rule democracy in favour of ‘austerity’ (cutbacks and restructuring of state spending) and limited constitutional government (‘demarchy’ ) whose job is to protect and nurture ‘free markets’ protected by the rule of law.

Other scholars, political commentators, policy makers and politicians stake out the contrary view. They maintain that since markets are never ‘naturally’ free but always, in one way or another, the creature of laws and governing institutions, market failures and market ‘externalities’ require political correction. Well-designed political interventions that draw democratic strength from popular consent are needed to redistribute income and wealth, to repair environmental damage caused by markets and to breathe new life into the old ideals of equality, freedom and solidarity of citizens.

Exactly what this general democratic formula means in practice has been hotly disputed since the earliest (19th-century Chartist and co-operative movement) public attacks on markets in the name of ‘the people’. The democratisation of markets has meant different things at different times to different groups of people. For some analysts, democracy requires the replacement of markets by the principles of Humanity ( Giuseppe Mazzini ), or by communist visions of ‘social individuality’ (Karl Marx) and post-market individualism ( C.B. Macpherson ). For the majority of card-carrying democrats of the past century, the democratisation of markets meant greater state intervention and control of markets. When confronted with the collapse of the Soviet model of socialism, some analysts tried to develop fruitful comparisons among contemporary Anglo-Saxon, Rhineland, Japanese, Indian, Chinese and other ‘varieties of capitalism’. Recognising that parliamentary democracy is constantly vulnerable to corporate ‘kidnapping’, these analysts champion updated versions of the social democratic vision of liberating (‘de-commodifying’) areas of life currently in the grip of unregulated markets. What is needed, they argue, is the restriction of markets: new government policies that ‘socialise’ the unjust effects of competition by ‘embedding’ markets within civil society institutions guaranteed by election victories, welfare mechanisms and legal regulation.

Whether such policies and regulations can succeed without straddling borders and through state efforts alone remains an open question. Yet the broad vision is bold, and clear: in defence of the democratic principle of equality, government instruments are needed to limit ‘predatory’ forms of capitalism. The priority is to protect people and their ecosystems, to nurture social citizenship rights through a politics of redistribution that includes the defence of public services, raising the minimum wage and enforcing new contract law arrangements that empower workers and consumer citizens.

Such proposals for a new politics of breaking the grip of capitalist markets on people’s lives are important, above all because they restore the old subject of worsening inequality to its rightful place in scholarly work on democracy. Pauperism mixed with plutocracy is today a feature of practically every democracy on our planet. Things are everywhere growing worse, not better. For all democrats and scholars sympathetic to democracy, disparities between rich and poor ought to be intellectually and politically scandalous. ‘Enough is enough’ should be the new democratic mantra.

Among the top priorities of researchers must be to remind citizens and their representatives that wide gaps between rich and poor, in the long run, have ruinous effects on civil society and the whole political order. Citizens in unequal societies, many researchers have shown , more likely end up sick, obese, unhappy, unsafe, or in jail. Such dysfunctions, in various ways, impact the lives of the rich. Even plutocrats feel the pinch; nobody is safe from the scourge of inequality. Inequality is perversely egalitarian.

Whether in South Africa, Greece, Brazil or the United States, market inequality endangers the spirit and institutions of monitory democracy in other ways. Concentrated wealth likes secrecy, surveillance and law and order. It outvotes ballots; and wealth tilts public policy in favour of the rich, towards short-sighted rewards or special treatment (deregulation, tax breaks) and away from the public goods (education, infrastructure) so essential to future economic growth. Finally, in normative terms, capitalist inequality plainly contradicts the democratic spirit of equality. Like salt to the sea, the principle of equality is the quintessence of the democratic ideal. That’s why, historically speaking, every form of democracy worth its salt has stood against the presumption that the wealthy are ‘naturally’ entitled to rule. When they don’t, and when the gap between rich and poor grows ever wider, they are asking for political trouble.

To be continued….

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Capitalism vs. Democracy

What's the difference.

Capitalism and democracy are two distinct systems that often coexist in modern societies. Capitalism is an economic system that emphasizes private ownership, free markets, and profit-driven production. It allows individuals and businesses to pursue their economic interests with minimal government intervention. On the other hand, democracy is a political system that emphasizes the participation of citizens in decision-making processes and the protection of individual rights and freedoms. While capitalism focuses on economic aspects, democracy focuses on political aspects, ensuring that power is distributed among the people. Both systems promote individual freedom and choice, but they operate in different spheres and serve different purposes.

Further Detail

Introduction.

Capitalism and democracy are two distinct systems that have shaped the modern world in profound ways. While capitalism primarily focuses on economic organization and the distribution of wealth, democracy pertains to political governance and the participation of citizens in decision-making processes. Both systems have their own unique attributes and impacts on society. In this article, we will explore and compare the key characteristics of capitalism and democracy, shedding light on their strengths, weaknesses, and the potential synergies that can arise when they coexist.

Capitalism is an economic system characterized by private ownership of resources and the means of production, driven by profit motives and market competition. It emphasizes individual freedom, entrepreneurship, and the pursuit of self-interest. In a capitalist society, prices and production are determined by supply and demand, and the market plays a central role in allocating resources.

One of the key attributes of capitalism is its ability to foster innovation and economic growth. The profit motive incentivizes individuals and businesses to develop new products, services, and technologies, leading to increased productivity and overall prosperity. Capitalism also provides individuals with the freedom to choose their occupations and pursue economic opportunities, which can lead to upward social mobility and the accumulation of wealth.

However, capitalism is not without its drawbacks. One of the main criticisms is its potential to exacerbate income inequality. The pursuit of profit can lead to wealth concentration in the hands of a few, while leaving others behind. Additionally, unregulated capitalism may result in market failures, such as monopolies or externalities, which can have negative consequences for society as a whole.

Democracy, on the other hand, is a political system that emphasizes the participation of citizens in decision-making processes and the protection of individual rights and freedoms. It provides a framework for collective decision-making, where power is vested in the people through free and fair elections.

One of the key attributes of democracy is its emphasis on equality and inclusivity. It provides a platform for diverse voices to be heard and considered in the decision-making process, ensuring that the interests of all citizens are taken into account. Democracy also promotes transparency and accountability, as elected representatives are accountable to the people and can be held responsible for their actions.

However, democracy is not without its challenges. Decision-making processes can be slow and cumbersome, as consensus-building and compromise are often required. This can lead to inefficiencies and delays in implementing necessary reforms. Moreover, in some cases, democratic systems can be susceptible to populism and demagoguery, where leaders exploit public sentiment for personal gain, potentially undermining the principles of democracy itself.

Capitalism and Democracy: Synergies and Tensions

While capitalism and democracy are distinct systems, they often coexist and interact in modern societies. The relationship between the two can be complex, with both synergies and tensions arising.

One of the key synergies between capitalism and democracy is the potential for economic prosperity and individual freedom. Capitalism, with its emphasis on entrepreneurship and market competition, can generate wealth and economic opportunities that benefit society as a whole. Democracy, on the other hand, ensures that the benefits of capitalism are distributed more equitably and that the interests of all citizens are taken into account.

However, tensions can also arise between capitalism and democracy. The pursuit of profit in a capitalist system can sometimes clash with democratic values, such as social justice and environmental sustainability. For example, businesses driven solely by profit motives may disregard the well-being of workers or the impact of their activities on the environment. In such cases, democratic institutions and regulations are necessary to ensure that capitalism operates within ethical and sustainable boundaries.

Furthermore, the influence of money in politics can pose challenges to the democratic process. In capitalist societies, where wealth often translates into political power, there is a risk that the voices of the economically disadvantaged may be marginalized. This can undermine the principles of equality and inclusivity that are central to democracy.

In conclusion, capitalism and democracy are two distinct systems that have shaped the modern world in profound ways. While capitalism primarily focuses on economic organization and the distribution of wealth, democracy pertains to political governance and the participation of citizens in decision-making processes. Both systems have their own unique attributes and impacts on society.

Capitalism, with its emphasis on individual freedom and market competition, has the potential to foster innovation and economic growth. However, it also raises concerns about income inequality and market failures. Democracy, on the other hand, promotes equality, inclusivity, and accountability. Yet, it can be slow and susceptible to populism.

When capitalism and democracy coexist, there can be synergies in terms of economic prosperity and individual freedom. However, tensions can arise when the pursuit of profit clashes with democratic values or when money influences the democratic process. Striking a balance between the two systems is crucial to ensure a just and prosperous society.

Comparisons may contain inaccurate information about people, places, or facts. Please report any issues.

Capitalism and Democracy: Complementarity, Complicity, Conflict, Compatibility

• First Online: 08 September 2022

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• Brian Milstein 18  

Part of the book series: Philosophy and Politics - Critical Explorations ((PPCE,volume 22))

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In this chapter I review four ways of theorizing the relationship between capitalism and democracy. Classical liberalism has long maintained that capitalism and democracy are complementary —that both mutually reinforce the same demand for freedom or, at the very least, that the freedom democracy requires fits best with a competitive market system. Orthodox Marxists, meanwhile, often held that liberal democracy as a political system is complicit in the maintenance of capitalist domination. Still others have characterized the relationship between capitalism and democracy as one of fundamental conflict , with capitalists fearing takeover by democracy and democrats fearing takeover by capitalism. Finally, there are those who strive to make capitalism and democracy compatible , for example by de-commodifying democratic citizenship or re-politicizing capitalist institutions. In the course of reviewing these perspectives, I will argue that how one conceptualizes the relationship between capitalism and democracy varies greatly with how one defines these two terms, the normative value one places on each, the level of precision one brings to the analysis, and the social ontology one adopts.

• Social ontology

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I am grateful to Albena Azmanova for pointing this out to me.

I am grateful to Rainer Forst for stressing to me this point.

I am grateful to James Chamberlain for urging me to clarify this point.

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Milstein, B. (2022). Capitalism and Democracy: Complementarity, Complicity, Conflict, Compatibility. In: Azmanova, A., Chamberlain, J. (eds) Capitalism, Democracy, Socialism: Critical Debates. Philosophy and Politics - Critical Explorations, vol 22. Springer, Cham. https://doi.org/10.1007/978-3-031-08407-2_2

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Article Contents

Introduction, global capitalism: how did capitalism go global, what is essential for democracy, how do globalization and democracy interact, what is to be done, a research agenda for the future.

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Is Global Capitalism Compatible with Democracy? Inequality, Insecurity, and Interdependence

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Helen V Milner, Is Global Capitalism Compatible with Democracy? Inequality, Insecurity, and Interdependence, International Studies Quarterly , Volume 65, Issue 4, December 2021, Pages 1097–1110, https://doi.org/10.1093/isq/sqab056

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Global capitalism seems to be placing democracy, especially liberal democracy, under considerable stress. Support for populism has surged, especially for extreme right parties with populist and authoritarian programs. Inequality, insecurity, and interdependence—all associated with globalization—have grown globally and appear to be key sources of stress. New technologies spread readily by globalization are also a force for destabilization. Do these international forces pose existential challenges to democracy? Liberal democracy rests on a foundation of political equality among citizens; it requires free and fair elections, competition among programmatic parties, political legitimacy from public support, and institutional constraints on executive power and majority rule. Is the rise global capitalism eroding all of these key elements? If so, what can be done about it?

El capitalismo global parece estar sometiendo a la democracia, en especial a la democracia liberal, a una tensión considerable. El apoyo al populismo ha resurgido, sobre todo para los partidos de extrema derecha con programas populistas y autoritarios. La desigualdad, la inseguridad y la interdependencia (asociadas a la globalización) han crecido a nivel mundial y parecen ser fuentes clave de tensión. Las nuevas tecnologías que se difunden fácilmente debido a la globalización tambièn son una fuerza de desestabilización. Estas fuerzas internacionales suponen un desafío existencial para la democracia? La democracia liberal se apoya en una base de igualdad política entre los ciudadanos. Requiere elecciones libres y justas, competencia entre los partidos programáticos, legitimidad política por el apoyo de la población y límites institucionales al poder ejecutivo y al gobierno de la mayoría. El ascenso del capitalismo global está erosionando todos estos elementos clave? Si así fuera, què se puede hacer al respecto?

Le capitalisme mondial semble soumettre la dèmocratie, en particulier la dèmocratie libèrale, á une tension considèrable. Le soutien au populisme a fortement augmentè, en particulier pour les partis d’extrême droite aux programmes populistes et autoritaires. L’inègalitè, l’insècuritè et l’interdèpendance, trois caractèristiques qui sont toutes associèes á la mondialisation, ont augmentè dans le monde entier et apparaissent comme ètant des sources majeures de tension. Les nouvelles technologies facilement rèpandues par la mondialisation constituent ègalement une force de dèstabilisation. Ces forces internationales prèsentent-elles des dèfis existentiels pour la dèmocratie ? La dèmocratie libèrale repose sur une base d’ègalitè politique entre les citoyens; elle nècessite des èlections libres et justes, une concurrence entre les partis programmatiques, une lègitimitè politique issue du soutien public et des contraintes institutionnelles affectant le pouvoir exècutif et la régle de la majoritè. Le capitalisme mondial croissant èrode-t-il tous ces aspects clès ? Si tel est le cas, qu’est-il possible de faire pour y remèdier?

Global capitalism seems to be placing democracy under considerable stress. Inequality, insecurity, and interdependence have surged globally and appear to be key sources of stress. Populist challenges, from the left as well as the right, to democratic constitutional processes have been growing around the world. Political turmoil is taking place not only in poorer countries with weakly institutionalized political systems, but also in advanced industrial countries which were thought to have stable democratic systems. This in turn is having large effects on world politics. Change and instability domestically rebound onto the international system causing profound and wrenching changes there too. As many have noted, we are witnessing upheavals in the existing global order based on multilateral neoliberalism. 1 These challenges have all been amplified and spread further by the coronavirus pandemic. Global problems and domestic turmoil are now intermixed and reinforcing one another. The shock to both globalization and liberal democracies may be overwhelming.

Democratic political systems have been facing major challenges in the past few decades. The global financial crisis of 2008 and the slow recovery from it, worldwide migration surges, extensive globalization, and the rise of fake news via social media have all produced forces that seem to threaten liberal democracy. 2 Many stable political systems are facing dramatic changes including events like the 2016 U.S. presidential election of Donald Trump, Brexit, rising support for anti-system parties like France’s National Front, the Five Star Movement, and the League in Italy, and the Alternative for Germany, Bolsonaro, and his extreme right party’s (the Alliance for Brazil) victory in Brazil, and Modi’s Hindu nationalist BJP government in India, as well as the enduring role in government of illiberal parties like Hungary’s Fidesz leader Viktor Orbán, Duterte’s PDP-Laban in the Philippines, and Poland’s governing Law and Justice party.

Support for populism has surged in recent years, especially for extreme right parties with authoritarian views. Using a new database of 211 populist parties in 450 legislative elections across the world, Chwieroth and Walter ( 2019 , 18) find that support for populist parties has grown from around two percent in 1980 to 20 percent in 2005 to nearly 25 percent today, with right-wing parties’ vote shares growing at nearly twice the rate of left-wing parties. These gains have been uneven across regions and among different types of populist parties; however, Rodrik ( 2018 , 13) points out that nearly all of the increase in support for populist parties in Europe comes from the extreme right; whereas vote totals for left populist parties in Latin America have remained consistently strong. In Europe, the average vote share won by so-called authoritarian populist parties, mostly right-wing ones, in the lower house of national parliaments more than tripled from around 5.4 percent in the 1970s to close to 17 percent recently ( Milner 2021 ). Their share of legislative seats tripled, rising above 12 percent today ( Norris and Inglehart 2019 , 9). So-called illiberal democracies have also grown in number, as has illiberalism over the past few decades. These systems tend to feature elections but have few of the constitutional checks or protections of individual rights that liberal democracies do. Some have claimed they are really ”populist authoritarian” systems ( Müller 2017 ). The number of liberal democracies has declined from forty-one in 2010 to thirty-two in 2020, after reaching its peak in 2014, as the V-Dem report on democracy in 2021 notes ( Alizada et al. 2021 ).

As of 2020, democracy still prevailed in a majority of countries in the world (ninety-two countries), but no longer for a majority of the world’s population, accounting for only 32 percent of the world’s population now ( Alizada et al. 2021 , 13). However, the decline of democracy within countries continues and now affects twenty-five countries. 3 Because of that, over one-third of the global population lives in countries undergoing increasing autocratization ( Alizada et al. 2021 , 13). 4 Since 2011, this designation of countries in a stage of democratization has diminished by nearly half, with sixteen being the most recent estimate. “The ‘third wave of autocratization’ is accelerating, now engulfing 25 countries and 34% of the world population (2.6 billion)” ( Alizada et al. 2021 , 6).

What is the underlying source of many of these changes and challenges? I argue here that it is the interaction of liberal democracy and global capitalism. Capitalism has been around for centuries. But capitalism on the global scale we now have it—which I call globalization—is relatively unusual and new. Globalization refers to this extensive integrated international market in goods, services, capital, and labor, linking the economies of countries around the globe. As noted in the history section below, the only previous period with similar levels of globalization was in the late nineteenth century, and that did not end well. The relationship between capitalism and democracy has been a longstanding issue, and many of the themes here have been dealt with by many other scholars, including the giants of social science like Karl Marx, Max Weber, Joseph Schumpeter, Robert Dahl, and Charles Lindblom. I add two new perspectives to this old debate: a more global one and one focused more on the current technological state we are in—i.e., the so-called digital revolution. The historical context in which globalization and liberal democracy are interacting has changed.

In this article, I first discuss how capitalism went global and what this means. This brief history serves to introduce the magnitude and implications of globalization. Then I briefly talk about democracy and what democracy, especially liberal democracy, seems to require. I touch on what defines democracy and the processes that it entails. What are the essential elements that make a democracy? Next, the focus is on the interaction of global capitalism and democracy. How do the conditions produced by globalization affect democracy and its baseline requirements? In particular, I focus on three causal pathways by which globalization might be undermining (stable) democracy. These involve rising economic inequality, personal insecurity, and global interdependence. The next section explores what can be done to try to make global capitalism more compatible with democracy. Undoing globalization may be harder than it seems; preserving democracy seems paramount, however. What can be done domestically and internationally to make the two more compatible? Finally, I end by presenting a few ideas about future research agendas to explore these topics more. We need much more research that integrates economics and politics and domestic and international factors to understand our current predicament.

