Wednesday, January 04, 2006

Are Democracy and Capitalism Synonymous?

NP - Royskopp - What Else Is There

I asked two of my friends this question, here were their replies:

(friend 1) says:
Akeed ['of course' in arabic]

JZL says:
hell fuckin no ... if anything, theyre incompatible

Both of these people know their politics quite well, although they clearly have differing opinions on this matter. I guess it depends which way you lean. If you lean to the right, you see capitalism as the natural extension of democracy perhaps, something inevitable. As we progress as a society, naturally we would look towards free-trade solutions, where the ultimate fairness is obtained through the free movement of the dollar. Its not necessarily equal, but life's like that. If you lean towards the left, capitalism is not necessarily the natural evolution of a democratic society. Its the will of the political or corporate elite, an unfair system that may breed equity, but has no guarantee of equality (indeed, by its very nature, will continue to expand the difference between the rich and the poor).

I'll admit I'm a left-leaner. I like to believe that democracy does not necessarily mean capitalism.

Looking up dictionary definitions, initially it seems theres no link between them:

de·moc·ra·cy Audio pronunciation of "democracy" ( P ) Pronunciation Key (d-mkr-s)
n. pl. de·moc·ra·cies
  1. Government by the people, exercised either directly or through elected representatives.
  2. A political or social unit that has such a government.
  3. The common people, considered as the primary source of political power.
  4. Majority rule.
  5. The principles of social equality and respect for the individual within a community.
cap·i·tal·ism Audio pronunciation of "capitalism" ( P ) Pronunciation Key (kp-tl-zm)
An economic system in which the means of production and distribution are privately or corporately owned and development is proportionate to the accumulation and reinvestment of profits gained in a free market.

However, if we were to take real life examples of 'successful' democracies, we'd see that most of them are capitalistic societies. Look at the United States, the United Kingdom, Japan, etc. Successful democracies (by some counts), capitalist states. Look at Cuba - dictatorship, far from capitalist, far from successful economically.

But I doubt, personally, the relationship is that simple. I'm more interested that political theory, not current events and that (although I realise that current events are probably more important than mere theory). In theory, theres nothing tying democracy to capitalism. It just seems to be the trend in today's world. But theres examples of democracies that reject capitalism and free-market policies. Look at Venezuela and Bolivia. Both of these countries are democracies (theres a bit of talk about Venezuela, but I'm not sure about that). Bolivia's president-elect Evo Morales won something like 54% of the vote, the highest majority in quite a while, apparently. And he, like Hugo Chavez, president of Venezuela, has rejected US-sponsored free-trade policies.

In the end, I don't know whether democracy=capitalism. I like to think it doesnt: I like to think that our happiness is ultimately measured by how many widescreen TVs we have, or how many Starbucks Frappucinos we can buy a week. I read a book once, called Cloud Atlas, where there was this society which was I guess what you could call a pure capitalist society: he called it a 'corprocracy'. 'Coffee' was called 'Starbuck'. TVs were called 'Sonys'. Everyone had a certain amount of their income that they HAD to spend. I thought it was a very fascinating description of what society could become.


Some useful links on both, for you to decide :

And heres something new to me: sounds...interesting.

Posted by illogicist at 12:24 PM


  1. Blogger Lym posted at 1/04/2006 01:40:00 PM  
    Money---} Power----} Domination----} So called Democracy?

    Thats how I see it.
  2. Blogger A. B. Dada posted at 1/04/2006 04:10:00 PM  
    I found your blog by searching for anarcho-capitalism (I am an AnarCap).

    Capitalism and Democracy are actually direct opposites. In a Democracy, the majority ("mob") rules. They have the power to tax the individual or the minority, through a monopoly on force.

    Capitalism, on the other hand, is what I call "cooperation for the profit of both parties." Capitalism is, in essence, the fairest form of cooperation.

    Now many readers will disagree! They'll point to the unfairness of "capitalism" in the world. The problem with that point is that we don't live in a capitalist world -- we live in what is called mercantilism. Mercantilism is not even close to the freedom of capitalism: it includes protectionism, taxation, regulation and cronyism.

