On the Incompatibility of Capitalism and Democracy

Democratic nations today are often referred to as bourgeois democracies, corporate democracies, and even called corporate feudalism. This is a warranted critique of modern democracies, as the principles underlying capitalism and democracy are fundamentally opposed. According to Webster's dictionary, democracy is defined as "equality of rights," [1] and capitalism as, "an economic system in which the means of production and distribution are privately owned." [2] By definition alone, the consequences of capitalism immediately undermine the unity that democracy strives to achieve.

Capitalism is the system responsible for turning information into a commodity that costs time and money. In a capitalist system there will always be those who have a great deal of money and those who have less. When capitalism is mixed with democracy, a new system emerges in which people reap the benefits of uncertainty. This allows for the unequal distribution of wealth, and by default, unequal influence in government, in a system "where only the equal distribution of votes is supposed to reign."[3] In uncertainty, the division of labor promoted by capitalism will always lead to differing costs of acquiring information for different levels in the division of labor.[4]

Uncertainty leads to the conscious acquisition of information by individuals who try to exercise rational thought. In an uncertain world information has procurement, analytic, and evaluative costs.[5] On the same note, formal education has been cited to create a gap in information gathering. It is generally known that children of high-income groups usually receive a better education than children of lower income groups. This disparity puts the next generation of high-income earners at the head of the information gap.[6] The people who have more information regarding political situations have more money than others to obtain this information and also have the ability to persuade other voters.

Once there is a clear distinction between those who have persuasive ability and those who do not, the government and politicians seeking office will generally cater to their insatiable policy appetites. The idea of surrendering given political power to corporations or individuals who own them is completely out of touch with democratic ideology. In a democracy it is widely known that no one person, let alone a corporation, should have more power than another. The suggestion that politicians will surrender their policy positions to corporations or individuals in exchange for campaign contributions is bribery and should be treated as such. Unfortunately today in the US, this practice is not looked down upon, it is treasured and rewarded. This system is an effect of the combination of capitalism and democracy: you have money, give it to people who control the policy, and you control the policy.

Many argue that capitalism fosters democracy. These people cite history and use economic statistics to back up their claims. Statistical evidence has said to lead to the conclusion that there is a "strong statistical association between GNP per capita and democratic political institutions."[7] In order to find this as so-called evidence of capitalism supporting democracy one must ask how do we measure democracy and what evidence of progress can be found in GNP? First and foremost economic growth means nothing when a concentrated number of citizens at the top of the income latter benefit from said growth. While many countries show what is called economic progress, measured in GNP, GDP, et cetera, we must measure the effective distribution of wealth in said countries. It is widely known that in the United States the top ten percent of income earners own more than over seventy one percent of the nation's wealth.[8] While a few in the United States are obscenely rich, there are many who are scraping to afford food and shelter. This is not moral let alone democratic. Instead of racial or gender discrimination, capitalism encourages wealth discrimination. The focus on economic growth marginalizes the vast inequities perpetuated by the capitalist system that are present in industrialized/modern nations. If one is to ignore such inequality, they are in essence ignoring the foundations of democracy that the argument is said to foster.

The idea that capitalism facilitates the development of democracy is absurd. Simply because democracy and capitalism rose together does not mean that the democracy was as we understand it now. To rely on history as fact that the relationship between capitalism and democracy is a positive one, is to ignore the foundations of, in the United States for example, an economy built on slavery and colonization. Democratization of nations was a product the revolutionary struggles of peoples in colonies and oppressed peoples in Western nations; it was not the product of the market forces that historians claim democracy to be spawned. In fact, early capitalist economies were primarily based on the exploitation of colonies and oppressed peoples. In the early United States, we did not have (and it could be argued that we still do not have) and true democracy, but a democracy for the few.

I am obviously not arguing that democracy and capitalism cannot co-exist; they co-exist today. I am arguing instead, that they are two systems that are fundamentally and morally incompatible with each other. The conclusion of all this is that people who have more money have more important votes to politicians and the government. Elitism is acceptable and expected in a capitalist system however, in a democracy every person's vote is supposed to count equally. Democracy is about equality; capitalism rewards exploitation. Capitalism suggests that it is morally sound for some to starve so that others may take island vacations - after all, according to the market, they've earned it.

[1]Webster's Pocket Dictionary, 2003. 89

[2] ibid. Page 50

[3] Anthony Downs, An Economic Theory of Democracy, (Boston: Addison-Wesley, 1957), 94.

[4] ibid. Page 236

[5] ibid. Page 210

[6] ibid. Page 235

[7] Gabriel A. Almond, "Capitalism and Democracy," PS: Political Science and Politics, Volume 24, Number 3, September 1991, 467-474, http://links.jstor.org/sici?sici=1049-0965%28199109%2924%3A%3C467%3ACAD%3E2.0.CO%3B2-G, 4 December 2005.

[8] http://en.wikipedia.org/wiki/Distribution_of_wealth