I refer to global capitalism here as globalization. The integration of national economies into a world market has developed very extensively in the past 30 years. The main economic globalization index, the KOF one, shows globalization rising rapidly from the 1970s to 2009; after the global financial crisis, globalization plateaus and even falls in some areas a bit ( Dreher 2006 ). The advanced industrial countries began their move toward greater openness in the 1970s and 1980s, while the developing world moved rapidly in the 1990's and 2000s. Key measures of the components of globalization—that is, international trade openness, foreign direct investment (FDI) inflows, and international migration—saw remarkable growth from 1970 until the global financial crisis in 2008. Trade openness as defined as a percentage of total exports and imports rose from about 26.5 percent of world gross domestic product (GDP) in 1970 to 59 percent in 2007. FDI net inflows also surged from less than 1 percent of world GDP in 1970 to 5.4 percent in 2007. Against this backdrop, large numbers of people moved from the developing to advanced economies during the same time period. Among the original twenty-three Organisation for Economic Co-operation and Development (OECD) members, the migrant stock rose from roughly 4.6 percent of the total OECD population in 1970 to over 10.7 percent in 2005. 5

However, the growth in globalization has stalled since the 2008 financial crisis: international trade has remained roughly the same representing only 58.2 percent of world GDP by 2019, with developing countries being hardest hit. FDI has failed to rebound, only accounting for about 1.9 percent of world GDP in 2019. International migration, however, continues to grow in both developed and developing economies (about 12.7 percent of the rich world is now foreign born). Globalization is now extensive but not advancing any more. Recent political changes, such as the trade wars launched by the United States, suggest it may be in retreat.

This is the second period of extensive globalization that the modern world has known. The first wave occurred from roughly 1870 to 1914. On the surface, these two periods look similar: trade, capital, migrants, and ideas surged across borders, while rapid technological change took place; however, the causes, processes, and consequences seem different ( Gourevitch 1986 ; Baldwin and Martin 1999 ; Baldwin 2016 ). After the mid-nineteenth century, an integrated international system emerged as the European great powers, led by the British, created a more open world economy, employing their military power and economic policy. The expansion of European trade, capital, values, and political power helped by the development of colonies around the globe established this period of globalization ( Boswell and Chase-Dunn 2000 ; Milner 2011 ). By the late nineteenth centesury, the international economy reached levels of openness that had never been seen before ( Findlay and O’Rourke 2007 ). In some areas, such as the movement of labor, these high levels of global integration have never been achieved since then ( Hatton and Williamson 2007 ).

During the first wave of globalization beginning around the 1870s, a truly global economy was created, as Europeans spread their influence around the world, often not benignly but through colonialism and imperialism (see, e.g., Darwin (2009) ). Technological change, especially evident in the decline in transport and communication costs combined with the invention of steamships, railroads, and the telegraph, fueled the second Industrial Revolution in Europe and North America ( Mokyr 1994 ). But this Northern industrialization led to deindustrialization in the South, especially for China and India ( Buzan and Lawson 2013 ), as only a small number of countries benefited from the decline in transport costs ( Pascali 2017 ). These changes enabled a boom in international trade, which also benefited from the removal of many trade barriers with the shift from mercantilist policies to freer trade in Europe. International financial markets became highly integrated as the British pound dominated global markets. Migration was also prominent, as a result of the drop in transport costs. This asymmetric structure of relations led to “differential” growth in globalization where some parts of the world—mainly the North—saw intense societal interactions and economic interdependence and others did not ( Buzan and Lawson 2013 ). British hegemony and European dominance shaped this wave of globalization.

This integrated global economy fell apart in the early twentieth century with the two World Wars and the Great Depression ( Kindleberger 1973 ). From 1914 to 1945, globalization unraveled as countries chose to turn inward. Protectionism became the leading policy on trade issues for many nations. Regional blocs of trade and currency flows formed, usually centered on a powerful country. Military conflict became widespread ( Simmons 1994 ; Eichengreen 2012 ). Virulent nationalism, isolationism, and regionalism was a prominent feature of this timespan. Interstate wars and economic crises, nationally and globally, brought globalization to a halt and then reversed it ( Gourevitch 1986 ). Countries emerged from World War II with closed and tattered economies. Some scholars argue that the forces associated with globalization caused its own destruction ( Polanyi 1957 ; James 2001 ). Globalization unravelled as democracies around the globe also died. The economic crises and inequality generated by this first wave of globalization did not provide support for democracy. Indeed, they probably helped hasten democratic decline in many places like Germany.

After 1945, the United States became the system leader as the British declined, and began to establish a world economy advancing its interests through the choice of an internationalist foreign policy, using international institutions, an open economic policy, and military interventions ( Gilpin 1975 , , 1981 ; Maier 1977 ; Ruggie 1982 ; Strange 1987 ). Because of the Cold War, the global system divided into three blocs: the United States and its Western allies on one side, many developing countries in a neutral bloc, and the former Soviet Union and its communist allies on the other side. Globalization was actually limited to the West in this Cold War system ( Gowa 1989 ). It was only after the collapse of the Soviet Union in the 1990s and the opening of China that globalization accelerated.

In the second wave, technological change, primarily in the information, communications, and transport (ITC) field, also helped propel globalization, but US dominance also shaped it. Transport costs declined greatly until about 1960, but then ITC costs plunged ( Baldwin 2016 ). Led by the United States, domestic policy changes began in the advanced industrial countries in the 1970s, as they opened up their markets to trade and foreign investment; immigration policy was much slower to open. But international governance also mattered. The development of the European Community and the creation of the General Agreement on Tariffs and Trade (GATT) and its rounds of negotiations initiated the process of trade liberalization in the 1950s among the industrial countries. Tariff rates were reduced after the formation of the GATT in 1947 and this continued until the Uruguay Round’s conclusion. The Treaty of Rome in 1958 created the world’s largest customs union, and the European Union (EU) deepened and extended that openness in many other areas. Further tariff and non-tariff barrier reductions and the multinationalization of production fostered north-south trade. The development of global value chains recently has been a distinguishing characteristic of the second wave ( Antràs and Chor 2013 ; Baldwin 2016 ).

Financial globalization also followed. Capital flows took longer to return to to pre-World War I levels but have done so recently ( Sachs and Warner 1995 ). Domestic policy changes, again often led by the United States, plus new global governance institutions fostered this new wave of globalization. The Bretton Woods monetary system including the World Bank and International Monetary Fund (IMF) enabled countries to create currency convertibility and thus to eventually develop a global monetary system based on the American dollar ( Cohen 1977 ; Eichengreen 2008 ; Milner 2011 ). Although labor flows were never liberalized as much as flows of capital and goods were, primarily due in part to legal constraints to immigration in the Western countries, greater mobility of labor did occur ( Peters 2017 ). The expansion of the EU to many more countries and its extension to new issues also fostered globalization. By the 1980s, most of the advanced industrial countries had joined the world economy, and economic interdependence was high and growing rapidly.

After the 1980s, the rest of the world started opening their economies and joining the world economy. To what extent this opening was voluntary rather than coerced is debated. The collapse of the Soviet Union, the end of the Cold War, and the new economic opening in China all further enabled the globalization process. Beginning mostly in the 1990s, developing countries joined the world economy and its international institutions, sometimes pressured externally and sometimes prompted by domestic imperatives to do so ( Gruber 2000 ; Vreeland 2003 ; Milner and Kubota 2005 ). Almost all countries now belong to the IMF, the World Trade Organization (WTO), and the World Bank. Civil and political rights expanded as countries around the world adopted conventions on human rights, labor standards, environmental regulations, and other issue-areas ( Simmons, Dobbin, and Garrett 2006 ; Freedom House 2019 ). Globalization, however, also brought with it crises, and ones that now traveled around the globe. Shocks, such as the 1997/1998 Asian financial crisis and the 2008 financial crisis begun in the United States, rapidly propagated on a global scale. By the first decade of the twenty-first century then, most countries had become a part of the integrated global system. The second episode of deep globalization was here, but the key question now is whether the backlash against globalization, especially in the core developed countries, is growing and once again will halt it. A further question is whether globalization has gone so far as to endanger democracy across the globe ( Rodrik 2011 )?

We need to think about what democracy is in order to understand how global capitalism challenges it. In addition, delineating the essential elements of democracy helps one understand the challenge that extreme right wing and populist movements pose for it. Democracy is often defined “ a method of group decision making characterized by a kind of equality among the participants at an essential stage of the collective decision making” ( Christian 2018 ). Democracy means the rule of the people. It refers to a system of governance that rests on popular sovereignty and intends to translate public preferences into policy and political outcomes. Majority rule is central to how preferences are aggregated. Pure democracy relies on the direct translation of public preferences into outcomes via majority rule in direct elections or referendums. Other forms of democracy, like representative or constitutional ones, are more indirect and rely on elites and political parties to aggregate and synthesize public preferences. These forms of democracy put limits on majority rule and often rely on unelected, independent institutions, such as courts or central banks or even international institutions, to govern and set policy.

Interestingly, some scholars consider populism to be a type of democracy and to entail a demand for a purer form of democracy. 6 Some types of populism are seen as a demand for a return to direct democracy ( Meny and Surel 2002 ). The challenge populists often pose to most current democracies is their dislike of representative or constitutional forms of democracy. They advocate pure popular sovereignty and majority rule, claiming that this the only way for the popular will to shape politics. Populists see representative democracy as a system dominated by oligarchic elites that deny popular sovereignty. They build on popular resentments and dissatisfaction with political institutions that do not deliver for the average voter, leaving them feeling powerless, ignored and unfairly treated. Political and economic elites in unelected institutions—domestic and international—are viewed as a central element in the democratic deficit that populists decry.

Many other scholars see populism as dangerous to democracy. As Urbinati ( 2019 , 112) points out,“if a populist movement comes to power, it can have a disfiguring impact on the institutions, rule of law, and division of powers that comprise constitutional democracy. In effect, it can stretch constitutional democracy toward its extreme borders and open the door to authoritarian solutions and even dictatorship.” Many populist parties and movements on the extreme right also combine these criticisms of liberal democracy with strong assertions of nationalism and anti-foreign sentiment, advocating protection of domestic markets from foreign goods, capital, ideas, and people. For them, “ the people” refers only to natural citizens, and closure of the polity and economy often is deemed necessary to protect the nation and its true people.

Political Equality

The foundational idea behind democracy is political equality. The claim is that all citizens have equal political rights and should be treated equally by the state. Such rights involve participation in the establishment or administration of a government, including but not limited to equal treatment before the law, the right to vote and hold political office, and freedom of speech, assembly, and association. 7 This idea of equality is, of course, nebulous: What do we mean by equality? Equal outcomes or opportunities or access? Moreover, how does this fit with representative democracy where citizens elect a small fraction of the public to represent them? Do these representatives, who are likely to be elites themselves, ensure equality or negate it? If majorities rule, how can minorities, especially persistent ones, be treated equally? In addition, most democracies have not practiced pure political equality. Restrictions on who can vote or participate in politics have long existed in many countries. Voter registration laws may consistently prevent certain classes of citizens from exercising their political rights. Moreover, some political rights may be restricted in certain times and places. Nevertheless, the expectation that citizens have equal political rights is a bedrock belief for many people in many democracies.

Non-democracies usually do not guarantee or respect such equal access to political rights. While constitutions in non-democracies often list such political rights for their citizens, in practice they do not protect them or allow equal participation and enjoyment of such rights. Non-democratic systems are usually built on hierarchies with a small elite running the government. Many political rights, especially freedom of assembly and speech as well as political contestation, are often severely restricted. As has been pointed out by scholars (see, e.g., Bollen (1990) ), democracy is not a dichotomous concept; it is a continuous one and as such democracy is always a matter of degree. But there are basic requirements that make governments more and less democratic. In addition to political equality, the key ones for our discussion of democracy’s relationship to globalization are noted below.

Free and Fair Elections

A second critical requirement for democracy has been free and fair elections. 8 Democracy is after all intended to translate the people’s will into governance and policy. For some scholars, elections where elites can be replaced by voters are the sine qua non of democracy. For Schumpeter, democracy was a method for arriving at decisions, not the outcomes of the decisions themselves. For him ( Schumpeter 1942 , 242), a political democracy was defined as an“institutional arrangement for arriving at political decisions in which individuals acquire the power to decide by means of a competitive struggle for the people’s vote.” Similarly, Lipset ( 1959 , 71) defines democracy as “a political system which provides regular constitutional opportunities for changing governing officials . . . [and] permits the largest possible part of the population to influence decisions through their ability to choose among alternative contenders for political office.” For Downs ( 1957 , 23–24) as well, democracy requires at a minimum periodic elections with majority rule with a one-person, one-vote standard. These more elite theories of democracy rely on competitive elections to bring accountability and to ensure that the people’s will determines political choices.

Competition among Programmatic Parties.

Another key element of democracy is competition for the people’s vote. This competition and the alternation in office it should create are necessary for accountability, that is, for linking the public’s preferences to political leaders’ policy decisions. Political parties are considered an essential element of this process since they aggregate preferences and propose actual government programs. These programs are often focused on the provision of public goods, rather than personal benefits. Such programmatic parties are helpful in reducing clientelism and its emphasis on private goods ( Stokes 2009 ). They make democracy more responsive to public needs and demands by regulating political leaders as well ( Stokes 1999 ). 9 In addition, they can resolve fundamental problems in aggregating preferences ( Aldrich 2011 ).

The alternative to such programmatic parties tends to be two types of systems. One is based on charismatic leaders who basically are the party. Populists often advocate such leaders so that instead of an organized party, leaders connect directly to citizens, often through a movement that is more ephemeral. Representing the people’s will, these leaders make parties and other forms of representation unnecessary, according to populist ideas. The danger for democracy here is, of course, the problem of demagoguery and the move into despotism.

A second alternative is clientelist parties. Instead of a manifesto of positions on issues, parties in such clientelist systems provide private goods for citizens in exchange for their support ( Hicken 2011 ). The problem for democracy here is that vote buying and patronage become central; accountability is lost and elites control the public. Another issue is the problem of party cartels, or lack of competition ( Kriesi 2014 ). That is, what happens to democracy if parties, even programmatic ones, coordinate and do not compete? How are citizens represented then? The legitimacy and responsiveness of democracy may erode as parties no longer compete but collude ( Katz and Mair 1995 ). Competition among programmatic parties then is seen as important for realizing democracy’s goals and satisfying public preferences.

Political Legitimacy and Public Support.

Scholars tend to place great faith in institutions to deliver and secure democracy ( North and Weingast 1989 ; Weingast 1997 ; Acemoglu and Robinson 2006 ; Dahl 1998 ). But others have argued that public support and trust in democratic institutions and practices are crucial ( Almond and Verba 1963 ). Public support confers legitimacy on governments and democratic institutions, and legitimacy makes them more stable, effective, and durable ( Lipset 1959 ; Easton 1965 ). 10 Public trust and support for political institutions in democracies is thus important for their durability, as empirical research suggests ( Claassen 2020 ). When publics reduce their support and lose trust, democracy can be in trouble. Leaders can appeal to the public to overturn institutions and to ignore their rules, undermining their ability to function. In many democracies today, public support and trust for many political institutions have declined. Citrin and Stoker (2018) find a precipitous fall in support for US political institutions since the 1960s, with nearly 80 percent evincing trust in the government to do what is right in 1964 to under 20 percent in 2016 saying the same. 11

Many other countries have experienced reductions in public support for democratic institutions and for international ones, like the EU. Foa and Mounk (2017) show that for younger generations in many advanced democracies there is no longer majority support for the view that “it is essential to live in a democracy”, and there is growing support for non-democracy with rising approval for “having a strong leader who does not have to bother with parliament or elections.” Support for non-democratic systems tends to be higher among voters who prefer right-wing parties ( Wike and Fetterolf 2018 ). Challenges to the above essential elements of democracy can trigger such loss of support; that is, a growing sense that political equality does not hold, or that elections are not fair, or that parties are not competing over contrasting programs can bring on a loss of support for democracy. In addition, poor economic outcomes for citizens can sour their mood toward their political leaders and institutions. Wike and Fetterolf (2018) point out that the 2017 Pew survey found that people who see the the economy as performing badly have lower levels of satisfaction with democracy and less commitment to the principle of representative democracy.

Loss of legitimacy and public support can doom democracy. As Foa and Mounk ( 2017 , 9) say, “Democracy comes to be the only game in town when an overwhelming majority of a country’s citizens embraces democratic values, reject authoritarian alternatives, and support candidates or parties that are committed to upholding the core norms and institutions of liberal democracy. By the same token, it can cease to be the only game in town when, at some later point, a sizable minority of citizens loses its belief in democratic values, becomes attracted to authoritarian alternatives, and starts voting for ‘antisystem’ parties, candidates, or movements that flout or oppose constitutive elements of liberal democracy.” Discontent with democracy and its functioning seem to be rising globally and this could spell trouble for its durability, as populist and extreme right and left parties gather momentum.

Other Liberal Elements: Constraints on the Executive, Rule of Law, Free Press

Some scholars consider liberal institutions an essential element of democracy ( Levitsky and Ziblatt 2018 ). Liberalism in its political form refers to a system organized around an individualist ideology in which individual freedom is maximized as long as this doesn’t infringe on other’s freedoms. Liberal thought often argued for freedom from the state, claiming that some individual rights—such as freedom of speech, property, assembly, and religion—should be protected both from the state and majority rule. This freedom requires institutions that shield people from pure democracy. These institutions include the rule of law and courts, constitutions with individual rights, separation of powers, representation via legislatures, and other forms of checks on majority rule. Liberal democracy tends to imply representative government with majority rule but where key individual rights are protected against the majority and the state.

Illiberal democracy tends to have elections, which can be more or less competitive. But these systems downplay political and civil rights, rule of law, and checks on the executive. Majority rule and strong executive powers are the center of illiberal systems ( Zakaria 1997 ). Direct democracy is supposed to be in the forefront here, as populists applaud. But it often turns out that when rights like freedom of speech and assembly and institutions like courts and legislatures are weakened, there is little political competition and one party and/or one leader dominates the system, often for years ( Müller 2017 ). As scholars note, the erosion of democracy thus can occur through the dismantling of checks on elected leaders ( Levitsky and Ziblatt 2018 ). Liberal institutions may be an essential component of democracy and its stability.

