Why is there tension between capitalism and democracy today? Essay Example

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Title: Why is there tension between capitalism and democracy today?


At the moment, capitalism has been having a major impact on the progression of democracy. Countries which have both democracy and capitalism are more developed and stable economically. Capitalism is based on industrialising and creating an economical sufficient country. Democracy on the other hand is based on creating a society that recognises equal rights and freedoms for all citizens. Research shows that democracy is egalitarian while capitalism is in-egalitarian (Schumpeter, 2013). Thus, there has been a strain that exists between capitalism and democracy. Global power is highly related to the domain of capitalism. It is highly associated with the expansion of the corporate interests sometimes at expense of common citizens. There is high expansion of multinationals which are operating across borders. In fact, multinationals firms have been able to penetrate global economies selling products and using cheap labour and resources (Audretsch and Thurik, 2001). This essay analyse the existing tension between capitalism and democracy today.

The concerns that capitalism and socialism may not be compatible have been there for a long time. From the 19th century up to the 20th century, there were concerns by the bourgeoisie and political right who saw democracy as a major threat to private property and free markets. In fact, they saw it as a form of rule of the poor over the rich (Streeck, 2011). On the other hand, political left and the working class feared that the capitalists would work together with forces of reaction and do away with the democracy (Allman, 2001). This is due to fact that capitalists were searching for the protection from permanent majority governing them who were mainly dedicated to wealth redistribution (Streeck, 2011). The two positions show the earliest existence of tension between democracy and capitalism which still exist today.

The view that capitalism and democracy are naturally in tension was held by theorists such as Karl Marx up to the neo-theorists of the 1970s (Sherman, 1995). Theorists held that the basic structure in the western societies was capitalism while democracy acted as the surface phenomenon. According to the theorists, coexistence between democracy and capitalism was only temporary. They claimed that in the time of crisis, democracy was easily abandoned in favour of capitalism. Here, capitalism was depicted as exploitive and alienating (Streeck, 2011). In fact, it was claimed that capitalism would be overthrown under the conditions of true democracy. These views still exists today.

The challenge of making capitalism and democracy compatible depicts the existing tension. In the developed countries, the left and working class had the reason to fear democracy being overthrown by the right with an aim of saving capitalism (Streeck, 2011). After the Second World War, it was clear that for capitalism to be compatible with democracy there was need for extensive political control (Schumpeter, 2013). This was aimed at ensuring that democracy was not restrained for the sake of free markets. There were some who advocated for the abolishment of democracy like Friedrich von Hayek. Modern capitalism works based on rule bound economic policies, protection of markets and property rights from unwanted political interference (Streeck, 2011). This further enhanced the existing tension.

Capitalism is looked as a political economy which is ruled by two main conflicting principles leading to tension. One of the principles operates based on the marginal productivity while the other is based on the social needs which are existing choices of democracy (Schumpeter, 2013). A government which runs base on a democratic capitalism faces pressure from both principles which they are supposed to honour. Failure to honour both principles leads to challenges associated with the consequences. When a government fails to meet the democratic claims which are aimed at redistribution, they face losing majority. On the other hand, failure to follow the claims for compensation leads to economic dysfunctions which can undermine their political support (Streeck, 2011). This shows the tension between capitalism and democracy.

Tension between capitalism and democracy is also caused by the fact that democratic capitalism is based on contradicting rules. This is through empowering citizens through giving them their rights and providing them with few property rights (Allman, 2001). It is based on historic conflict between the civil rights and property rights. According to Sherman (1995), the tension between capitalism and democracy can be explained through two main points. First, there is undemocratic control exercised by the capitalists and secondly the democratic control exercised by the workers and community. This compliments the argument between Bowles and Gintis on civil and property rights (Bowles & Gintis, 1987).

Another cause of tension is the fact that as long as capitalism is in existence, there are high chances of unequal distribution of wealth. This is based on the disproportionate hegemony on the political system by the rich (Allman, 2001). When there is inequality, the existence of democracy is undermined. This leads to the existing tension between democracy and capitalism. Moreover, the tension is also caused by the fact that not everyone who is in capitalism is independent. For example, workers have a right to leave their jobs and start theirs but lack adequate saving to do so. This shows that despite having freedom, they lack pure democracy in a capitalist system (Schumpeter, 2013).

In addition, capitalist nature undermines the democratic values leading to tensions. An example is the USA which is a leading capitalist state which is considered close to perfect democracy. The capitalist nature of the USA has been associated with compromised democratic values (Kasser, Cohn, Kanner & Ryan, 2007). Growing USA multinationals have faced intense competition in the market leading to excessive lobbying and public relations. This is aimed at enhancing influence and favour which undermines the average citizens’ rights. In USA, corporations have gained a lot of power and influence making them gain special treatment by the government at the expense of the citizens (Korten, 1998). In a capitalist democracy, entities are granted all rights of people. They are seen as immortal people who have wealth and power. This makes them act without constraints giving them immense influence (Hertz, 2002).