    Check out the myriad of anarchocapitalist blogs out there, or the Wikipedia article. Don't ever associate the US with capitalism -- we're not it, and we haven't been capitalistic since about 1859.
  3. Blogger muscati posted at 1/05/2006 08:03:00 AM  
    Democracy and capitalism are not synonymous. You can have one without the other, and you can have one despite the other. Non-democratic, strongly capitalistic countries: China, Singapore, Dubai, Malaysia, etc. Democratic country where capitalism had a very tough time and is still unable to break entirely free: India.

    In fact the India vs China comparison shows that in third world economies it can be argued that lack of democracy can more favorable to the emerging of capitalism. It can also argued that capitalism can eventually lead to increased democracy.
  4. Blogger x~nezitiC posted at 1/05/2006 08:15:00 AM  
    -Democracy is a political system.
    -Capitalism is an economical system.
    -You can't compare both in same level.
    -Democracy tends to use Capitalist system to run its economy,
    -while the economical communist system prefers to use Dectatorship. -Dictatorship can also use Capitalism such as Nazi Germany.
    -India vs China = India is using democratic political system that runs on some capitalistic economical system.
    -While China is trying to adjust, by running Communistic economical system and capitalistic system in the same time under dictatorship political system!
    - Therefore, I conclude that Capitalism is not Democracy, if so, then it's ok to say Communism is Democracy!

  5. Blogger Arabian Princess posted at 1/05/2006 10:16:00 PM  
    I think I agree with you, I dont think capitalisim means Democracy .. in fact I think it means the exact opposite. As a capatlist, if you have what it takes you win the market. If you win the market, you have power. If you have power you can rule.

    In another note, I am always surprised why do we have to push our countries into democracy thinking that its the best ultimate way to live. Democracy works in some places and doesnt work in others.
  6. Blogger Soul Rebel posted at 1/07/2006 02:35:00 AM  
    Captialism is an economic system
    Democracy is a political system
    Communism is both a political and economic system

    ...just had to clear a few things up before typing...

    I have to agree with Muscati, capitalism flourishes in countries where governments repress the people, and allow open access for governments to do whatever they want.

    Interestingly enough, big business tried to overthrow the U.S. Government during the depression. The man that they asked to lead the coup was Smedly Butler. Smedly Butler had a distinguished military career, and he gives a brief overview of his resume below.

    "I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902–1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested."
    --Smedley Butler

    Big business was worried about Roosevelt (F.D. that is) and his attempts for the government to sponsor projects and a "safety" net for its citizens. They felt that government was overstepping its bounds, and wanted Butler to do the same thing for business in America that he was so successful at doing in other countries. Set up a facist regime in the United States. One that would allow business to do all that it wishes, and set the stages for the emergence of capitalism.

    I come from the other end of the spectrum when it comes to anarchy...I wouldn't quite say I'm a political anarchist but I do identify myself as anti-authoritarian/anti-capitalist. In the anarcap model, you replace the state, with businesses.

    Let me repeat that, the state with businesses...

    These businesses run everything, including the security force, which they may use at their leisure (sure its for a "certain things", but we know how people act when money is involved...)

    Could it work in an ideal word? Of course it can.

    Are humans ideal? No, we are not. People love money and power above all things. Humans are greedy, its the story of the golden calf played out over and over again....

    In a democracy, its one person one vote...In capitalism people vote with money, whoever has the most money has the most power.

    The two are not the same, and either the political or the economic side needs to be changed so that they may work together.
  7. Blogger illogicist posted at 1/07/2006 12:09:00 PM  
    Some interesting comments, I'm glad that I got some cause this kind of topic usually doesnt go down too well on my blog. I'll comment more later, but I just want to clarify that I wasnt equating democracy and capitalism. What I was basically saying was does a democracy have to have a capitalist system.

    Anyway, more from me later.
  8. Blogger illogicist posted at 1/07/2006 01:37:00 PM  
    @a.b.dada: thanks for stopping by. I glanced thru the Wiki page, and I'll make sure to read some more on it later. But one criticism comes to mind for now: what about public goods? Things that have no real monetary benefit to the person who develops or maintains it, but has a positive externality on everyone else? E.g. national parks?

    Also, can you please explain to me the significance of 1859 in relation to America being a capitalist state? Please excuse my ignorance - I know few details about American history.

    @Muscati: I wonder if you could provide some more info or some links about India having a tough time breaking entirely free, I'd be interested to know more.

    @the rest: thanks for ur posts. SR in particular thanks for providing that info.