The delineation of these essential elements of democracy is important because it tells us where to look for problems in the relationship with capitalism. If capitalism makes achieving these elements more difficult or impossible, then the two institutions will clash. Instead of reinforcing one another, they will undermine each other. Hence, one view is that without serious restrictions on capitalism, democracy will be imperiled. On the other hand, some claim that without restrictions on democracy, capitalism could be imperiled. From Marx onward, numerous scholars have claimed that democracy has been limited in order to preserve capitalism. For Marx, the institutions of the state were built to protect capitalism; democracy was just the “dictatorship of the bourgeois” hiding behind a veil. The capitalist state was designed to protect the collective interests of the capitalist class against the working class and against the short-sighted behavior of individual capitalists; thus the state had some autonomy. 12 But for Marx and many Marxists, democracy itself was a sham set up to protect capitalism. More recently, Slobodian argues that the entire neoliberal system of international institutions set up since the 1950s has served to protect capitalism against democracy: the entire “neoliberal project focused on designing institutions–not to liberate markets but to encase them, to inoculate capitalism against the threat of democracy” ( Slobodian 2018 , 2). For many on the left of the political spectrum, capitalism makes democracy impure at best and impossible at worst.

For others from the right, government intervention in the economy even decided democratically can ruin capitalism and thus destroy individual freedom. Laissez-faire doctrine advocated the most limited interference of politics in the matters of the economy. Hayek (1976) among many feared that any government intervention corrupted capitalism and that only the most minimal state was desirable. “The system of private property is the most important guaranty of freedom, not only for those who own property, but scarcely less for those who do not . . . If all the means of production were vested in a single hand, . . . whoever exercises this control has complete power over us” ( Hayek 1976 , 103). Freedom is the highest goal, but capitalism—not democracy—brings freedom. The protection of private property was necessary for democracy in the first place. 13 Economic conservatives such as Hayek decried government intervention in the economy and the creation of large social welfare systems. The balance between unregulated markets and government intervention has long been a central issue in politics. This balance has been changing over time, especially as globalization has spread. Global capitalism seems to have given capitalists a stronger hand relative to either labor or the state ( Bates and Lien 1985 ). Laissez-faire and austerity have gained in prominence as labor unions have shrunk, center left parties have declined, and social welfare spending and redistribution have fallen out of favor ( Blyth 2013 ).

Political Equality and Economic Inequality

As noted above, an essential element of democracy is the idea of political equality. All adult citizens should be treated equally by the state and should have equal political rights. What political equality means may be debated, but citizens do expect some kind of equal treatment by their government. The problem this runs into is the economic inequality generated by capitalism ( Piketty 2014 ).

Economic inequality has increased very substantially within countries across most of the world since the 1990s ( Bourguignon 2015 ). This rise has been especially notable in the advanced industrial countries, particularly the United States and UK. While rates of absolute poverty across the world have plummeted, one particularly contentious issue is whether globalization has fueled the rise in within-country inequalities. For example, the Gini index for income distribution in the United States has worsened steadily from 0.36 in 1970 to 0.41 in 2015 ( Lahoti, Jayadev, and Reddy 2016 ). By 2008, the level of inequality in the United States, as measured by the share of family income for the top 10 percent, had returned to the highest levels recorded in the early twentieth century ( Bourguignon 2015 , 48). The middle four deciles of the income distribution in the United States saw a similar decline in income share from 1980 (0.46) to 2014 (0.40). However, growth in inequality in Europe has been less pronounced with the income share of the middle four deciles sharply dropping in the UK and more moderately decreasing in Germany and France ( Blanchet, Chancel, and Gethin 2019 ).

While unemployment in the United States has been low, wage growth especially in the middle and low skill occupations has been very limited in the past few decades. “Since 2000, [US] weekly wages have risen 3% (in real terms) among workers in the lowest tenth of the earnings distribution and 4.3% among the lowest quarter. But among people in the top tenth of the distribution, real wages have risen a cumulative 15.7%, . . . nearly five times the usual weekly earnings of the bottom tenth” ( Desilver 2018 ). 14 In the United States by 2010, the top 10 percent of the income distribution has received over half of all wage gains during the past 30 years, and the top 1 percent and 0.01 percent had received most of that ( Bourguignon 2015 , 49). In Europe, slow wage growth has been combined in many countries with high unemployment. In many of the OECD countries, the concentration of wealth, as opposed to income, is even more stark and has grown worse as well. International trade appears to have amplified inequality in developed countries by deepening the high-skill and low skill labor divide ( Wood 1994 ; Ebenstein et al. 2013 ). Surprisingly, there is some evidence this is happening in the developing world as well ( Harrison and Hanson 1999 ).

The problem is that this period of rising within country inequality corresponds to the period of globalization’s fastest growth. It looks as if, and perhaps is the case that, they are related. 15 But the impression is that globalization has benefited a small elite and not the whole society or even the middle class. The majority is losing and this should not happen in a democracy. The sense that the system is rigged and only the rich benefit from openness is pervasive and growing. Anger and resentment are rising in publics as they see only a small segment of society gaining from globalization, and as everyone else becomes a relative loser ( Galston 2018 ). 16 The pervasive sense is that elites have captured the political system and opened up the economy to external forces that benefit only the rich and well connected. Inequality also seems to drive support for a main policy advocated by populist parties, that is, for protectionism, thus challenging the foundations of the liberal global order ( Lü, Scheve, and Slaughter 2010 ).

Another issue is that any sense of political equality is hard to sustain when economic inequality is large. If the wealthy have, or are seen to have, special access to political leaders and more influence over elections because of their money, then political equality is undermined. As Przeworski says, “When groups compete for political influence, when money enters politics, economic power gets transformed into political power, and political power in turn becomes instrumental to economic power ....Access of money to politics is the scourge of democracy” ( Przeworski 2016 , 5). Research suggests that the rich do have more access and influence over politics ( Bartels 2008 ; Gilens 2012 ). As the rich become richer, their influence magnifies, policy diverges more from the median voter’s preferences, and democracy seems less and less legitimate to the average citizen. If globalization is linked to rising inequality, then we may fear for democracy because research shows that democracy does not do well in conditions of high inequality ( Boix 2003 ; Ziblatt 2008 ). 17 Globalization may then indirectly undermine support for democracy as it enables greater economic inequality ( Elkjær and Iversen 2020 ).

It is important to note that the Covid-19 pandemic seems to be increasing inequality as it rages in different countries. High-skill workers have maintained their jobs and avoided the virus by telecommuting. Lower skill workers who are usually paid less have been more likely to lose their jobs and get sick ( Davis, Ghent, and Gregory 2021 ; Deaton 2021 ). And large firms with abundant capital have expanded as their small rivals are driven out of business by the pandemic closures ( Bartik et al. 2020 ) Capital is being concentrated even more by this plague. It has also increased individual insecurity and reduced social capital as people cannot congregate and socialize.

Creative Destruction and Economic Insecurity

Capitalism is marked by rapid change and technological advances. As many have noted, it is a very dynamic system that incentivizes change, upgrading, and innovation. In the process, however, it destroys the old, the familiar, and the once lucrative. Schumpeter termed this essential dynamic, creative destruction ( Schumpeter 1942 ). There is also evidence that innovations and adoption of new technologies spread in waves over time, sometimes leading to deep and rapid changes ( Milner and Solstad 2021 ). These technological revolutions then produce side effects in social and political life. The first industrial revolution from about 1760 to 1830 saw a spurt of activity around iron and steel, coal, and steam engines ( Mokyr 2009 ). The second industrial revolution from the 1870s to early 1900s again brought a surge in new technologies including railroads, mass assembly, automobiles, telegraph and radio, and electricity ( Gordon 2017 ). Recently we have witnessed another technological revolution, the so-called digital revolution, and it is now having widespread effects. It is not just disruptions to labor markets that matter, but also shocks to information and communications systems, changes in social organization and disruptions of existing institutions. These rapid changes create insecurity for people who are, or believe they will be, negatively affected. 18 This personal insecurity is likely to have political ramifications, especially when social protection is weak ( Mughan 2007 ; Margalit 2011 ; Hacker, Rehm, and Schlesinger 2013 ; Rehm 2016 ).

Capitalism has brought forth many changes in markets, especially in labor markets over time. Old industries die and new ones emerge, but labor and capital are often slow to keep pace with these changes. Boix (2019) argues that first period of globalization in the late nineteenth century and early twentieth century was accompanied by technological change which generated more jobs than it displaced. This earlier wave of disruption was job inducing, and the new technology then was complementary to labor. The second period of globalization occurring recently is different; the new technologies are job displacing and substitute for labor. These two conditions produce very different politics. Boix (2019) , however, still thinks that democracy can persist in this second period, as do others who see democracy as extremely resilient ( Iversen and Soskice 2019 ). But many others are more pessimistic, worrying that the effects of technology now are enhancing inequality and destroying decent jobs ( Baldwin 2019 ).

A primary example has been the rise and fall of manufacturing industries, especially in the advanced industrial countries. Industrial employment as a percentage of the civilian labor force has dropped from 38.8 percent in 1970, 25 percent in 2007, and falling to 18.8 percent in 2016 among the original 23 OECD countries ( Armingeon et al. 2019 ). Offshoring has been a main ingredient in this process, and more recently the development of global value chains across borders has accelerated these changes. This deindustrialization has generated much economic insecurity as higher wage-paying, blue-collar jobs have disappeared with it ( Hacker 2008 ; Milberg and Winkler 2013 ).

In addition, the new jobs produced have often been inferior to the old ones lost; this inferiority concerns not just wages but also the terms of employment, which have become less secure and more temporary in the so-called gig economy. “Employment precariousness,” or the lack of a “decent job,” is another aspect of this technological revolution ( Lorey 2015 ). “Fixed-term employment contracts, temporary work and part-time work in developed countries, and informal jobs with irregular working hours, low earnings and uncertain futures in developing countries” ( Bourguignon 2015 , 63), which are the telltale indicators of this precariousness, have grown greatly. “In France, employment precariousness has increased significantly over the last twenty years, from 8% in 1990 to 12% of total employment in the 2000s” ( Bourguignon 2015 , 63–64). Skill-biased technological change and trade with the developing world have been largely responsible, as they have helped fuel offshoring and global value chains ( Michaels, Natraj, and Van Reenen 2014 ; Doraszelski and Jaumandreu 2018 ). Hence, despite the fact that unemployment in many developed countries had fallen to low levels before the pandemic, personal insecurity has been pervasive because wages and working conditions have worsened, especially for lower skilled workers.

Global capitalism produces a double dose of technological change. Capitalism itself is very disruptive, but on a global scale it accelerates this change. Research shows that few countries innovate and that most adopt innovations from elsewhere ( Keller 2004 ). The speed of this adoption varies from country to country and over time, but globally-integrated markets make these changes more rapid and widespread ( Mokyr 1994 ; Taylor 2016 ; Milner and Solstad 2021 ). The third technological revolution then also is different because it is probably the fastest and most wide-ranging. It has brought even more economic anxiety and insecurity than past revolutions.

The insecurity generated by capitalism has long been noted. Furthermore, capitalism on a global scale seems to amplify this insecurity since international capital and labor flows may be ever more politically destabilizing ( Scheve and Slaughter 2004 ). Economic crises like the global financial one of 2008–2009, which often are fostered by globalization, exacerbate this insecurity as well. Indeed, the creation of social welfare states was intended to help damp down this anxiety and reduce the frictions associated with economic change and crises. Polanyi (1957) long ago noted that left exposed to unregulated markets, people would turn away from democracy and toward extreme political solutions. The risks and insecurities generated by capitalism needed to be alleviated by social protection. The idea was to “embed” markets in social and political relations by having governments intervene to provide compensation to people affected by market volatility. After World War II, markets for capital and labor flows across borders were regulated as trade was slowly liberalized, and stability and growth with redistribution were paramount for the advanced industrial democracies until the 1980s.

After World War II, embedded liberalism in the Western world was the compromise that arose to make democracy and capitalism compatible ( Ruggie 1982 ). As noted by Lim (2020 , 67–68), “Studies of Western democratic countries have found that citizens who are exposed to the risks and uncertainties of global capitalism demand greater social protection from their government ( Burgoon 2001 ; Cusack, Iversen, and Rehm 2006 ; Walter 2010 ; Margalit 2011 ). Empirical analyses also have revealed that more open economies tended to have larger public spending to compensate for and insure against the vagaries of an open economy ( Garrett 1995 ; Rodrik 1997 , 1998 ; Rickard 2012 ; Nooruddin and Rudra 2014 ).” Others show that technological adoption is faster and acceptance of new technologies is higher when welfare state generosity is greater ( Lim 2020 ). Up to the 1990s, the embedded liberalism compromise seemed to be reconciling democracy and global capitalism.

Embedded liberalism, however, has come under sustained pressure as globalization has advanced. The combination of slowing or declining welfare efforts plus the growth of globalization have increased insecurity and reduced support for people facing it. Scholars have pointed to these changes as being a source of the rise of populism and the extreme right in various countries. Margalit (2011) shows that where job losses from foreign competition were high, incumbent politicians in the United States were more likely to lose and especially so if the job losses were not compensated. Autor et al. (2020) provide evidence that the trade shock from Chinese entry into the WTO led to increasing political polarization in the United States. Jensen, Quinn, and Weymouth ( 2017 , 1) demonstrate that “increasing imports (exports) [in a region] are associated with decreasing (increasing) [US] presidential incumbent vote shares.” Colantone and Stanig ( 2018a , b ) provide data showing that support for right-wing, nationalist and populist parties and for Brexit came from areas hardest hit by globalization, in particular trade shocks and immigration. Burgoon (2001) points out that the backlash against globalization is less in areas where social welfare provision is highest. Milner ( 2018 , 2021 ), on the other hand, argues that in areas with more trade flows support for extreme right parties is stronger and that social welfare provision does not seem to temper this political backlash against globalization any longer. As globalization has proceeded and welfare states have not expanded to match this, personal insecurity has grown and its political consequences are increasingly manifest. As Rodrik (1997) noted, increasing global economic integration produces more public demands on governments for social protection while concurrently undermining their ability to supply these policies because they require considerable public expenditure, which globalization may prevent.

Insecurity can also be a product of the new information technologies today. The gig economy is in part made possible by such technologies. Surveillance technology may make people feel safer, but it may also enable governments to monitor their citizens and create new fears. While social media may enhance accountability pressures, it may also generate confusion and fake news. Many new sources of information have become easily available, often creating political and social problems. There is deep concern that new information technologies have helped disseminate populist political views. Social media in particular can undermine confidence in and the legitimacy of mainstream parties and leaders by transmitting false and damaging views of them ( Tucker et al. 2017 ). International interference to exert political influence may also be easier to accomplish and disguise with these technologies. Creating confusion about what the facts are, disseminating fringe views as if they were credible, and sowing doubt about the validity and legitimacy of key democratic practices like elections are all means for generating greater insecurity and boosting populist support.

Global Interdependence

Deep integration of national economies through trade, capital markets, and immigration poses direct challenges for democracy. Above, I noted the indirect ways that globalization might undermine support for democracy, first by increasing inequality and second by fostering faster technological change. But globalization may also have more direct effects. I discuss three such effects here: increasing economic policy constraints on the government; pushing convergence on economic policy choices; and creating more need for international cooperation and governance. Each of these means that governments have less control over the economy, less room for partisan competition, and less autonomy.

Globalization seems to produce three inter-related processes that might undermine support for democracy. As trade, capital, and labor flows grow in importance, governments become increasingly constrained; governments can always opt out of this but the costs of doing so rise as globalization proceeds. First, globalization can undercut the government’s ability to direct the economy. The government’s policy instruments become more limited and less effective. With an open economy, macroeconomic policy and exchange rate policy become more interdependent and less effective, especially for smaller economies ( Frieden and Rogowski 1996 ; Broz and Frieden 2001 ). As countries joined the WTO and signed preferential trade agreements, trade policy and investment policy have become more constrained as well. Fiscal policy in an open economy also loses some of its effect as it flows across borders. While some scholars have noted that larger and more developed countries have more room to maneuver ( Mosley 2003 ), others have noted the shrinking field of policy choice and autonomy open to countries ( Rodrik 1997 , 2011 ). Policy autonomy and efficacy matter for democracies because the public often judges governments and parties on the basis of economic outcomes ( Kosmidis 2018 ; Duch and Stevenson 2010 , 2008 ). When governments lose the ability to direct the economy, democratic accountability is weakened and so is its legitimacy ( Hellwig 2001 ; Hellwig and Samuels 2007 ; Hellwig 2015 ).

A second process that might undercut democracy is the policy convergence and consensus that has grown with globalization. As governments around the world increasingly liberalized trade and opened their capital markets, policy converged and consensus grew across parties about the value of openness and to some extent deregulation as well as austerity. Differences among left and right centrist parties on their platforms diminished, and publics began to view all mainstream parties as very similar ( Sen and Barry 2020 ; Ward et al. 2015 ). Globalization may force parties to converge on their economic policies, restricting parties’ ability to differentiate themselves and thus to effectively compete against other parties on economic issues. 19 The consensus over economic policies and globalization has left many European Social Democratic parties losing vote share and public support ( Mair 2000 ).

This convergence has created an opening for extreme right and populist parties to generate support. 20 As ( Mughan, Bean, and McAllister 2003 , 619) points out,“By virtue of their commitment to economic internationalization, the established parties of government are blamed by populists for turning a blind eye and a deaf ear to workers’ legitimate concerns for their job security in an increasingly global, competitive, and volatile labor market. Blaming it on established parties’ commitment to economic globalization, in other words, right-wing populist parties have commonly sought electoral advantage by turning job insecurity into a political issue.” If vigorous party competition along programmatic lines is central to democracy, then globalization may be undermining it. And lack of partisan competition among centrist parties may enable more extreme parties to gain support.

The third element is that globalization has also raised pressure on governments to coordinate their polices to eliminate externalities ( Milner 1997 ). A more open economy implies a greater need to cooperate and coordinate with other countries. The past 30 years have seen many international regimes and institutions created to deal with global problems, all of which have constrained governments even more. The IMF, World Bank, OECD, EU, WTO, regional development banks, and many preferential trade agreements are the major examples of these multilateral economic institutions; each of which produces norms, rules, and procedures that members are expected to follow. They constrain government policy choices domestically; they appear to impose decisions from unelected international elites on the public; and they push all parties who might be in government to adopt similar policies. Many of these have generated popular dissatisfaction and resentment, being seen as undemocratic and as undermining democracy and its legitimacy at home. The EU is a prime example of this complaint about “democratic deficits”; EU decision-making is often seen as too elite- and interest group-driven, and too distant from public preferences ( Follesdal and Hix 2006 ; Mair 2007 ). Brexit as a vote against international cooperation and extensive coordination is a reflection of this public perception of the EU.