Costly campaigns which are funded by the bourgeois class contribute to the existing tension between capitalism and democracy. There is use of private contributions and donations which leads to massive sums during political campaigns (Sussman, 2005). This violates the democratic process leading to the tension where capitalists who rule the economy rule the government through contributions (Streeck, 2011). Thus, politicians become the hired hand of the capitalists through donations. Moreover, capitalism has insatiable needs to exploit new markets at the expense of freedoms especially in the developing countries. It is common for the capitalist states to ignore the abuse of human interests in other countries as long as these countries do not affect their interests. This is evidenced by the capitalist countries ignoring abuse and human rights violation in countries where they have business interests (Achcar, 2006).

Capitalism involves rule of small elite while democracy is based on rule of everyone (Przeworski, 1985). This leads to tensions when capitalism is used as the base for democracy. In fact, capitalism in its basic sense is dictatorial since it is based on control by capitalists who have ultimate control over people irrespective of the community wishes (Klikauer, 2009). On the other hand, use of democratic control implies control by workers or community which can lead to the end of capitalism (Hertz, 2002). Thus, democracy and capitalism are two different and opposing concepts.

Lastly, where capitalism has succeeded, there has been weakening of democracy. This includes the voices of the average citizens being ignored in countries which have highly progressed in capitalism. Moreover, the roles of the democracy to attain needs that cannot be attained individually are weakened by capitalism. This is due to fact that corporates in a capitalist system have competitive standing through use of politics (Sussman, 2005). The corporates which are economic agents in developed countries are powerful hence dominates the policy making. It makes it hard for the society to address the existing social issues brought about by corporations. The poor are denied their rights and influenced by corporates in making their democratic decisions such as voting (Klikauer, 2009). This further enhances the existing tension between democracy and capitalism.


To sum up, the tension between capitalism and democracy can be traced to long time ago. The domain of capitalism has gained a lot of power globally especially in the developed countries. While democracy is egalitarian, capitalism is in-egalitarian. The first tension was based on the views by the bourgeoisie and political right and the political left and working class on the other hand. This tension has persisted to date with the capitalism being associated with unequal distribution of wealth, taking away of rights and undermining of other democratic values. Corporates have gained immense power under capitalism in the developed countries which have made it hard for common citizens to express their rights. This has further enhanced the existing tension where corporates are seen as exploiters of democracy freedoms. In fact, capitalism cannot be used as the base for democracy. It is evident that where capitalism has succeeded, there has been weakening of democracy.


Achcar, G. 2006, ‘Oil, Religion, Fanaticism and Frankensteins’, inThe Clash of Barbarisms, London: Saqi, ch. 2, Pp. 39-76

Allman, P., 2001, Critical education against global capitalism: Karl Marx and revolutionary critical education, Westport: Greenwood Publishing Group.

Audretsch, D.B. & Thurik, A.R., 2001, Capitalism and democracy in the 21st century: from the managed to the entrepreneurial economy, In Capitalism and democracy in the 21st century (pp. 23-40). Physica-Verlag HD.

Bowles, S. & Gintis, H., 1987, Democracy and capitalism: Property, community, and the contradictions of modern social thought,
New York: Basic Books.

Hertz, N. 2002, The silent takeover: Global capitalism and the death of democracy, New York: Simon and Schuster.

Kasser, T., Cohn, S., Kanner, A.D. & Ryan, R.M., 2007, ‘Some costs of American corporate capitalism: A psychological exploration of value and goal conflicts’, Psychological Inquiry, Vol.18, no.1, pp.1-22.

Klikauer, T., 2009, ‘Supercapitalism–The Transformation of Business, Democracy, and Everyday Life’, Transfer: European Review of Labour and Research, Vol. 15, no.2, pp.323-325.

Korten, D.C., 1998, ‘When corporations rule the world’, European Business Review, Vol. 98 no.1.

Przeworski, A., 1985, Capitalism and social democracy, Cambridge: Cambridge University Press.

Schumpeter, J.A., 2013, Capitalism, socialism and democracy, London : Routledge.

Sherman, H.J., 1995, Reinventing Marxism. Baltimore, MD: JHU Press.

Streeck, W., 2011, The crisis in context: Democratic capitalism and its contradictions, MPIfG Discussion Paper 11/15

Sussman, G., 2005, Global electioneering: Campaign consulting, communications, and corporate financing, New York: Rowman & Littlefield.