Capitalism and Democracy

There is indeed a noticeable difference between capitalist development and democracy especially when viewed from the perspective of two different countries practicing either of the above. Ideally, capitalist development entails an economic system that revolves around private ownership and freedom in markets, capitalism can also be compared to a great philosophy founded on the principals of individual gains and returns. On the other hand, democracy can be defined as a form of governance and a rule by the people. It involves having a large number of citizens taking part in a countries decision making progress, currently, over 70% of the world’s countries can be considered democratic.

Despite the increased number of democratic nations worldwide, there are still a number of countries that believe in the capitalism. For instance, United states of America is a better example of a capitalist country amongst other countries that share a similar ideology and we are going to keep a keen eye on it throughout this essay. For the democratic representation, Norway has for a good time now taken the first position in the democracy index scoring 9.87 and is also considered to practice full democracy whereas the rest with an index of about 5.00 being considered to be practicing a hybrid regime.

Adam Smith’s Theory on Capitalism

There are different theorists with a similar mindset who have brought their ideologies on board regards capitalism development as well as democracy. Adam Smith is considered to have fathered the capitalist theory of development and had the welfare of the society at heart. For the welfare of the society to grow, he encouraged free trade this meant personal interest in the exchange in goods and services in the market. This allowed the society to choose what to trade and how to trade it in the market and in turn, it lead to the society maximizing profits at the end of the trading spree. Adam understood that government intervention would be a mere burden to the society and hence in his ideology he placed the government at a spot where its role would simply be, educating the society. He also came up with the idea of division of labor which would basically increase the output while using the least resources. This concept allows division of the work load in to small parts. (Adam Smith, 1776. Wealth of nations.)

Similarities between Democracy and Capitalism

From that ideology, there are certain similarities that show up between democracy and capitalism. For instance, in as much as capitalism sidelines government intervention in its dealings, at some point Adam Smith agrees that it has a role to play by educating the society. While on the other hand, democracy runs with 100% support of government undertakings and interventions. Another similarity shows up when we view democracy and capitalism from the perspective of privatization. Capitalism revolves around prioritizing private interests whereas for democracy to take root, citizens must enjoy their sole right for personal ownership of belongings and business. 

Variations Between Capitalism and Democracy


The most distinct variation between capitalism and democracy is the distribution of power. With democracy, power is connected to citizenship and this is a factor that capitalism seems to undermine from the word go, since for them power is associated with property. It is important to note that there is a hierarchical order in power distribution but in as much as with democracy the power is with the people, the decision making process mandate is retained by the central government, an arm elected by citizens of the said state. Norway for instance, its democratic nature consists of a parliamentary constitutional monarchy that is led by both a monarch and a prime minister. The house of parliament is responsible in passing laws governing the state and is elected by the citizens.

Capitalism show cases the ideology of ownership of property where the wealthy also have a say in the decision making process on the state affairs. Its form of distribution of power is unclear and hazardous since it involves a lot of manipulation of power. On the flipside, its economic frame work time and again interferes with the political ideologies of the state since with capitalism, business interests become more and extremely overrepresented. United States of America shares a similar ideology where there is a different voting pattern compared to the democratic states. Here, the elite’s ideology (electoral college) is highly considered and their vote might even over rule the decision by the citizens. The electoral college also vote in the desired president and vice president.

Point of Interest

Another variation is the point of interest where democratic states place their interests on the publics welfare. The central government has a clear mandate of coming up with policies that in turn manage the state with the public interest at heart. Laws made by the Norwegian parliament, are ideally a representation of the peoples wants and needs. While the capitalists have their priority on the private interests, they pass their laws in a manner that it looks like they are protecting both the public and private but on the real, their point of interest is the private sphere. For instance, in the united states of America, there is the principle of a liberal non-regulated market that denies the government the power and mandate to regulate any free economic private interest of its citizens in order for the economy to flourish under sheer market rules and also for the sake of public interest.

In conclusion, it is clear that there is a distinctive difference between capitalism and democracy based on a number of issues. The irony is that, despite the manipulation in the capitalists’ ideology, their economies still flourish but that only allows the rich to get richer and the poor get no say. On the other hand, democratic states always have a stagnating economy but in turn allows everyone to take part in the decision making process, it might slow things but in the long run every citizen is always catered for since the government has its citizens as its top priority in its undertakings.


Brunkhorst, Hauke. "European Constitutionalization Between Capitalism and Democracy." Constellations 23, no. 1 (2016), 15-26. doi:10.1111/1467-8675.12167.

"Capitalism." Max Weber and Contemporary Capitalism (n.d.). doi:10.1057/9781137271181.0005.

Iversen, Torben. "Capitalism, Democracy, and Welfare." Capitalism, Democracy, and Welfare(n.d.), xix-xx. doi:10.1017/cbo9780511758645.001.

Mueller, John E. Capitalism, Democracy and Ralph's Pretty Good Grocery. Princeton, N.J.: Princeton University Press, 2001.

Rabie, Mohamed. "Capitalism and Democracy." Saving Capitalism and Democracy, 2013, 61-76. doi:10.1057/9781137321312_5.

Stripling, Scott Randall. Capitalism, Democracy, and Morality. Acton, Mass: Copley Pub. Group, 1994.

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