The nationalist backlash that has animated populist parties recently builds off of this anxiety over and distaste toward global governance. The cosmopolitan elites that supposedly direct international institutions are seen as having made bad decisions (e.g., the financial crisis) and as holding preferences far removed from those of the average national voter. Populist leaders thus call for a return to national priorities and a rejection of global cooperation, as the quote from Marine Le Pen at the start of this article illustrates. As Mughan, Bean, and McAllister ( 2003 , 619) points out, “the economic basis of their [populist parties’] appeal [lies] in their rejection of the postwar social democratic consensus. Taking as a starting date the end of the Second World War we can, with a nod to national variations, pick out four elements that have characterised the domestic politics of Western Europe in the ensuing four decades: social democracy, corporatism, the welfare state and Keynesianism. It is on the fertile ground of the foundering of these four pillars that the new (populist) parties have taken root.” Globalization by making international cooperation ever more necessary thus contributes to legitimacy problems for mainstream political parties and may generate public dissatisfaction with their governments and democracy.

I have identified three areas where globalization and democracy may conflict and if globalization is left unchecked may lead to the erosion of democracy. What can be done about inequality, insecurity, and interdependence so that they do not hurt democracy? I briefly discuss a few ideas below, but unfortunately there are no simple solutions.

Is economic inequality really a problem? There is some evidence that the public does not understand the extent of inequality and that they may not care that much even if they do know it ( Alesina and La Ferrara 2005 ; Bartels 2008 ; McCall 2013 ). Some scholars think people are and should be more focused on economic growth and their personal situation rather than relative gains and interpersonal comparisons. Belief in upward social mobility and equality of opportunity as well as a focus on non-economic issues may dull any interest in fixing inequality. Preferences for equality vary greatly and may not dominate voters’ other concerns.

If inequality is seen as a problem, can we fix it? One attempt to reduce inequality was tried during the post World War II period with government intervention in the economy using taxes and social transfers to redistribute income. Numerous scholars and politicians are now calling for new taxes on the wealthy ( Piketty 2014 ; Scheve and Stasavage 2016 ). 21 But in a open economy, such taxes may have limited success; only far-reaching international cooperation could make them workable. Closing the open economy is another option, but one that is very costly and will probably not reduce inequality if it is structural to capitalism ( Piketty 2014 ; Boushey, DeLong, and Steinbaum 2017 ). Others doubt the efficacy of government policy and find that the only solutions have involved large-scale violence ( Scheve and Stasavage 2016 ; Scheidel 2017 ). Without major war, revolution, or a devastating pandemic, they claim there is little evidence that any policy can reduce substantial inequality, especially once it has increased greatly. The problem in this condition of deep inequality becomes a political one where taking away substantial amounts from the rich becomes difficult without violence.

Global capitalism fosters faster technological change and this is one important factor driving insecurity among voters. How are we going to deal politically with rapid technological change and innovation? Skill-biased technological change, particularly in the form of automation and artificial intelligence (AI), is going to have increasingly large distributive effects on societies. Many occupations will disappear, and hopefully new ones will arise in their place, as in the past. But the transition is likely to be difficult and long. Calls for policies that make education less costly and enable job training and transitions are widespread, although there is less evidence that these are effective. The research on technological change points out that government policy is very important for innovation and adoption. Governments can be a brake on or a spur to change through a wide variety of policies, such as taxes, subsidies, and anti-trust. Mazzucato (2015) even argues that governments have been the primary driver of technological progress lately. In addition, interest groups and existing firms may have strong effects as well, usually in slowing down change ( Taylor 2016 ). Controlling the rate of technological change then is possible, and government policy may be able to shape the impact to some extent through its policies. We do not want to shut down technological progress since it may be central to solving large problems like climate change. But the key is that leaders must be aware of the possible effects and willing to intervene to enhance job and income security for their citizens. Focusing policy on reducing individual insecurity should be paramount.

Interdependence

Having an open economy creates more constraints on domestic leaders and more demand for international cooperation and coordination. In turn, these processes appear to generate dissatisfaction with incumbent governments and democracy generally. There seem to be two ways to alleviate these problems. One is to try to reduce interdependence and close the national economy. The trade wars, greater scrutiny of FDI, and immigration crackdowns of the Trump administration leaned in this direction, as the UK may also tend toward after Brexit. Can and should we decouple the world’s economies? At what cost? Rodrik (2011) argues for rolling back globalization to save democracy by creating more space for national policy choices and differences. It is not clear that this will open up more space since even with limited openness in today’s world competitive pressures will be felt everywhere. Indeed, race to the bottom pressures may grow stronger with more closure, as the UK after Brexit is starting to realize. Regional blocs may form, and if, as in the interwar period, these are closed and driven by political competition may result in fiercer pressures on governments.

A second way forward may be to try to make international cooperation and institutions more friendly to voters and democratic publics. Delivering greater benefits and making the public aware of them are one path. Another is to try to democratize these institutions more. The EU has tried to do this by passing more power to the European Parliament. It is not clear this has helped, however. The main problem is that global institutions are by nature very far removed from local politics and will always be seen as a distant force that sometimes institutes policies that are not preferred locally. But redesigning international institutions may be our best hope here. 22

The topics that I consider most important for future study revolve around capitalism on a global scale and democracy. In particular, they concern the three issues above. How does globalization contribute to inequality? Can we make global capitalism produce less unequal outcomes, and do we need to change it? Are there policies that would make economic outcomes less unequal? What does inequality do to politics? Is it the driving force behind polarization and populism ( McCarty, Poole, and Rosenthal 2006 ; Sprong, Jetten, and Wang 2019 )? A second topic is technological change and democratic politics. Globalization fosters rapid technological change, and recently this change has been high skill-biased. This has contributed to rising inequality and insecurity. Many scholars and political leaders are now focused on how further automation and AI will affect politics. Evidence exists already that such technological change can create support for extreme right politics and populism ( Gallego, Kurer, and Schöll 2019 ; Anelli, Colantone, and Stanig 2019 ; Milner 2021 ). Third, research should focus on how international institutions and governance are affecting domestic politics. Does more international cooperation generate less trust and legitimacy for democracy at home? How can we make sure cooperation at the global level does not undermine support for democracy domestically? As problems grow more global in scope, we must find solutions that leave people feeling better off and willing to trust in international institutions as well as domestic ones. A retreat to nationalism and unilateralism will make solving our many transnational problems, like climate change, pandemics, and terrorism, ever harder.

Concerns about the relationship between capitalism and democracy have long been part of scholarly debate. My claim here is that global capitalism and the new technologies of today are making the tension between them even greater than in the past. Globalization seems to heighten the impact of markets. It brings faster and more widespread technological change, more intense distributional consequences, wider financial crises, and more problems having a global scale. Capitalism has always fostered change, which has had political implications. The development of social welfare states to channel and moderate that change was important after World War II. But today the inequality, insecurity, and interdependence it is breeding are creating serious political problems for democracies. No longer is democracy seen by many as the only game in town; more autocratic forms of government are being considered, especially with successful example of China’s rise. Maintaining democratic systems with constitutional checks and balances and rule of law seems paramount.

Will rolling back globalization help this? It is not clear. Economies may perform less well when closed; technological change driving inequality and insecurity is likely to continue; and national solutions to global problems are likely to be insufficient, if possible. Will public support for constitutional democracy be any stronger in such conditions? A better way forward seems to be using government and international institutions to direct technological change and reduce insecurity for individuals within their societies. As many have noted, real progress in human well-being has occurred over the past two centuries ( Pinker 2011 ; Deaton 2013 ; Rosling 2018 ). Navigating the right balance between capitalism and democracy remains a critical task.

See the International Organization 75th anniversary special issue ( Finnemore et al. 2020 ) for a series of papers on the problems of the Liberal International Order.

Will responses to the coronavirus accelerate these challenges? A key concern is with the lingering effects on privacy that tracking the virus may entail, as well as the use of executive orders and emergency powers in shutting down social interaction.

These include Bangladesh, Benin, Bolivia, Botswana, Burundi, Cambodia, Comoros, Hong Kong, Hungary, India, Mali, Nicaragua, the Philippines, Serbia, Tanzania, Thailand, Turkey, Venezuela, Yemen, and Zambia, which have fallen into or remain in the category of electoral autocracy. Brazil also fell down but remains an electoral democracy. Botswana, Mauritius, Poland, and Slovenia have fallen from the designation of liberal democracy to electoral democracy. And the United States, still designated a liberal democracy, has scored lower lately as well.

The well-known POLITY score for democracies, ranging from −10 to 10, hit a peak in 2006 for the original 23 OECD countries and in 2015 for the world ( Marshall and Jaggers 2005 ); the V-Dem score hit a peak for global democracy in 2012 ( Coppedge et al. 2019 ).

All data from the World Bank Development Indicators, 2020.

For definitions of populism and more discussion of it, see Urbinati (2019) , Mudde (2017) , and Müller (2016) .

See Dahl (1971) for a list of such rights and the basic requirements for a democracy to exist.

Classical democracy viewed sortition (or selection by lot, or randomly), not election by voting, as central for democracy. They saw elections and voting as autocratic. So it may not be necessary for democracy to have and be defined by having competitive elections. ( Manin 1997 ; Smith 2009 ).

Grillo and Prato (2020 , 4–5; 19) note that “challenging democracy is a more viable strategy when citizens’ expectations about leaders’ behavior are not anchored to parties’ programmatic identities or the fact-based reporting of traditional media outlets...[T]he weakened intermediation by parties and media is a key prerequisite for populist authoritarianism.”

Political legitimacy is the “belief that existing political institutions are the most appropriate or proper ones for the society,” according to Lipset ( 1959 , 83).

In this case, “trusting” the government was a response of “Always” or “Most of the time” to “How much of the time do you think you can trust the government in Washington to do what is right - just about always, most of the time, or only some of the time (with ‘never’ coded if volunteered)?” Since 2008, the wording of the question has been revised, with results showing a slight decrease in trust in government, while maintaining a similar trend to the previous question.

There was a long debate over the relative autonomy of the state in capitalist democracies in the 1970s and 1980s; see Nordlinger (1981) , Skocpol (1979) , Miliband (1969) , Poulantzas (1978) , and Block (1977) .

Along with private property as a shield, privacy is also an important element for many conservatives. The increasing challenges to privacy from social media and digital firms may also threaten democracy. See Zuboff (2019) on surveillance capitalism.

In March 2019, real average wages in the United States finally attained the same level as they hit in February 1973: https://www.weforum.org/agenda/2019/04/50-years-of-us-wages-in-one-chart/ .

In addition to trade and immigration flows, the two biggest sources identified by scholars as causes of rising inequality are skill-biased technological change and government policy, including tax cuts and social benefits reductions.

As Galbraith (1977) warned years ago concerning the negative effects of inequality: “ When reforms from the top became impossible, the revolution from the bottom became inevitable.”

Some scholars such as Scheve and Stasavage (2017) find less of a relationship between the two.

Economic insecurity can be defined as “a psychological response to the possibility of hardship-causing economic loss.” It implies that there is a real risk that threatens people with true hardship ( Hacker 2008 , 20).

A common theme in the literature is that this pushes parties to turn to non-economic issues—i.e., social or cultural ones—and to try to generate competition over them. This has also played into the hands of populist parties who use extreme positions on these issues to polarize the public.

Dal Bó, et al. (2019) say in discussing the rise of the radical right in Sweden: “Our analysis suggests that the political left offers a slate of politicians skewed away from labor-market outsiders and vulnerable insiders, and skewed instead towards secure insiders. Moreover, we use survey data to show that the economic shocks diminished trust in government, of which the established left parties form part (following Algan et al. 2017 ). Thus, in an environment of diminished trust, disgruntled voters turn to candidates who share their economic traits and fates.”

See the campaign manifestos of Senator Elizabeth Warren and Bernie Sanders in the United States in 2019–2020.

It is likely that most international institutions will be redesigned anyway in the near future. China’s rise and the US retreat are already creating conditions for the transformation of global governance.

I thank Dominic De Sapio and Tom Cunningham for their research assistance and Robert Keohane, Peter Gourevitch, David Baldwin, and Nita Rudra for their helpful comments.

Helen V. Milner is the B.C. Forbes Professor of Politics and International Affairs at Princeton University and the director of the Niehaus Center for Globalization and Governance. She is currently working on issues related to globalization and populism, foreign aid and taxes, and technological change and international politics. She is the president of the International Studies Association (2020–2021).

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Capitalism, Socialism and Democracy revisited

• September 8, 2023

Niall Ferguson

• Themes: Geopolitics, History

In the titanic struggle between capitalism and socialism, there can only be one winner.

This essay was first published in Past and Present: Perspectives from the Engelsberg Seminar, Axess Publishing , 2020 . It was published by  Bokförlaget Stolpe , in collaboration with the  Axel and Margaret Ax:son Johnson Foundation .

Joseph Schumpeter was pessimistic. ‘Can capitalism survive?’ he asked in his book Capitalism, Socialism and Democracy (1942). His answer was stark: ‘No. I do not think it can.’ He then posed and answered a second question: ‘Can socialism work? Of course it can.’ Perhaps the Austrian-born economist’s pessimism was simply the effect of teaching at Harvard. Yet Schumpeter offered four plausible reasons for believing that socialism’s prospects would be brighter than capitalism’s in the second half of the twentieth century, even if he signalled his strong preference for capitalism in his ironical discussion of socialism.

First, he suggested, capitalism’s greatest strength — its propensity for ‘creative destruction’ – is also a source of weakness. Disruption may be the process that clears out the obsolescent and fosters the advent of the new, but precisely for that reason it can never be universally loved. Second, capitalism itself tends towards oligopoly, not perfect competition.

The more concentrated economic power becomes, the harder it is to legitimize the system, especially in America, where ‘big business’ tends to get confused with ‘monopoly’. Third, capitalism ‘creates, educates and subsidizes a vested interest in social unrest’ — namely, intellectuals.

Finally, Schumpeter noted, socialism is politically irresistible to bureaucrats and democratic politicians.

The idea that socialism would ultimately prevail over capitalism was quite a widespread view — especially in Cambridge, Massachusetts. It persisted throughout the Cold War . ‘The Soviet economy is proof that, contrary to what many sceptics had earlier believed, a socialist command economy can function and even thrive’, wrote Paul Samuelson, Schumpeter’s pupil, in the 1961 edition of his economics textbook — a sentence that still appeared in the 1989 edition. In successive editions, Samuelson’s hugely influential book carried a chart projecting that the gross national product of the Soviet Union would exceed that of the United States at some point between 1984 and 1997 (see figure 1). The 1967 edition suggested that the great overtaking could happen as early as 1977. By the 1980 edition, the timeframe had been moved forward to 2002–2012. The graph was quietly dropped after the 1980 edition.

Samuelson was by no means the only American scholar to make this mistake. Other economists in the 1960s and 1970s — notably Campbell McConnell and George Bach — were ‘so over-confident about Soviet economic growth that evidence of model failure was repeatedly blamed on events outside the model’s control’, such as ‘bad weather’. Curiously, McConnell’s textbook more or less consistently estimated US GNP to be double that of the USSR between its 1960 and its 1990 editions, despite also insisting in the same period that the Soviet economy had a growth rate roughly double the American. Yet it was Lorie Tarshis whose textbook drew the most damaging fire (from William F. Buckley amongst others) for its sympathetic treatment of economic planning, despite the fact that Tarshis was more realistic in his assessment of Soviet growth. The uncritical use of the simplistic ‘production possibility frontier’ framework — in which all economies essentially make a choice between guns and butter — was a key reason for the tendency to overrate Soviet performance. For example, as late as 1984 John Kenneth Galbraith could still insist that ‘the Russian system succeeds because, in contrast with the Western industrial economies, it makes full use of its manpower.’ Economists who discerned the miserable realities of the planned economy, such as G. Warren Nutter of the University of Virginia, were few and far between — almost as rare as historians, such as Robert Conquest , who grasped the enormity of the Soviet system’s crimes against its own citizens.

The majority view exemplified by Samuelson and Galbraith was of course wrong. Despite Schumpeter’s pessimism, capitalism survived precisely because socialism did not work. After 1945, according to Angus Maddison’s estimates , the Soviet economy was never more than 44 percent the size of that of the United States. By 1991, Soviet GDP was less than a third of US GDP. The tendency of American intelligence experts was to exaggerate the extent of Soviet success. But those who visited the Soviet Union could hardly miss its inferiority.

Moreover, beginning in around 1979, the very term ‘socialism’ went into a decline, at least in the English-speaking world. Use of ‘capitalism’ also declined — as the two terms were in some senses interdependent, often appearing on the same page — but not as much. This was a humiliating reversal of fortune; socialism had led from the second half of the nineteenth century until the mid-1920s, and again in the 1960s and 1970s.

The terms ‘capitalism’ and ‘socialism’ had their origins in the British Industrial Revolution . As the Chicago economist Thorstein Veblen argued, nineteenth-century capitalism was an authentically Darwinian system , characterized by seemingly random mutation, occasional speciation and differential survival. Yet precisely the volatility of the more or less unregulated markets created by the Industrial Revolution caused consternation amongst many contemporaries. Until there were significant breakthroughs in public health, mortality rates in industrial cities were markedly worse than in the countryside. Moreover, the advent of a new and far from regular ‘business cycle’, marked by periodic crises of industrial over-investment and financial panic, generally made a stronger impression on people than the gradual increase in the economy’s average growth rate. Though the Industrial Revolution manifestly improved life over the long run, in the short run it seemed to make things worse.

Intellectuals, as Schumpeter observed, were not slow to draw attention to this shadow side. Steeped in German literature and philosophy, the Scottish philosopher Thomas Carlyle was the first to identify what seemed the fatal flaw of the industrial economy: that it reduced all social relations to what he called, in his great essay Past and Present, ‘the cash nexus’.

That phrase so much pleased the son of an apostate Jewish lawyer from the Rhineland that he and his co-author, the heir of a Wuppertal cotton mill-owner, purloined it for the outrageous ‘manifesto’ they published on the eve of the 1848 Revolutions.

The founders of communism, Karl Marx and Friedrich Engels, were just two of many radical critics of the industrial society, but it was their achievement to devise the first internally consistent blueprint for an alternative social order. A mixture of Georg Wilhelm Friedrich Hegel’s philosophy , which represented the historical process as dialectical, and the political economy of David Ricardo, which posited diminishing returns for capital and an ‘iron’ law of wages, Marxism took Carlyle’s revulsion against the industrial economy and substituted a utopia for nostalgia.

