Capitalism and Democracy

Question

Capitalism - an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.

Democracy - a system of government by the whole population or all the eligible members of a state, typically through elected representatives.

I have been hearing a lot in the recent years about democracy and capitalism. Can a democratic country be a capitalist country at the same time? For example, Singapore. Singapore is a country that relies heavily on trade and investments. Plus most of Singapore's industries are foreign owned. However Singapore calls herself a 'democratic' nation. This is true, where the citizens have to vote for their representative in parliament and etc. However, does this mean that the Singapore government exist to provide welfare to the country or to exist to ensure Singapore's economy growth?

Sorry for the long question and thanks for answering.

Answer 1

It's perfectly reasonable for a capitalist society to be democratic and vice versa.

For capitalism to be viable in the long term, a stable, and enforced, legal framework is required. This usually implies some form of stable, central government and democracy is a viable option for that.

Having said that, it's rare/unheard of to have either a perfectly democratic society or a perfectly capitalist one. Exactly where one draws the line varies quite widely from country to country.

For example, on the democracy side, I'm not aware of any country that gives children the vote but prisoners voting is more varied. Similarly, for capitalism, how much of defence or policing is state controlled versus private varies widely.

Singapore is an interesting case as, although it appears capitalist, it actually has very strong state involvement in its economic activity. More so than some, nominally socialist, countries. Less so today, but the early, post-colonial, period had a state much more in keeping with the national socialist conception of state involvement as envisaged by Mussolini.

Note, I'm not suggesting parallels with Fascism or Nazism here as there really aren't any. Those societies were characterised by racism and aggressive imperialism which clearly doesn't apply. But they did have a well thought out model for state involvement and, to my mind, Singapore has been extremely successful by applying a close descendant of it.

Answer 2

While it is completely possible for the two to be compatible (so, the answer to your question is "Yes"), they are not automatically linked, as many in the USA like to suggest. This makes sense because capitalism is not a system of government, democracy is not an economic system. People with certain interests and agendas like to conflate the separate topics.

It's entirely possible for a democracy to have other forms of economies - like pure socialism, or even communism, while maintaining democratic governments.

It's also possible for capitalism to be practiced by non-democratic governments, as well.