    On another note, does anyone apart from me get the perception that it seems to be taken for granted amongst everyday people that democratic societies are generally capitalistic to some degree? As in some greater degree than, say non-democratic countries? Thats just the impression I get.

    Regarding what AP said about democracy not always being ideal, I might agree, might disagree. If you have a good monarch, you're lucky. Thats pretty much what we have in Oman. But too often thats the exception and not the rule - look at pre-war Iraq, Libya, and Syria for example. I specifically chose arab countries btw to show that even in this relatively small region, the rule when it comes to dictatorships seems to be bad. With democracies, its still ugly and more often than not you end up with a non-so-good government.
    I was looking up a particular quote, I couldnt find it. Its something like democracy is the worst form of government that works, or something like that. Instead I found this:

    ... the 20th century has been characterized by three developments of great political importance: The growth of democracy, the growth of corporate power, and the growth of corporate propaganda as a means of protecting corporate power against democracy.

    Australian social scientist Alex Carey

    That quote is also kinda cool. Its ironic that so many of the famous quotes about democracy tend to put it down, eh?
  9. Blogger muscati posted at 1/07/2006 06:51:00 PM  
    Check your email :)
  10. Blogger muscati posted at 1/07/2006 07:00:00 PM  
    btw, totally agree with your last comments. It is by the grace of god that we have fortunate to have good rulers like Sultan Qaboos. Otherwise it would be an absolute disaster living in a non-democratic society. Look at how Oman was before Qaboos. We had close to 40 years of rule by his isolationist paranoid father which did nothing but damage to Oman. Because of the monarchy and lack of any kind of system for the people to do anything about it they had no choice but to either rebel, escape the country or simply stay and live in misery.

    The lack of democracy is only good when the leadership is good. But that's very rare. Not every country is lucky enough to be blessed with a Lee Kwan Yew or a Mohd bin Rashid Al Maktoum.
  11. Blogger Arabian Princess posted at 1/11/2006 12:19:00 PM  
    but look at arab world countries?? give me one democracy thats successful?

    the problem with us arabs is that we still have the mentality of triblisim in our blood .. we cant get it out .. whoever gets the chair *be it with election or by over-throwing the previous ruler" would try his best to keep his kin controling the country.

    ask me whats the soloution, I dont know .. I just know that we are happier in oman as a monarch. Without monarchy we would have a tribal war!!
  12. Blogger A. B. Dada posted at 1/11/2006 04:53:00 PM  

    what about public goods?

    That's a tough one because it is hard to see how we'd live free if we didn't have excessive taxation (and fiat inflationay money). Privately-funded (endowments by the wealthy?) parks are not out of the question even today. Many public parks already are litter pits and money pits -- the comparison of Boise-Cascade's pristine forests and the Yellowstone mess next door is appropriate. The same is true with libraries -- wealthy people love to pass on their name/memory, and I believe the opportunities to do so would open up if we privatized forests and libraries.

    For me, I have no problem with housing "co-ops" pitching in money together to set up local park endowments.

    Also, can you please explain to me the significance of 1859 in relation to America being a capitalist state? Please excuse my ignorance - I know few details about American history.

    From America's start through about 1859, we lived on the gold standard -- a true monetary system. $1 in 1800 was $1 in 1859. When Lincoln enacted a central bank, they inflated (legal counterfeit) money non stop, making $1 worth about $0.25 just years later. After the war the bank fell apart (people didn't have faith), the gold standard was brought back, and $1 was stable until 1913 when the central bank was recreated. $1 in 1913 is worth $0.03 today -- all from legal counterfeiting.

    Capitalism can not exist with a central bank -- the Federal Reserve in our case. Central banks force currency on citizens and then print it willy-nilly devaluing it over time, the worst form of taxation. True capitalism is actually not tied to any currency system -- money is part of the free market and everyone is available to choose their form of money. Some banks might decide to print dollars backed by oil, others might print dollars backed by gold. From 1800 to 1913, when gold was the standard, the government didn't print money -- banks did. You could have a Citibank $1 and an Amex $1 -- both equal to a certain deposit of gold. If you thought the bank was cheating (printing some fake bills here and there) you could redeem your $1 for the gold -- if the bank was lying, they'd have a run and go bankrupt (meaning bank rupture).

    Check out my blog if you have more interest, or just post more questions here :)

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