The essence of Marxism was the belief that the industrial economy was doomed to produce an intolerably unequal society divided between the bourgeoisie, the owners of capital, and a property-less proletariat. Capitalism inexorably demanded the concentration of capital in ever fewer hands and the reduction of everyone else to wage slavery, which meant being paid only ‘that quantum of the means of subsistence which is absolutely requisite to keep the labourer in bare existence as a labourer’.

Before identifying why they were wrong, we need to acknowledge what Marx and his disciples were right about. Inequality did increase as a result of the Industrial Revolution. Between 1780 and 1830 output per laborer in the UK grew over 25 percent but wages rose barely 5 percent.

The proportion of national income going to the top percentile of the population rose from 25 percent in 1801 to 35 percent in 1848. In Paris in 1820, around 9 percent of the population were classified as ‘proprietors and rentiers’ (living from their investments) and owned 41 percent of recorded wealth. By 1911 their share had risen to 52 percent. In Prussia, the share of income going to the top 5 percent rose from 21 percent in 1854 to 27 percent in 1896 and to 43 percent in 1913. Industrial societies, it seems clear, grew more unequal over the course of the nineteenth century. This had predictable consequences. In the Hamburg cholera epidemic of 1892, for example, the mortality rate for individuals with an income of less than 800 marks a year was thirteen times higher than that for individuals earning over 50,000 marks.

It was not necessary to be an intellectual to be dismayed by the inequality of industrial society. The Welsh-born factory-owner Robert Owen envisaged an alternative economic model based on co-operative production and utopian villages like the ones he founded at Orbiston in Scotland and New Harmony, Indiana. It was in a letter to Owen, written by Edward Cowper in 1822, that the word ‘socialism’ in its modern sense first appears. An unidentified woman was, Cowper thought, ‘well adapted to become what my friend Jo. Applegath calls a Socialist’. Five years later, Owen himself argued that ‘the chief question … between the modern … Political Economists, and the Communionists or Socialists, is whether it is more beneficial that this capital should be individual or in common.’

The term ‘capitalism’ made its debut in an English periodical in April 1833 — in the London newspaper the Standard — in the phrase ‘tyranny of capitalism’, part of an article on ‘the ill consequences of that greatest curse that can exist amongst men, too much money-power in too few hands’. Fifteen years later, the Caledonian Mercury referred with similar aversion to ‘that sweeping tide of capitalism and money-loving which threatens our country with the horrors of a plutocracy’.

Yet the revolution eagerly anticipated by Marx never materialized — at least, not where it was supposed to, in the advanced industrial countries. The great bouleversements of 1830 and 1848 were the results of short-run spikes in food prices and financial crises more than of social polarization. As agricultural productivity improved in Europe, as industrial employment increased and as the amplitude of the business cycle diminished, the risk of revolution declined. Instead of coalescing into an impoverished mass, the proletariat subdivided into ‘labour aristocracies’ with skills and a Lumpenproletariat with vices. The former favoured strikes and collective bargaining over revolution and thereby secured higher real wages. The latter favoured gin. The respectable working class had their trade unions and working men’s clubs. The ruffians had the music hall and street fights.

The prescriptions of the Communist Manifesto were in any case singularly unappealing to the industrial workers they were aimed at. Marx and Engels called for the abolition of private property; the abolition of inheritance; the centralization of credit and communications; the state ownership of all factories and instruments of production; the creation of ‘industrial armies for agriculture’; the abolition of the distinction between town and country; the abolition of the family; ‘community of women’ (wife-swapping) and the abolition of all nationalities. By contrast, mid-nineteenth-century liberals wanted constitutional government , the freedoms of speech, press and assembly, wider political representation through electoral reform, free trade and, where it was lacking, national self-determination (‘Home Rule’). In the half-century after the upheaval of 1848 they got a great many of these things — enough, at any rate, to make the desperate remedies of Marx and Engels seem de trop. In 1850 only France, Greece and Switzerland had franchises in which more than a fifth of the population got to vote. By 1900 ten European countries did, and Britain and Sweden were not far below that threshold. Broader representation led to legislation that benefited lower-income groups; free trade in Britain meant cheap bread, and cheap bread plus rising nominal wages thanks to union pressure meant a significant gain in real terms for workers. Building labourers’ day wages in London doubled in real terms between 1848 and 1913. Broader representation also led to more progressive taxation. Britain led the way in 1842 when Sir Robert Peel introduced a peacetime income tax; by 1913 the standard rate was 14 pence in the pound. Prior to 1842 nearly all British tax revenue had come from the indirect taxation of consumption, via customs and excise duties, regressive taxes that take a proportionately smaller amount of your income the richer you are. By 1913 a third of revenue was coming from direct taxes on the relatively rich. In 1842 the central government had spent virtually nothing on education and the arts and sciences. In 1913 those items accounted for 10 percent of expenditure. By that time, Britain had followed Germany in introducing a state pension for the elderly.

Marx and Engels were wrong on two scores, then. First, their iron law of wages did not exist. Wealth did indeed become highly concentrated under capitalism, and it stayed that way into the second quarter of the twentieth century, but income differentials began to narrow as real wages rose and taxation became less regressive. Capitalists understood what Marx missed: that workers were also consumers. It therefore made no sense to try to grind their wages down to subsistence levels. On the contrary, as the case of the United States was making increasingly clear, there was no bigger potential market for capitalist enterprises than their own employees. Far from condemning the masses to ‘immiseration’, the mechanization of textile production created growing employment opportunities for Western workers — albeit at the expense of Indian spinners and weavers — and the decline in the prices of cotton and other goods meant that Western workers could buy more with their weekly wages.

The second mistake Marx and Engels made was to underestimate the adaptive quality of the nineteenth-century state — particularly when it could legitimize itself as a nation-state. In his Contribution to a Critique of Hegel’s Philosophy of Right , Marx had famously called religion the ‘opium of the masses’. If so, then nationalism was the cocaine of the middle classes. Between 1830 and 1905 eight nation-states achieved either independence or unity: Greece (1830), Belgium (1830–39), Romania (1856), Italy (1859–71), Germany (1864–71), Bulgaria (1878), Serbia (1867–78) and Norway (1905). But the American Southerners failed in their bids for statehood, as did the Armenians, the Croats, the Czechs, the Irish, the Poles, the Slovaks, the Slovenes and the Ukrainians. The Hungarians, like the Scots, made do with the role of junior partners in dual monarchies with empires they helped to run. As for such ethno-linguistically distinct peoples as the Roma, Sinti, Kashubes, Sorbs, Wends, Vlachs, Székelys, Carpatho-Rusyns and Ladins, no one seriously thought them capable of political autonomy.

Entities like Italy or Germany, composites of multiple statelets, offered all their citizens a host of benefits: economies of scale, network externalities, reduced transaction costs and the more efficient provision of key public goods like law and order, infrastructure and health. The new states could make Europe’s big industrial cities, the breeding grounds of both cholera and revolution, finally safe. Slum clearance, boulevards too wide to barricade, bigger churches, leafy parks, sports stadiums and above all more policemen — all these things transformed the great capitals of Europe, not least Paris, which Baron Georges Haussmann completely recast for Napoleon III. All the new states had imposing façades; even defeated Austria lost little time in reinventing itself as ‘imperial-royal’ Austria-Hungary, its architectural identity set in stone around Vienna’s Ringstrasse.

But behind the façades there was real substance. Schools were built, the better to drum standardized national languages into young heads. Barracks were erected, the better to train the high-school graduates to defend their fatherland. And railways were constructed in places where their profitability looked doubtful, the better to transport the troops to the border, should the need arise. Peasants became Frenchmen — or Germans, or Italians, or Serbs, depending where they happened to be born.

So effective was the system of nation-building that when the European governments resolved to go to war over two arcane issues — the sovereignty of Bosnia-Herzegovina and the neutrality of Belgium — they were able, over more than four years, to mobilize in excess of 70 million men as soldiers or sailors. In France and Germany around a fifth of the pre-war population — close to 80 percent of adult males — ended up in uniform.

When the leaders of European socialism met in Brussels at the end of July 1914, they could do little more than admit their own impotence. A general strike could not halt a world war. What gave socialism a shot was that the hypertrophic nationalism of the first half of the twentieth century plunged the world into not just one but two world wars . Without these catastrophes, it is inconceivable that so many devotees of Marx would have come to power in the seventy years after 1917. The world wars made the case for socialism in multiple ways.

First, they seemed to confirm the destructive tendencies of ‘imperialism, the highest form of capitalism’. Second, they greatly expanded the role of the state, which became the principal purchaser of goods and services in most combatant countries, creating precisely the kind of state-controlled economy that socialist theory claimed would perform better than free markets. Third, the wars acted as a great leveller, imposing very high marginal rates of taxation, wage controls and price controls in ways that tended to reduce wealth and income disparities. Fourth, in 1917 the German government financed the Bolshevik coup in Russia that brought Lenin to power.

The tragedy was that those who promised utopia generally delivered hell on earth. According to the estimates in the Black Book of Communism , the ‘grand total of victims of Communism was between 85 and 100 million’ for the twentieth century as a whole. The lowest estimate for the total number of Soviet citizens who lost their lives as a direct result of Stalin’s policies was more than 20 million, a quarter of them in the years after World War II. Mao alone, as Frank Dikötter has shown, accounted for tens of millions: two million between 1949 and 1951, another three million by the end of the 1950s, a staggering 45 million in the man-made famine known as the ‘Great Leap Forward’, yet more in the mayhem of the Cultural Revolution. Even the less bloodthirsty regimes of Eastern Europe killed and imprisoned their citizens on a shocking scale. In the Soviet Union, 2.75 million people were in the Gulag at Stalin’s death. The numbers were greatly reduced thereafter, but until the very end of the Soviet system its inhabitants lived in the knowledge that there was nothing but their own guile to protect them from an arbitrary and corrupt state. Other communist regimes around the world, including the very durable dictatorships in North Korea and Cuba, were strikingly similar in the miseries they inflicted on their own citizens.

The various socialist regimes could not even justify their murderous behaviour by providing those they spared with higher living standards than their counterparts living under capitalism. On the contrary, they were economically disastrous. The collectivization of agriculture invariably reduced farming productivity. A substantial proportion of the victims of Communism lost their lives because of the famines that resulted from collectivization in the Soviet Union and China. North Korea had a similarly disastrous experience. Central planning was a miserable failure for reasons long ago identified by Ludwig von Mises, Friedrich Hayek and Janos Kornai, amongst others. Indeed, the economic performance of strictly socialist countries got worse over time because of rigidities and perverse incentives institutionalized by planning.

Moreover, the evidence is clear that, as countries moved away from socialist policies of state ownership and towards a greater reliance on market forces, they did better economically. The most striking example — but one of many — is that of China, which achieved a true great leap forward in economic output after beginning to dismantle the restrictions on private initiative in 1978. After the collapse of ‘real existing socialism’ in Central and Eastern Europe in 1989 and the dissolution of the Soviet Union in 1991, there was widespread recognition (the ‘Washington consensus’) that all countries would benefit from reducing state ownership of the economy through privatization and lowering marginal tax rates. As figure 4 shows, the highest marginal personal income tax rate was reduced in nearly all OECD countries between the mid-1970s and mid-2000s.

By 2007, socialism seemed dead almost everywhere. Only the most ardent believers could look at Cuba or Venezuela — much less North Korea — as models offering a better life than capitalism. Even when the era of globalization and deregulation ended in the disarray of the global financial crisis, socialism did not initially show much sign of making a comeback. In most countries, the financial crisis of 2008–9 was more politically beneficial to the populists of the right, illustrating that, as in the 19th century, national identity tended to trump class consciousness whenever the two came into conflict.

Why, then, has socialism come back into vogue in our time — and in America, of all places? To answer this question, it is helpful to turn back to Schumpeter. It will be remembered that he argued, first, that capitalism’s propensity for ‘creative destruction’ was also a source of weakness; second, that capitalism tends towards oligopoly, not perfect competition; third, that capitalism ‘creates, educates and subsidizes a vested interest in social unrest’, namely intellectuals; and, finally, that socialism is politically attractive to bureaucrats and (many) democratic politicians. All four tendencies are visible in the United States today. Although policymakers have been successful in reducing the volatility of output and the rate of unemployment since the financial crisis — and very successful in raising the prices of financial assets above their pre-crisis level — the relative losers of the past decade have been succumbing in alarming numbers to what Case and Deaton have called ‘deaths of despair’. A number of authors have noted the decline in competition that has afflicted the United States in the recent past, most obviously but by no means only in the information technology sector, which has come to be dominated by a handful of network platforms . The American academy is now skewed much further to the left than it was in Schumpeter’s time. And, just as Schumpeter might have anticipated, a new generation of ‘progressive’ politicians has come forward with the familiar promises to soak the rich to fund new and bureaucratic entitlement programmes. It is noteworthy that younger Americans — nine out of ten of whom now pass through the country’s left-leaning college system — are disproportionately receptive to these promises.

New York Representative Alexandria Ocasio-Cortez is often portrayed as an extremist for the democratic socialist views that she espouses. However, survey data show that her views are close to the median for her generation. The Millennials and Generation Z — that is, Americans aged 18 to 38 — are burdened by student loans and credit card debt. Millennials’ early working lives were blighted by the financial crisis and the sluggish growth that followed. In later life, absent major changes in fiscal policy, they seem unlikely to enjoy the same kind of entitlements enjoyed by current retirees. Under different circumstances, the under-39s might conceivably have been attracted to the entitlement-cutting ideas of the Republican Tea Party (especially if those ideas had been sincere). Instead, we have witnessed a shift to the political left by young voters on nearly every policy issue, economic and cultural alike. As figure 5 shows, it is the youngest voters in American who are most attracted to socialism, to the extent that those aged under 25 profess to prefer it to capitalism. This must be a matter of serious concern for Republicans, as ten years from now, if current population trends hold, Gen Z and Millennials together will make up a majority of the American voting-age population. Twenty years from now, they will represent 62 percent of all eligible voters.

Of course, it depends what is meant by ‘capitalism.’ According to a 2018 Gallup poll, just 56 percent of all Americans have a positive view of capitalism. However, 92 percent have a positive view of ‘small business’, 86 percent have positive view of ‘entrepreneurs’ and 79 percent have a positive view of ‘free enterprise’. It also depends what is meant by ‘socialism’. Asked by Gallup to define socialism, a quarter of Democrats (and Republicans) said it meant equality; 13 percent of Democrats saw it as government services, such as free health care; around the same proportion thought that socialism implied government ownership. (About 6 percent believed that socialism meant being social, including activity on social media.)

Asked by Anderson Cooper to define socialism, Ocasio-Cortez replied: ‘What we have in mind and what my policies most closely re-resemble are what we see in the UK, in Norway, in Finland, in Sweden.’ But just how socialist is Sweden today? The country is 9th in the World Economic Forum’s Competitiveness ranking, 12th in the World Bank’s Ease of Doing Business league table, and 19th in Heritage’s Economic Freedom ladder. Many young Americans seem to have in mind the 1970s, rather than the present, when they wax lyrical about Swedish socialism.

So what does American socialism amount to? According to a Harvard poll, 66 percent of Gen Z support single-payer health care. Slightly fewer (63 percent) support making public colleges and universities tuition-free.

The same share supports Ocasio-Cortez’s proposal to create a federal jobs guarantee. Many Gen Z voters are not yet in the workforce, but nearly half (47 percent) support a ‘militant and powerful labour movement’. Millennial support for these policies is lower, but only slightly. Although wary of government in the abstract, young Americans nevertheless embrace it as the solution to the problems they perceive. Among voting-age members of Gen Z, seven in ten believe that the government ‘should do more to solve problems’ and ‘has a responsibility to guarantee health care to all’.

These polling results strongly suggest that what young Americans mean by ‘socialism’ is nothing of the kind. What they have in mind is not the state taking over ownership of the means of production, which is the true meaning of socialism. They merely aspire to policies on healthcare and education that imply a more European system of fiscal redistribution, with higher progressive taxation paying for cheaper or free healthcare and higher education. As figure 6 shows, OECD countries vary widely in the extent to which they reduce inequality by means of taxes and transfers. At one extreme is Chile, which only minimally reduces its Gini coefficient through its fiscal system; at the other is Ireland, which would be an even less egalitarian country than Chile without taxes and transfers, but which reduces inequality by more than any other OECD country through the various levers of fiscal policy. American voters may one day opt for an Irish level of egalitarianism, but it would be a mistake to regard this is a triumph for socialism. So long as it is a large private sector that is being taxed to pay for the benefits being disbursed to lower income groups, socialism is not le most juste .

A final cause of confusion that remains to be resolved is what to make of ‘ socialism with Chinese characteristics ’? According to the Economist, ‘The non-state sector contributes close to two-thirds of China’s GDP growth and eight-tenths of all new jobs.’ Clearly, the most dynamic Chinese corporations — Alibaba and Tencent, for example — are not state-owned enterprises. The state sector has shrunk in relative terms significantly since the beginning of economic reform in the late 1970s. A common conclusion drawn by many Western visitors is that China is now socialist in name only; functionally it is a capitalist economy.

One objection to that conclusion is that, since the accession to power of Xi Jinping , there has been a deliberate revival of the state sector. In 2012, for example, private sector companies received 52 percent of new loans issued by the official bank sector, compared with 32 percent to SOEs. But in 2016 private companies received just 11 percent of new loans, while more than 80 percent flowed to SOEs. The balance has shifted back in the other direction in more recent years, but the central government retains an option to direct credit in this discriminatory way, just as it relies on capital controls to prevent Chinese investors sending more money of their abroad, and on anti-corruption procedures to confiscate the property of officials and businessmen deemed to have transgressed.

Schumpeter largely omitted from his analysis an important variable which helps explain why socialism did not prevail in most countries in the second half of the twentieth century — namely, the rule of law. Because socialism at root means a violation of private property rights — the forced acquisition of assets by the state, with or without compensation — the most effective barrier to its spread is in fact an independent judiciary and a legal tradition that protects property owners from arbitrary confiscation.

A common error made in the wake of the 1989 revolutions was to argue that it was capitalism and democracy that were interdependent, whereas in reality it is capitalism and the rule of law. On this basis, it is striking not only that China is so much inferior to the United States by most measures in the World Justice Index, but also that Sweden is some way ahead of the United States.

The defining characteristic of socialist states is not their lack of democracy, but their lack of law. So long as China does not introduce a meaningful reform of the law — creating an independent judiciary and a truly free legal profession — all property rights in that country are contingent on the will of the Communist Party. It is perhaps worth adding that, precisely because property rights in a socialist state are so constrained, there is almost no limit to the negative externalities that can be foisted on citizens and neighbouring countries by polluting state enterprises (see figure 8).

Nearly eighty years ago, Schumpeter was right to identify the inbuilt weaknesses of capitalism and the strengths of socialism, and to perceive that democracy alone would not necessarily uphold the free market system. He correctly identified the enemies within, which would turn against capitalism even in its most propitious habitat, the United States.

He did not, however, spend enough time thinking about what institutions might be counted upon to defend capitalism against socialism. In a characteristically sarcastic passage setting out the supposed benefits of socialism, Schumpeter notes that: ‘A considerable part of the total work done by lawyers goes into the struggle of business with the state and its organs. It is immaterial whether we call this vicious obstruction of the common good or defence of the common good against vicious obstruction. In any case the fact remains that in socialist society there would be neither need nor room for this part of legal activity. The resulting saving is not satisfactorily measured by the fees of the lawyers who are thus engaged. That is inconsiderable. But not inconsiderable is the social loss from such unproductive employment of many of the best brains. Considering how terribly rare good brains are, their shifting to other employments might be of more than infinitesimal importance.’

Conspicuously, Schumpeter did not subsequently acknowledge that defending business against the state is in fact an economically beneficial activity, insofar as it upholds the rights of private property and makes it difficult to violate them. Perhaps he did not feel that he needed to state something so obvious. Yet sometimes it is the responsibility of a public intellectual to do just that.

What makes socialism pernicious is not so much the inefficiency that invariably attends state ownership of any asset, as the erosion of property rights that tends inevitably to be associated with the state’s acquisition of private assets. Where — as in Sweden in the 1950s and 1960s — socialists acquired a dominant political position without overthrowing property rights in pursuit of direct state ownership, it proved possible to roll it back, once the inefficiencies of state control became apparent. But where — as in China or Venezuela — the rule of law has essentially ceased to exist, such self-correction becomes almost impossible. The socialist economy can then go down only one of two possible paths: towards authoritarianism, to rein in the oligarchs and carpetbaggers, or towards anarchy. This is a lesson that young Americans might have been taught at college. It is unfortunate that, as Schumpeter predicted, the modern American university is about the last place one would choose to visit if one wished to learn the truth about the history of socialism.

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Capitalism Vs Democracy Differences and Similarities

The capitalism vs democracy essay aims at making comparisons and contrasts between capitalism and democracy . The aim of the article is to explain the two concepts as well as their pros and cons to further facilitate the understanding of their similarities and differences. Before going to capitalism vs democracy, let us look at the two concepts.

Table of Contents

What is Capitalism?

When we talk of capitalism , it means an economic system in which private individuals are in full ownership and control of all means of production (trade and industry). It is one of the major economic systems that exist in most economies of the world. All capital resources or capital goods/ factors of production are owned by private individuals. Here, the determinant of the level of the production of goods and services as well as their prices is the forces of demand and supply .

A capitalist economy is a free market economy, also known as the laissez-faire economy. Private individuals determine the basic economic problems in society under this economy since they own and control all means of production.

Capitalism pros and cons

1. advantages of capitalism, efficient resource allocation.

Resource allocation is more efficient in the capitalist economy due to the existence of competition. This happens because companies try to utilize their resources such that they increase productivity and quality. They adopt strategies to cut down costs while they increase productivity and competitiveness. This is because a firm will certainly go out of business if it is unproductive.

Utilization of available resources

Capitalism has a great advantage in terms of optimal utilization of available resources. Firms try to engage their scarce resources in an efficient and economical way. By being strategic in this aspect, efficiency minimizes the wastage of resources. Every producing firm gives in its best in maximizing profit while minimizing cost. This result is possible only through the usage of resources in an economic way.

Financial incentives

In capitalism, the incentives to be more creative and innovative exist. Firms get a higher level of motivation to work hard. In this case,  firms embark on research and development With the purpose of facilitating expansion. The essence of this is to avoid going out of business since it is necessary to survive in the competitive market. In capitalism, every firm competes for the consumer’s money and patronage by improving product quality. So, firms take risks in setting up a business . In this economy, large financial rewards follow suit.

Minimal discrimination

This economic system is a tool for bringing people together and this helps to overcome discrimination. This goes further to encourage domestic and international trade . A sensitive outcome of this is that it works towards breaking down trade barriers. The system brings countries together thereby ignoring racial and tribal differences. Capitalism drives haters towards working on their hatred.

Raising the standards of living

Capitalism helps in improving the standard of living through the reduction of poverty. Obviously, economic growth gives rise to an improved standard of living. This is traceable to poverty reduction. When a country’s GDP grows, poverty reduces, and this is the result of production and entrepreneurship .

Consumer choices

There is freedom of choice. By implication, individuals can choose what to buy. Another area of choice is in the area of occupation and employers. Choices give rise to competition which triggers firms to improve in their product quality.

Dynamic efficiency

Capitalists/producers are highly responsive to the changes in  consumer behavior , choices, tastes, and preferences. They respond swiftly to new consumer trends, prompt response to the tastes and preferences of consumers.

Minimal government control

In a capitalist economy, there is minimal government control. Here, if the government tries to control a capitalist economy, problems will result. Some of the problems will include corruption, poor information, and a lack of incentives. By implication, a corrupt government is of great hazard to an economy. In this aspect, government control does more harm than good. This has a very high tendency of eroding an economy.

Self-interest

In this economy, individuals can pursue their self-interests and satisfaction. You have the right to do whatever you desire without experiencing any form of civil and political pressure . The emphasis here is on the idea that people’s actions are beneficial to the entire society. Humans are the most productive factors, they earn money which fetches them both political and financial freedom.

Competition

As individuals are free to own and control means of production, they can study the demands of consumers. This enables them to produce commodities that satisfy their wants. Businesses in the market compete with one another for consumer patronage and money. This happens through the growth of demand.  The positive impact of competition is that it motivates firms to produce more goods and lower their prices. This then calls for more labor force and better wages for the labor.

Invention and innovation

Through the capitalist idea, firms get more encouragement to come up with new business ideas. Efficiency in the market moves progressively.  Finding new business ideas as well as applying them to its production processes facilitates rapid expansion, greater employment opportunities, and a greater level of income. Firms that are innovative enjoy the benefits of their research as they create things that never existed.

2. Disadvantages of capitalism

Higher-income and wealth inequality.

In the capitalist economy, businesses tend to care less about the less privileged and the disadvantaged. The high rate of competition deviates the focus of people from societal benefits. The effect of this is a higher level of income inequality. Here, people’s priority bases on self-interest rather than societal interests. This, in turn, amounts to consumers exploitation by business firms.

Economic instability

It can lead to economic instability. When the economy expands, there is joy while the reverse is the case during economic contraction. This contraction may amount to an economic recession which will increase the unemployment rate. Wealthier people have more immunity to this period because they can go back to their wealth reserve. The system does not always stay on the growth pattern as some segments enjoy growth while others do not.

Fewer advantages for the low-skilled people

People who do not have sufficient skills will have no place to exist in a capitalist economy. This system requires firms and individuals to remain competitive. Based on this theory, social welfare and security programs do not seem to exist. This implies that any individual who is not able to contribute will face so many life-threatening experiences. Everyone pursues their own interests above others.

Requirements for successful consumption

Without consumers spending their money, the capitalist economy will not be effective. People will struggle to survive if consumers decide to save for future purposes. For capitalism to survive, it requires successful consumption.

Consumerism and environmental costs

For a capitalist economy to be successful, there has to be endless production. This production has led to environmental disasters thereby raising questions pertaining to sustainability. The long-term effect of capitalism is environmental pollution as well as climatic changes in production processes. The depletion of natural resources takes place in the long run thereby lowering the overall quality of life in society.

Greed while seeking profit

The profit comes first before every other thing. The emphasis and focus on profit cause producers to compete among themselves. The focus and emphasis on this subject matter make companies sell their products at the highest possible price. As they do this, they try to keep their costs low. Obsession with profit heightens the level of income inequality. The masses seem not to enjoy equal opportunity. The greed factor amounts to a high level of consumer exploitation. Also, some firms dominate the market thereby eliminating smaller firms. They charge the price they wish to thereby exploiting consumers.

Workforce limitations

In theory, factor inputs should be able to transit from unprofitable to profitable businesses. Unfortunately, this does not work for the labor force. Business fluctuations have a more negative impact on the labor force and this gives rise to a high unemployment rate. It is usually difficult for people to secure full-time jobs unless during an economic boom.

Neglect of social benefits

The system ignores the provision of social benefits since it yields no profit to capitalists. As a major feature of capitalism, the profit motive is the main factor. The government usually steps in to provide social benefits due to this deficiency.

Class struggle

Under capitalism, class struggles and conflicts are inevitable. Labor unrests such as strikes and riots exist in the system. Conflicts usually exist between employers and employees especially when wage earners face exploitation from capitalists.

What is democracy?

Democracy is a system of government in which the entire citizens or eligible ones have the right to carry out direct votes on issues or elect someone to decide on their behalf. In other words, democracy is the government of the people, for the people, and by the people. Due to the fact that everyone cannot have a hand in the running of a country, the masses vote for a representative that will take action on their behalfs such as the members of the house of representatives and councilors.

Almost everyone believes that democracy is the best available system of government. This is because everyone is free to have a voice and air out their opinions. A democratic government is not coercive and dictatorial in nature. In this governmental system,  public opinions are present. Under this form of government, the abuse of human rights is unacceptable.

Democracy pros and cons

1) advantages of democracy, personal involvement with the government.

Democracy provides people with the opportunity of having personal involvement with their government. Individuals can decide their fate since a democratic government is under the control of the people. This means that people have the right to choose to vote in the manner in which their morality dictates. Every cast of votes is a chance to express personal opinions. An agreement exists in a democratic government.

Minimizes the issue of exploitation

Democratic structures work towards reducing the issues of exploitation. This is because of the individuals that gain votes into powerful positions. Under democracy, there is an equal distribution of authorities in the system. Checks and balances exist to make sure that no single person gains supremacy over legislation. it does not allow officials from ignoring the needs of the people. Everyone has the opportunity to pursue their personal gains.

Positive equality

A democratic system of government encourages equality in a positive manner, it offers every vote an equal amount of weight in the course of an election. Every individual has the opportunity to cast a ballot without any form of judgment while registering for this process. This provides an opinion regardless of one’s economic and social status. In essence, every YES or NO counts as one whether you are rich or poor, possess an asset or not. One word that democracy and socialism have in common is equality.

Faster economic growth

A  democratic government tends to grow an economy faster than other systems of government. The general public can pursue whatever they want.  There are legal barriers to prevent one individual from hurting another even as freedom exists. Democracy influences everyone’s work with regard to fruitfulness as everyone employs their strengths.

2) Disadvantages of democracy

May be ineffective.

If voters do not take time to educate themselves on decisions regarding government, democracy will not be effective. There is usually no direction regarding how voters are to approach their responsibility.

Dependent upon the will of the majority

Democracy tends to be unfair to the minority as the majority carries the vote. The majority are better off while the minority are worse off. Minorities tend to feel as though their votes do not really count for something.

The cost of democracy unrealized

One of the least cost-efficient systems of government that exist today is the democratic government. The high cost involved is a factor that many people have not realized that it exists. The time and finances required in conducting an election are so costly. Even local and regional elections cost a lot. It is important for people to have power in their voices even as the government uses the taxes they pay for this opportunity.

More time to implement changes

Democracy requires more time for a change to take place. The processes of implementing changes tend to slow down such that it can take many years. This is because a referendum must go to the voters. All decisions must undergo a review potentially. Because of this, there is a certain level of uncertainty.

The risk of empty promises

The goal of every politician is to receive the highest number of votes. This gives rise to empty promises. An election candidate can make so many promises that will never be fulfilled once he gets into office. Under this system of government, empty promises are common.

Voters must accept an entire mandate for single issues

Unless a direct structure of democracy is in place, voters will always face compulsion to accept an entire manifesto to carry out votes on issues that are critical to their needs. Instead of the people/voters having a candidate who will truly represent them, they have no other choice than to pick the platform closest to their stance.

Capitalism vs democracy

Capitalism vs democracy similarities.

The capitalism vs democracy similarities explains the areas in which capitalism and democracy are similar. Though they represent two different concepts, it is important to note some similarities that exist.

Both capitalism and democracy provide for the freedom to make choices between alternatives. Capitalism empowers members by giving them the freedom to make choices with regard to what to produce or purchase. Also, democracy offers freedom of expression to the people. Freedom to make choices is a high moral principle.

Competition exists in both capitalism and democracy. Capitalist firms compete for the consumer’s money and patronage. Also, election candidates compete for the votes of the masses and the masses compete for their personal interests through their votes.

Tendency of immorality

Under capitalism and democracy, immorality tends to exist. While capitalists abuse monopoly power leading to exploitation, candidates abuse their power through some acts like corruption and lies. Election rigging is another form of immorality under the democratic form of government.

Effect on the economy

Both capitalism and democracy have effects on a country’s economy. These effects can take different forms, either positive or negative

Differences between capitalism and democracy

Capitalism vs democracy chart.

The capitalism vs democracy chart summarizes the differences that exist between capitalism and democracy.

Key differences between capitalism and democracy

Let us look at capitalism vs democracy differences in the areas below;

Capitalism refers to an economic system in which private individuals own and control trade and industry as well as all means of production. Democracy on the other hand is a system of government in which the entire citizens or eligible ones have the right to vote directly on issues or elect someone to make these decisions on their behalf.

While capitalism is an economic concept that emphasizes private ownership and control of all means of production, democracy on the other hand is a political concept that emphasizes equal rights of the masses to involve in political participation through the casting of votes.

While capitalism has to do with the private sector, democracy basically has to do with the public sector.

Capitalism is characterized by class distinctions where we have the rich and the poor. On the other hand, democracy has the feature of equal rights. The system of government does not divide the class of people into rich and poor. In other words, democracy does not divide society into classes as it is in the case of capitalism.

Capitalism focuses on individual growth while democracy focuses on the growth of the public as well as the combined growth of the government and society.

Economic growth

Under capitalism, the economic growth of the state is absent while it is present under the democratic system of government.

Benefits of capital

Under socialism , the benefits of capital are to the business owner while under democracy, capital is meant to benefit the public and society.

Priority on societal needs

The capitalist system places more priority on the freedom of individuals. Democracy places more priority on the interests of society above individual interests.

Frequently asked questions

What is the difference between capitalism and democracy.

Firstly, capitalism is an economic concept while democracy is a political concept. Also, while capitalism is a private sector, democracy is a public sector. Capitalism focuses on individual growth while democracy focuses on public and societal growth. While capitalism benefits the business owner only, democracy benefits the general public/society. Capitalism places more priority on individual needs than societal needs while the reverse is the case under democracy.

Is the United States a democracy or a capitalist country?

The united states s a capitalist country, highly entrepreneurial with large industries.

Is capitalism a form of government?

Capitalism is an economic system, not a form of government. It is an economic system in which private individuals are in full ownership and control of all means of production.

Related posts:

• What is Communism? Examples of Communist Countries
• Socialism Vs Democracy Differences and Similarities
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• Fascism Vs Communism Differences and Similarities

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David Brooks: Resist the Pull of ‘Us vs. Them’ Thinking

A message for president biden..

This transcript was created using speech recognition software. While it has been reviewed by human transcribers, it may contain errors. Please review the episode audio before quoting from this transcript and email [email protected] with any questions.

My name is David Brooks, and I’m a columnist for “The New York Times.”

[MUSIC PLAYING]

I’ve just finished a book tour, so I’ve been on the road for five months. I’ve probably been to 35 or 40 states. And I would say the predominant emotion I have heard when I ask people about politics during my travels is exhaustion — a sense of fatigue, a sense of discouragement, a sense of passivity, and especially among Democrats, a pessimism about the election. I think people are shocked and discouraged that Donald Trump, right now, has a pretty significant lead over Joe Biden in the presidential election.

We’re in the middle of the global surge in populism. Populism is belief that there’s a conflict, a class conflict. And the conflict is between the real Americans and the globalized elites. And in America, it’s mostly measured by levels of education. So it’s people with a high school degree who tend to be working class, who feel they are being oppressed, looked down upon, and condescended to, and morally scorned by members of the highly educated elites who live along the coasts.

And so, that’s the populism in America. It’s also the populism in Britain. It’s the populism in France, across Europe. In 2002, only 120 million people lived in their countries governed by populist parties. By 2019, more than 2 billion people lived under governments governed by populist parties. And so, this is surging. And what does global populism have in common? All these different national forms of populism, they are all based on zero sum thinking.

If you go back through human history, the human condition is tribal. And so, a zero sum mindset, an us/them mindset is sort of, I think, woven into our nature.

The zero sum mindset is the idea that we have a finite amount of goods in the world. And if I’m going to improve my lot in the world, I’ve got to take something away from you. And so, the zero sum mindset is an ancient mindset that is behind most conquest and war.

The positive sum mindset is the idea that we have an infinite, a potentially infinite amount of good in the world. And then I can add some good, and you will benefit. So when Steve Jobs does really well and makes $1 billion, it doesn’t hurt me. I get to enjoy the Mac. I get to enjoy my iPhone. People who work at Apple get to have great jobs. And so, his prosperity is not taking away other people’s prosperity. It’s mutually advantageous.

And that’s just a better way to live. It’s a better mindset to go through life, that life is not war and war. Life is competition, creativity, innovation, productivity, and sort of a measured sort of competition to add to each other’s benefit. And in many ways, our politics is a struggle to embrace this liberating idea against the darker angels of our nature, which want to really undermine it with us/them thinking.

People broke out of the zero sum mindset through a series of intellectual revolutions we call liberalism. And liberalism is the belief that we want a society that’s pluralistic, that I want to pursue my own eccentric and dynamic life being a writer or being an architect or being a nurse. And you get to pursue your own life, and the market and democracy are ways to keep our diversity coherent, so we can live together in an orderly way, in a safe way, in an affluent way, and liberalism based on respect and dignity for the individual.

And that, I think, is fundamentally different than populism, which is not so much based on respect and dignity of the individual. It’s based on obeisance, the bowing down to the great leader. If I had to try to summarize what I believe to the president and he was listening, I would say, Mr. President, as I think you understand, you’re involved in a fundamental and elemental struggle between two mindsets, two cultures, two systems of government, one of which is liberal and positive sum and growth oriented, and the other which is populist and zero sum and threat oriented. And so, we need you to be as big as the situation demands.

I’ve been writing about Joe Biden for 30 years. At the core of Joe Biden is a certain family culture. And I’ve never met a guy who quotes his mom and dad so much. And what he quotes is their belief in human dignity. And I think dignity is at the core of Joe Biden’s whole ethos.

It’s what makes him sensitive to slight. It’s what makes him fundamentally allied with working class Americans who have not had all the advantages. And so, starting from that point, celebrating human dignity, I think it puts him in touch and has put him in touch with the core of what Americans actually believe in.

I think it would be wonderful if Biden got out of the role of being president, got out of fancy policies, and stressed that liberalism and liberal democracy is not just an abstract idea that John Stuart Mill thought of. Liberal democracy is something we live every day. It involves a concrete set of social actions, like starting a business, building a better school, working together with people and companies, rising from poverty to buy a house, raising your children not to be culture warriors, but to be innovators, to be entrepreneurs.

This is what liberal capitalism is. It’s the stuff we do every day. And it comes under threat when we decide to live in a society that’s not liberal, but is authoritarian, and suddenly you don’t have the freedom to dream what you want to dream because you’re enmeshed in a web of fear.

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By David Brooks

Produced by Vishakha Darbha

The New York Times Opinion columnist David Brooks worries that the United States — and much of the world — is being harmed by the rise of populism. In this audio essay, he argues that the “us-versus-them” mentality, so core to populist movements, limits societal growth. Instead, Democrats should promote a positive-sum mind-set, centered on respect and dignity for every individual. He urges President Biden and other American leaders to embody a culture that celebrates what he describes as “liberal capitalism.”

(A full transcript of this audio essay will be available within 24 hours of publication in the audio player above.)

This episode of “The Opinions” was produced by Vishakha Darbha. It was edited by Alison Bruzek, Kaari Pitkin and Annie-Rose Strasser. Engineering by Efim Shapiro with mixing by Sonia Herrero. Original music by Isaac Jones, Carole Sabouraud and Sonia Herrero. Fact-checking by Mary Marge Locker. Audience strategy by Kristina Samulewski and Shannon Busta.

The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips . And here’s our email: [email protected] .

Follow the New York Times Opinion section on Facebook , Instagram , TikTok , WhatsApp , X and Threads .

David Brooks has been a columnist with The Times since 2003. He is the author, most recently,  of “How to Know a Person: The Art of Seeing Others Deeply and Being Deeply Seen.” @ nytdavidbrooks

395 Democracy Essay Topics & Research Questions: Elections, American Democracy, and More

What is democracy? The word “democracy” has Greek roots. It combines two words: “demos,” which refers to people residing within a specific country, and “kratos,” which means power. Democracy ensures that all citizens have the same rights regardless of their background, race, religion, or sexual orientation. It also raises people’s sense of civic dignity.

In this article, we’ll explain how to write an essay on democracy and give some helpful tips. Keep reading to find out more.

• 🔝 Top Democracy Essay Topics

📝 Democracy Essay Prompts

• 💡 Democracy Research Questions
• ✍🏻 Democracy Essay Topics
• 🎤 Democracy Speech Topics
• ✅ Essay on Democracy: Outline

🔗 References

🔝 top 12 democracy essay topics.

• Democracy as public justification.
• Freedom and democratic authority.
• What are the main problems with democratic governance?
• The role of democracy in the modern world.
• The development of democracy.
• The influence of democracy on the young generation.
• The connection between human rights and democracy.
• What are the key features of democracy?
• The value of democracy.
• Democracy as collective self-rule.
• The demands of democratic participation.
• Limits to the authority of democracy.

Many students find writing a college essay on democracy to be a stressful task. For this reason, we’ve prepared some essay prompts and tips to help students improve their writing skills.

What Is Democracy: Essay Prompt

Democracy is a form of government that has played an essential role in reshaping societies from monarchical, imperial, and conquest-driven systems into ones founded on sovereignty and harmonious cohabitation principles. Here are some of the questions you can use for your essay:

• What is the definition of democracy?
• Why do we need democracy?
• Where did democracy initially come into existence?
• What distinguishes democracy from other forms of government?
• Why is education important for democracy?
• What is democracy’s primary flaw?
• What poses the most significant risk to democracy?

Disadvantages of Democracy: Essay Prompt

One disadvantage of democracy is that it can sometimes lead to slow decision-making due to the need for consensus and majority agreement. There’s also a risk of overlooking the interests of the minority. Finally, democratic systems can be susceptible to manipulation and misinformation, potentially leading to uninformed or misguided decisions by the electorate. In your essay, you may focus on the following aspects:

• The issue of corruption . A democratic leader is only in power for a limited time. As a result, there’s a tendency to make money through the use of authority.
• Unfair business . Political leaders advocate unfair commercial practices to get support for political campaigns.
• Misuse of media . Often, the media attempts to deceive the public to influence their voting behavior.

Democracy vs. Totalitarianism: Essay Prompt

Totalitarianism and democracy are opposing forms of government. Whereas democracy values equal rights and citizens’ participation in the government, in a totalitarian system, the leader’s word is the law, and the state has all the power. To compare totalitarianism and democracy in your essay, you may discuss these points:

• Origin of totalitarianism and democracy;
• Public opinion on these forms of governance;
• Law and discretion;
• Minority rights and their importance;
• Internal enemies of totalitarianism and democracy.

Capitalism vs Democracy: Essay Prompt

Capitalism and democracy spread throughout the Western world during the 20th century. The fundamental distinction between the two concepts is that democracy is a form of government and a political system, while capitalism is an economic system.

In your essay, you can discuss the following questions:

• What is the connection between capitalism and democracy?
• What are the main goals and values of capitalism/democracy?
• What does capitalism/democracy mean today?
• What are the examples of capitalism/democracy?
• Why is capitalism /democracy harmful?

💡 Research Questions about Democracy

• How does a society’s education level impact the strength of its democratic institutions?
• What role does media freedom play in promoting democratic values?
• Relationship between economic development and political democratization .
• How does income inequality affect the functioning of democratic systems?
• What are the key factors that contribute to the stability of democratic governments?
• How does the level of political participation among citizens influence the quality of democracy?
• Researching the concept of democracy .
• What is the role of political parties in shaping democratic governance?
• How does the use of technology impact democratic processes and decision-making?
• Asian economic development and democratization .
• Does the presence of a strong judiciary contribute to the consolidation of democracy in a country?
• How does the level of trust among citizens affect democratic practices?
• What impact does gender equality have on the strength of democratic institutions?
• The equality of income or wealth depending on democracy .
• How does ethnic diversity influence the stability of democratic governments?
• What role do non-governmental organizations play in promoting democratic values?
• The democratic style of leadership .
• How does government transparency impact citizens’ trust in democratic institutions?
• How does the separation of powers principle contribute to democratic governance?
• What impact do direct democratic mechanisms, such as referendums , have on decision-making processes?
• How do political parties strengthen democracy ?
• How does the presence of independent media impact the accountability of political leaders in a democracy?
• What is the role of civil society in ensuring the effectiveness of democratic governance?
• Martin Luther Jr. “Jail Letter” and Aung San Kyi’s democracy excerp t.
• How does the integration of minority communities impact the inclusiveness of democratic systems?
• Does the involvement of citizens in local governance contribute to stronger democratic practices?
• What role does the rule of law play in establishing a democratic society?
• What are the impacts of social media on democracy ?
• What factors contribute to the erosion of democratic norms and values?
• What impact do international agreements have on the promotion and consolidation of democracy?
• Democracy: pluralist theory and elite theory .
• How does the role of money in politics influence the democratic decision-making process?
• What impact do international human rights standards have on protecting citizens’ rights within a democracy?
• What role does decentralization play in promoting democratic governance?
• What is the impact of technology on democracy ?
• How does the level of government accountability impact the overall functioning of a democracy?
• What is the relationship between economic development and the sustainability of democratic systems?
• Comparison of democracy levels in Uruguay and Venezuela .
• How does the level of political polarization impact the effectiveness of democratic governance?
• What role do regional and international organizations play in supporting the nascent democracies?
• How does the balance of power between the executive, legislative, and judicial branches influence democratic decision-making ?
• What are the key challenges faced by young democracies?
• What role does public opinion play in shaping democratic policies?
• Middle East democratization .
• How does the level of political corruption impact the functioning of democratic institutions?
• What impact does globalization have on the democratic governance of nation-states?
• What are the consequences of restrictions on freedom of expression in democratic societies?
• Social media regulation and future of democracy .
• What role do international democracy promotion programs play in supporting democratic transitions?
• How do different cultural and historical contexts shape the understanding and practice of democracy?
• Democracy and Western cultural values worldwide .
• What factors contribute to democratic backsliding in countries that have previously experienced democratic transitions?
• How does the presence of proportional representation contribute to inclusive and representative democratic governance?
• What role do civic education and political literacy play in a democracy?
• How does the level of social media usage impact the spread of disinformation and its effect on democratic processes?
• African political parties’ endeavour for the implementation of the democracy .
• How do citizen participation mechanisms, such as participatory budgeting, impact democratic decision-making?
• How does the level of political party system fragmentation impact the effectiveness of democratic governance?
• What role does the protection of minority rights play in establishing and sustaining democratic societies?
• How does the level of regional integration influence the democratic governance and decision-making of member states?
• The Australian Labor Party and the American Democrats: similarities and differences .
• What impact does income distribution have on citizens’ satisfaction with democratic systems?
• How does the presence of a strong civil service impact the capacity and efficiency of democratic governance?
• What factors contribute to successful democratic transitions in countries with a history of authoritarian rule ?
• How does the level of trust in key democratic institutions impact overall democratic stability?
• What factors contribute to economic failure in democracies ?
• What role does political leadership play in establishing and maintaining strong democratic systems?

Democracy and Elections Research Paper Topics

• The impact of voter ID laws on democratic participation.
• The influence of campaign finance spending on electoral outcomes.
• Political participation and voting as democracy features .
• The role of social media in shaping public opinion during elections.
• The effectiveness of electoral college systems in representing the will of the people.
• The effectiveness of international election observation missions in ensuring electoral integrity.
• The impact of electronic voting systems on election integrity.
• The role of political advertising in shaping voter preferences.
• Low voter participation in democratic countries .
• The relationship between political polarization and voter turnout.
• The effectiveness of voter education programs in promoting informed decision-making.
• The effect of voter suppression tactics on democratic participation.
• The influence of party endorsement on candidate success in elections.
• The impact of gender and ethnicity on political representation in elected offices.
• Voting: democracy, freedom, and political agency .
• The effectiveness of campaign debates in informing voter choices.
• The influence of social factors and peer networks on political affiliation and voting behavior.
• The effect of negative campaigning on voter perceptions and candidate success.
• The role of non-traditional media sources in shaping public opinion during elections.
• The role of technology in enhancing election monitoring and ensuring transparent and secure voting processes.
• Electoral systems in a democratic country .
• The influence of disinformation campaigns on voter behavior and their implications for electoral integrity.
• The challenges and opportunities of implementing online voting systems for improving accessibility and election integrity.
• The impact of non-voters and their reasons for not participating in the democratic process.
• The impact of campaign advertising on voter behavior in democratic elections.
• The role of social media platforms in electoral outcomes in democratic societies.
• “The Electoral College Is the Greatest Threat to Our Democracy” by Bouie .
• Electoral reforms and their effects on voter turnout and representation in democracies.
• The influence of demographic factors and socioeconomic status on voting patterns in democratic elections.
• The challenges and opportunities of implementing electronic voting systems to enhance the integrity and efficiency of democratic elections.

E-Democracy Research Topics

• Digital divide and its implications for e-democracy.
• Role of social media in promoting online political engagement.
• E-government and democracy .
• Challenges and opportunities for e-petitions as a form of democratic expression.
• Cybersecurity challenges in ensuring secure and reliable e-voting systems.
• Role of e-democracy in improving representation and inclusivity in decision-making processes.
• Ethical considerations in the collection and use of personal data for e-democracy purposes.
• Use of blockchain technology in enhancing transparency and trustworthiness in e-democracy.
• The use of technology in promoting transparency and accountability in government.
• American e-government and public administration .
• Influences of online political advertising on voter behavior.
• The potential of online deliberative platforms in fostering inclusive public discourse.
• The role of online communities in mobilizing citizens for political action.
• Effects of online platforms on political campaign strategies and communication tactics.
• Use of technology in expanding access to information and knowledge for informed citizenship.
• Strategies for building trust in e-government .
• Evaluation of online political education programs and their impact on citizen engagement.
• Open government initiatives and their role in fostering e-democracy .
• Digital activism and its effectiveness in driving social and political change .
• Online tools for monitoring and preventing disinformation and fake news in political discourse.
• Role of digital identity verification in ensuring the integrity of e-democracy processes.
• Challenges and opportunities for e-democracy in authoritarian regimes .
• Public trust and perceived legitimacy of e-democracy systems and processes.

✍🏻 Topics for Essays about Democracy

Democracy argumentative essay topics.

• The role of public protests in strengthening democracy.
• The role of youth engagement in shaping the future of democracy.
• Is the Democratic Party the Labour Party of the US ?
• Should there be limits on freedom of speech in a democracy to prevent hate speech?
• The tensions between national security and civil liberties in a democratic context.
• Is direct democracy a more effective form of governance than representative democracy?
• The United States is not really a democracy .
• The significance of an independent judiciary in upholding democratic principles.
• The importance of a robust and unbiased public education system for a thriving democracy.
• Compulsory voting: is it compatible with democracy ?
• The impact of income inequality on democratic participation and representation.
• The significance of constitutional reforms in addressing the challenges faced by democracies .
• Does the digital age pose a threat to the principles of democracy?
• Should prisoners have a right to vote in a democratic system?
• Are referendums effective tools for democratic decision-making?
• Democracy vs. other types of government .
• Does the media have a responsibility to promote democratic principles and accountability?
• Can a democratic government effectively balance national security and civil liberties ?
• Should there be limitations on the freedom of peaceful assembly and protest in a democracy?
• Democracy is the tyranny of the majority over the minority .
• Is the rise of populist movements a threat to democratic values?
• Does globalization undermine national sovereignty and democratic decision-making?
• Democracy: Durbin’s, Duckworth’s, and Krishinamoorthi’s positions .
• Should judges be elected or appointed in a democratic system?
• Is a strong independent judiciary essential for a healthy democracy?
• Is the EU an example of a successful democratic regional integration project?
• How can we provide political representation for non-citizens in a democratic society?
• Is democracy a universal value, or should different cultures be allowed to adopt different governance models?
• Democracy in the US: is it real today ?
• Should democratic governments prioritize economic growth or social welfare policies ?
• Should there be restrictions on the power of political parties in a democracy?
• Is there a tension between individual rights and collective decision-making in a democratic society?
• The role of national identity and multiculturalism in shaping democratic societies.
• The effectiveness of citizen initiatives and participatory democracy.
• Federal system’s pros and cons from a democratic perspective .
• The importance of accountability and transparency in ensuring the functioning of democracy.
• Should religion play a role in political decision-making in a democracy?
• Does a two-party system hinder the development of democracy?
• The influence of corporate power on democratic decision-making processes.
• The tension between individual rights and collective needs in democratic societies.
• Has the US government become more of or less of a republic, a confederation, or a democracy ?
• The role of education in fostering active and informed citizenry in a democracy.
• Is a multi-party system more conducive to a healthy and inclusive democracy?
• Should there be restrictions on political advertising to ensure fairness and transparency in democratic elections?
• Should corporations have the same rights as individuals in democratic legal systems?
• Is it necessary to separate church and state in a democratic society?
• How democratic was the new Constitution and the Bill of Rights ?
• Should there be mandatory civics education to promote democratic values and participation?
• Should there be age restrictions on political officeholders in a democracy?
• Should digital voting be implemented to increase participation and transparency in elections?

American Democracy Essay Topics

• The historical development of American democracy: from the Founding Fathers to the present.
• The significance of the American Constitution and its amendments in ensuring democratic governance in the United States.
• Government: United States Constitution and democracy .
• The impact of the American Revolution on the birth of American democracy.
• The separation of powers and checks and balances in the US government .
• The significance of the Bill of Rights in protecting individual freedoms within American democracy.
• Democracy: the Unites States of America .
• The challenges and opportunities of citizen participation in American democratic processes.
• The contributions of influential figures such as Thomas Jefferson , James Madison, and Alexander Hamilton to the development of American democracy.
• Dahl’s “How Democratic Is the American Constitution?”
• The evolution of political parties in American democracy: from the Federalists and Anti-Federalists to the Democrats and Republicans.
• The role of the Constitution in establishing and safeguarding American democracy.
• The two-party system and democracy in the US .
• The impact of the Civil Rights Movement on expanding democratic rights and equality in America.
• The ways media influences public opinion and its impact on American democracy.
• The influence of money in American politics and its effects on democratic processes.
• American democracy v. the social democracy: the healthcare system .
• The impact of the women’s suffrage movement on democratic participation and gender equality.
• The role of activism and social movements in shaping American democracy .
• The influence of third-party candidates on American democracy and election outcomes.
• Advancing democracy in the United States .
• The challenges and reforms associated with the electoral college system in American democracy.
• The impact of the progressive movement on democratic governance and social welfare.
• Democracy and tyranny in the United States .
• The role of the American presidency in shaping and upholding democratic principles.
• The historical relationship between religious freedom and American democracy.
• The influence of the labor movement on workers’ rights and democratic policies.
• Analysis of democracy in the USA .
• The significance of the New Deal and Great Society programs in fostering economic fairness and democratic values.
• The impact of the Cold War on American democracy and the preservation of democratic ideals abroad.
• Democracy in the United States of America .
• The challenges and reforms associated with campaign finance regulations in American democracy.
• The impact of modern technology on American democracy, including social media, data privacy , and online political engagement.
• Democracy in America: elites, interest groups, and average citizens .
• The significance of presidential debates in shaping public opinion and democratic decision-making.
• The role of state and local governments in American democracy and their relationship with the federal government .
• The impact of the Electoral College on presidential elections and its implications for democratic representation.
• Interest groups in the American democratic system .
• The relationship between media bias and democratic discourse in American democracy.
• The impact of the populist movement, both historically and in contemporary politics, on American democracy.
• The role of the First Amendment in protecting and promoting free speech in American democracy.
• “What Republicans and Democrats Are Doing in the States Where They Have Total Power”: analysis .
• The influence of foreign policy decisions on American democracy and the balance between national security and democratic values.
• American women’s historical struggles and triumphs in achieving suffrage and fighting for equal rights in American democracy.
• The shifting nature of American democracy .
• The impact of the Black Lives Matter movement on public discourse, democratic activism, and policy change.
• The labor movement’s influence on workers’ rights, economic policies, and democratic representation.
• The US democracy’s promotion in the Middle East .
• The significance of federalism in the American democratic system and the balance of power between states and the federal government.
• The importance of a free and independent press in American democracy.
• Democratic traditions in early American colonies .
• The influence of religious groups on American politics, democratic decision-making, and social policy.
• The role of non-governmental organizations in promoting democratic values, human rights, and social justice in America.
• Edmund Morgan: the views of American democracy .
• The protection of minority rights and the principle of majority rule in American democracy.
• The role of civil society organizations in promoting and strengthening American democracy.

Jacksonian Democracy Essay Topics

• The main principles and goals of Jacksonian Democracy.
• The impact of Jacksonian Democracy on expanding voting and political participation.
• Andrew Jackson’s first inaugural address .
• The role of populism in shaping Jacksonian Democracy.
• The controversy surrounding Jackson’s Indian Removal policies .
• The influence of Jacksonian Democracy on the development of the two-party system.
• The impact of the “Kitchen Cabinet” and informal advisors on Jackson’s presidency.
• The economic policies of Jacksonian Democracy and its effect on the national economy.
• The antebellum capitalism and Jeffersonians and Jacksonians capitalist ideals .
• The expansion of land ownership and westward expansion under Jacksonian Democracy.
• The role of women in Jacksonian Democracy and the early suffrage movement .
• The controversy surrounding Jackson’s veto of the Bank of the United States.
• The impact of Jacksonian Democracy on Native American rights and sovereignty.
• The legacy of Jacksonian Democracy and its influence on subsequent political movements.
• The significance of the Democratic Party’s rise during the Jacksonian era.
• Andrew Jackson presidency: society, politics, veto .
• The impact of Jacksonian Democracy on the growth of economic opportunities for common people.
• The relationship between Jacksonian Democracy and the rise of American nationalism.
• The role of newspapers and media in promoting or opposing Jacksonian Democracy.
• The controversies surrounding Jackson’s removal of government deposits from the Bank of the United States.
• The response of marginalized groups, such as Native Americans and African Americans, to Jacksonian Democracy.
• The impact of Jacksonian Democracy on the development of the American presidency and executive power.
• The long-term effects of Jacksonian Democracy on American political and social identity.

Questions about Democracy for Essays

• What are the key principles and values of democracy?
• How does democracy promote individual freedoms and rights?
• “Democracy and Collective Identity in the EU and the USA”: article analysis .
• What are the different forms of democracy, and how do they vary?
• How does democracy ensure accountability and transparency in governance?
• Concepts of democracy and wealth .
• What is the role of elections in a democratic system?
• How does democracy promote political participation and citizen engagement?
• Discussion of democracy assignment .
• What are the main challenges to democracy in the modern world?
• How does democracy protect minority rights and prevent majority tyranny?
• What are the political concepts of democracy and nationalism ?
• How does the media influence democratic processes and outcomes?
• What role do political parties play in a democratic system?
• What are representative democracy and its constituents ?
• How does democracy address social and economic inequalities?
• What is the relationship between democracy and human rights ?
• What are the benefits and drawbacks of direct democracy?
• How does democracy impact economic development and prosperity?
• Democracy description as a political system .
• What role does the judiciary play in a democratic system?
• How does democracy address issues of social justice and equality ?
• What are the implications of globalization for democracy?
• Can democracy exist without a well-informed citizenry and a free press?
• Democratic and authoritarian states .
• How does democracy respond to extremist ideologies and populism?
• What are the advantages and disadvantages of representative democracy?
• How does democracy promote peaceful transitions of power?
• How does democracy foster social cohesion and national unity?
• How does democracy ensure the protection of civil liberties?
• What is the nature and performance of Indonesia’s new democracy ?
• How does democracy reconcile the tension between majority rule and minority rights?
• What are the roles of civil society and non-governmental organizations in a democracy?
• How does democracy deal with issues of environmental sustainability ?
• Democracy: evolution of the political thought .
• What are the effects of money and lobbying on democratic processes?
• How does democracy guarantee freedom of speech and expression?
• What is the Canadian political culture and democracy ?
• What is the impact of education and civic education on democracy?
• How does democracy address the challenges of pluralism and diversity?
• What are the implications of digital technologies for democracy?
• The French Revolution: failed democracy and Napoleon .
• What role does international cooperation play in fostering democracy?
• How does democracy address the power imbalance between different societal groups?
• What are the reasons for the failure of democracy in South America ?
• What are the historical origins of democracy and its evolution over time?
• How does democracy protect the rights of marginalized and vulnerable populations?
• What are the political apathy and low voter turnout consequences in a democracy?
• How does democracy handle situations of crisis and emergency?
• Democracy as a socio-political phenomenon .
• What is the role of public opinion in democratic decision-making?
• How does democracy ensure fair representation and inclusivity ?
• What are the mechanisms in place to hold elected officials accountable in a democracy?

🎤 Topics about Democracy for Speeches

• The importance of democracy in safeguarding individual freedoms and human rights.
• The historical evolution of democracy: from ancient Athens to modern-day governance.
• The essential concepts and principles of democracy .
• Democratic revolutions and their impact on shaping the world.
• The role of citizen participation in a thriving democracy.
• Exploring the concept of direct democracy: can it work on a large scale?
• Backsliding of democracy: examples and preventive measures .
• The role of media in fostering accountability in a democracy.
• Striving for gender equality and women’s empowerment within democratic frameworks.
• Democracy and efforts to emphasize it .
• The influence of money and campaign finance on democratic processes.
• Democracy and social justice: addressing inequalities and discrimination.
• The impact of education in building a democratic society.
• The Republican and Democratic parties: issues, beliefs, and philosophy .
• Democracy and the environment: Promoting sustainable practices .
• The relation between democracy and economic development.
• Mexico’s globalization and democratization .
• The significance of a strong, independent judiciary in upholding the rule of law in a democracy.
• The potential benefits and drawbacks of digital technology on democracy.
• Youth engagement and the future of democracy.
• Democracy: equality of income and egalitarianism .
• Democracy in the face of political polarization and extremism.
• Democracy and cultural diversity : balancing majority rule and minority rights.
• Democratic society and the capitalist system .
• The importance of civic education in nurturing active and informed citizens.
• Democracy and peace: how democratic nations tend to avoid armed conflicts .
• The role of international organizations in promoting democracy worldwide.
• The struggle for democracy: bureaucracy .
• Social media and democracy: examining their impact on political discourse.
• Democracy and global governance: the need for collaborative decision-making.
• Democratization processes that have reshaped societies .
• The implications of demographic changes on democratic representation.
• The challenges of ensuring democracy in times of crisis and emergency.
• Democracy and immigration : the role of inclusive policies and integration.
• Corruption in the Democratic Republic of Congo .
• The responsibility of democratic nations in addressing global challenges (e.g., climate change , pandemics).
• The effects of fake news and disinformation on democratic societies.
• Democrats and communists in 1950 .
• Democratic reforms: lessons learned from successful transitions.
• The role of intellectuals and artists in promoting democratic values and ideals.
• Democracy and the future of work : navigating technological advancements and automation.
• Safeguard of democracy is education .
• The importance of strong civil society organizations to democracy.
• Democracy and national security: striking the balance between safety and civil liberties.
• Representing the democracy of Florida .
• The significance of a robust social welfare system in ensuring democratic stability.
• Democracy and accountability in the age of surveillance and privacy concerns .
• The future prospects of democracy: challenges and opportunities in the 21st century.
• Democratic regime and liberation movements .
• The role of transitional justice in post-authoritarian democracies.
• Democratic decision-making: weighing majority opinion against expert knowledge.
• The topic of democracy in various speeches .
• Democracy and educational policy: the need for equitable access to quality education.
• The influence of cultural, religious, and ideological diversity on democratic governance.
• Democracy and intergenerational justice: balancing present needs with future aspirations.
• Biden warns of US peril from Trump’s ‘dagger’ at democracy .

Democracy Debate Topics

• Is direct democracy a practical and effective form of governance?
• Should there be term limits for political officeholders in a democracy?
• Social democratic welfare state .
• Is compulsory voting necessary for a thriving democratic system?
• Is money in politics a threat to democratic integrity?
• Should there be limits on campaign spending in democratic elections?
• Social democracy vs. social policy .
• Should felons have the right to vote in a democracy?
• Can social media platforms ensure fair and unbiased political discourse in a democracy?
• Why does democracy work and why doesn’t it ?
• Is proportional representation more democratic than a winner-takes-all electoral system?
• Should there be stricter regulations on political lobbying in a democracy?
• Is it necessary to establish a global democracy to tackle global challenges ?
• Is the concept of majority rule compatible with protecting minority rights in a democracy?
• Is populism a threat or an asset to democracy?
• The struggle for democracy: how politics captures people’s interest ?
• Should the voting age be lowered to increase youth participation in democracy?
• Should corporations have a say in democratic decision-making processes?
• Is a strong centralized government or decentralized governance better for democracy?
• Should the internet be regulated to protect its users from misinformation?
• Is democracy the best form of government ?
• Should religious institutions have a role in democratic governance?
• Is international intervention justified to promote democracy in authoritarian regimes ?
• Is a multi-party democracy more representative than a two-party system?
• Should immigration policies be determined through democratic processes?

✅ Outline for an Essay About Democracy

We’ve prepared a mini guide to help you structure your essay on democracy. You’ll also find some examples below.

Democracy Essay Introduction

Would you like to learn how to write a strong essay introduction? We are here for you! The introduction is the first paragraph of your essay, so it needs to provide context, capture the reader’s attention, and present the main topic or argument of an essay or paper. It also explains what readers can expect from the rest of the text. A good introduction should include:

• Hook . A hook is a compelling, attention-grabbing opening sentence designed to engage the reader’s interest and curiosity. It aims to draw the reader into the essay or paper by presenting an intriguing fact, anecdote, question, or statement related to the topic.
• Background information . Background information provides context and helps readers understand the subject matter before delving into the main discussion or argument.
• Thesis statement . It’s a sentence in the introduction part of the essay. A thesis statement introduces the paper’s main point, argument, or purpose, guiding and informing the reader about the essay’s focus and direction.

Hook : “Democracy is the worst form of government, except for all the others.” ― Winston S. Churchill.

Thesis statement : Democracy has endured the test of time, and although other forms of governance have failed, democracy has stayed firm.

Essay on Democracy: Body Paragraphs

Body paragraphs are critical in writing a great college essay. There are 5 main steps you can follow to write a compelling body paragraph:

• Create a topic sentence.
• Provide the evidence.
• Explain how the evidence relates to the main points.
• Explain why your arguments are relevant.
• Add transition to the following paragraph.

Topic sentence : In a democratic system of governance, supreme authority rests with the people and is exercised through a framework of representation, often involving regular, unrestricted elections.

Supporting evidence : Democracy allows residents to participate in creating laws and public policies by electing their leaders; consequently, voters should be educated to select the best candidate for the ruling government.

Essay about Democracy: Conclusion

The conclusion is the final part of an academic essay. It should restate the thesis statement and briefly summarize the key points. Refrain from including new ideas or adding information to the conclusion.

There are 3 crucial components to the conclusion:

• Rephrased thesis statement.
• Summary of main points.
• Thought-provoking or memorable closing statement.

Rephrased thesis statement : To conclude, democracy is a form of government that has proven its effectiveness and resilience in contrast to other governance systems.

We hope you’ve found our article interesting and learned some new information! If so, feel free to share it with your friends and leave a comment below.

• Thesis Statements &ndash; The Writing Center • University of North Carolina at Chapel Hill
• How to Write a Five-Paragraph Essay, With Examples | Grammarly
• Creating a Thesis Statement, Thesis Statement Tips – Purdue OWL® – Purdue University
• Paragraphs &amp; Topic Sentences: Writing Guides: Writing Tutorial Services: Indiana University Bloomington
• How to Write a Topic Sentence (With Examples and Tips) | Indeed.com

414 Proposal Essay Topics for Projects, Research, & Proposal Arguments

371 fun argumentative essay topics for 2024.

Taxes, Capitalism, and Democracy: Karl Marx vs. Plato Essay

After the 2007 economic recession, it is claimed that many people have defaulted in paying their taxes due to low returns and lack of jobs. The media has focused on the issue mainly because taxation is a sensitive issue to government. Anusha Shrivastava wrote that the Federal Reserve had not done enough during the last few years to boost the economy (1). In this regard, fiscal policies must be designed to ensure maximum taxation.

Policies made should be in line with the state’s monetary policies. This would stimulate the economy. Brenda Cronin observed that American households had witnessed a rise in their income in the recent days (2). She however predicts that economic growth could be temporary because of financial problems in other states. Cronin argues that there is some hope among Americans that the economy might favor them.

This is welcomed by the state because taxation would be enhanced. Conversely, many people are not sure whether economic growth rate will hold. Citizens argue that one-month growth rate should not be used to speculate good future. Brendan Conway argues that taxation is projected to fall because American stock market is experiencing tensions due to the on-going financial meltdown in Europe (2).

The columnist argues that Dow Jones Industrial unit had already witnessed a drop of 145 points or 1.2% of its total shares. This shows that economic tension is still a threat to taxation. Many citizens would not be able to pay their taxes.

The claims in the media belong to the camp of freedom and community. The columnists are discussing some of the key issues that touch on the freedom of people and their communal living. Citizens are burdened with the responsibility of paying taxes yet they are not in a position. Taxation denies people their freedom because they become slaves only to pay taxes.

Therefore, the columnists present some problems that affect people in society. Citizens are seeking freedom although it is tied to other things. Economic freedom would liberate people from poverty. Cronin argues that the state does not except the poor from taxation. The rich are taxed in the same way as the poor. This represents inequality because the state should tax the rich to feed the poor. This shows that capitalism is a problem to society.

It affects the lives of citizens because it leads to domination, alienation and pauperization. The existing tax system portrays inequalities because it increases the gap between the rich and the poor. The rich pay fewer taxes while the poor are taxed heavily. Such system leads to instabilities in the community because it affects the social structure. Families continue suffering because able members are forced to work hard only to pay taxes.

Karl Marx argued that the economy determines all aspects of life. In this respect, life is depended on production and distribution. Marx focused on the work that people do in order to sustain their lives. The most important aspect of life is the means of production. The means of production such as tools, raw materials and skills are the base of any society. He observed that a small group in the society controls capital. The main aim of the owners of the means of production is to maximize profits.

Plato on his part observed that justice is only achieved when people pay taxes. The best in society should be allowed to rule because they are able to bring justice and order. Citizens must be governed because they are highly appetitive. This means that they can easily be corrupted by the earthly. The philosopher king is compared to gold, meaning that he/she is the best in society (Nettleship 89). Soldiers are likened to silver.

They do not have the best knowledge to run the economy but they help the philosopher king in enforcing the law. Their main role is to make sure that people conform to the set rules. Citizens are like bronze. This means that they are not much valued. Plato argued that citizens must be respected because they are taxpayers. Any government cannot do without citizens. However, Plato observed that citizens must not be given a chance to rule because they are least qualified.

Karl Marx would argue that the state is the property of the ruling class. The state serves the interests of the owners of means of production (27). Marx could further observe that policies made are meant to subjugate and dominate workers. Workers are forced to pay taxes making them to work hard. The owners of the means of production benefit because workers produce more goods to earn more wages. The state makes sure that people participate in economic development by setting standards for each person.

Workers do not benefit from government policies, which make them to rise up to the occasion and fight for their rights. Workers will one day overthrow the ruling class, leading to socialism. Marx argued that taxation is one of the reasons that will force workers to challenge the elites in society. He further observed that introduction of technology would contribute to worker’s dissatisfaction. Profits will fall among capitalists because of competition, which will force them to adopt technology because it is easy to control.

Plato on his part was against capitalism because it supports democracy. Plato was disillusioned with the way Socrates was treated by the thirty tyrants (Blackburn 35). Socrates was falsely accused of inciting the youth against the aristocrats. Socrates was finally punished by death, something that did not go down well with Plato.

Plato became an opponent of democracy, suggesting that the best form of government should be based on educational qualification. The most qualified would identify how much each person should pay in form of taxes. Democracy is the tyranny of the multitude according to Plato. He highly discouraged democracy because it oppressed some members of society.

Works Cited

Anusha, Shrivastava. Fed’s Williams: Fiscal Policy Actions ‘Badly Needed’. Wall Street Journal , 18 Nov. 2011. Web. Nov. 2011. https://blogs.wsj.com/economics/2011/11/18/feds-williams-fiscal-policy-actions-badly-needed/?mod=WSJBlog&mod=marketbeat

Blackburn, Simon. Plato’s Republic: A Biography . New York: Atlantic Monthly Press, 2007.

Conway, Brendan. Global Stocks Slide. Wall Street Journal , 20 Nov. 2011. Web. https://www.wsj.com/articles/SB10001424052970204531404577051842829678760

Cronin, Brenda. Uptick in household income: Trend or hiccup. Wall Street Journal , 21 Nov. 2011. Web. https://blogs.wsj.com/economics/2011/11/21/uptick-in-household-income-trend-or-hiccup/?mod=WSJBlog&mod=marketbeat

Marx, Karl. A Contribution to the Critique of Political Economy . Moscow: Progress Publishers, 1977. Web. https://www.marxists.org/

Nettleship, Richard. The Theory of Education in Plato’s Republic . London: Oxford, 1935.

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IvyPanda. (2024, February 27). Taxes, Capitalism, and Democracy: Karl Marx vs. Plato. https://ivypanda.com/essays/taxation-essay/

"Taxes, Capitalism, and Democracy: Karl Marx vs. Plato." IvyPanda , 27 Feb. 2024, ivypanda.com/essays/taxation-essay/.

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IvyPanda . 2024. "Taxes, Capitalism, and Democracy: Karl Marx vs. Plato." February 27, 2024. https://ivypanda.com/essays/taxation-essay/.

1. IvyPanda . "Taxes, Capitalism, and Democracy: Karl Marx vs. Plato." February 27, 2024. https://ivypanda.com/essays/taxation-essay/.

Bibliography

IvyPanda . "Taxes, Capitalism, and Democracy: Karl Marx vs. Plato." February 27, 2024. https://ivypanda.com/essays/taxation-essay/.

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