The political system of a country cannot be isolated from its economic system. In the modern Democratic system, the economic systems of states are generally propelled by their political systems and this defines their stability among competitive cultures. In this tutorial which is capitalist democracy, we shall look at Democratic capitalism/capitalist democracy as a political, economic and social system. We shall also look at the characteristics of a capitalist democracy.
Objectives of this tutorial
At the end of this topic, students should be able to :
i. Define capitalist democracy
ii. Explain the characteristics of capitalist democracy
Meaning Of Capitalist Democracy
Capitalism is an economic system that includes private ownership of the means of production, the creation of good jobs or services for profit or income, the accumulation of capital, competitive market, voluntary exchange and wage labour. Simply put, in capitalism, people own and control wealth which they use to produce more wealth.
Democracy, on the other hand, is a system of government in which all the citizens of a nation takes part in government by voting to elect their representatives.
Therefore, capitalist democracy is a political, economic and social system and ideology based on a tripartite arrangement of a market-based economy based predominantly on a democratic polity, economic incentives through free markets, fiscal responsibility and a liberal moral-cultural system which encourage pluralism. It can also be said to be an economic, social and political system by which the government selects the representatives of the people who can manage and control the resources of the country for the good of the people.
In a capitalist democracy, private ownership and the drive for profit occurs in an atmosphere of freedom, without government interference. The government regulates the economy through taxation and legislation so as to ensure that competitions among capitalists are fair and that losers are not totally destroyed.
Thus, in a capitalist democracy, the economic system supports a capitalist free market economy subject to control by a democratic political system that is supported by the majority. Here, the means of production and distribution of goods are owned and controlled by private corporations. It stands in contrast to authoritarian capitalism by limiting the influence of special interest groups, including a corporate lobbyist, on politics. Capitalist democracy provides freedom of speech, press, religion, Association, movement, etc. And is based on the decision that is based on majority rule which provides equal opportunity.
Characteristics of Capitalist Democracy
i. The economic system is controlled by a Democratic political system. This implies that people choose who will govern them through periodic elections.
ii. The political and economic system is controlled by the majority.
iii. All organizations, governments and individuals operate under the rule of law. Everyone is treated equally before the law.
iv. It supports a capitalist free market economy where the prices of goods and services so as to maximize profit are determined by the capitalist. The government does not intervene in setting prices.
v. There is competition among the industrialists which leads to rapid innovation as each industrialist strive to find a better way to produce goods at a cheaper cost or introduce new products that will meet the needs of individuals in order to make a profit. This, in turn, leads to an enhancement in the economy and an increase in government revenue through taxation.
vi. Individuals have the right to acquire much economic good as they can.
vii. There is the free choice the capitalist has to embark on any business venture as his right to his property is guaranteed. He freely decides what to produce, when to produce, for whom to produce for and how to produce.
viii. The economic system is liberal and encourages pluralism, that is, two or more political parties competing for power, a free press, voluntary associations
examples: trade unions, non-governmental organizations, etc. That ensure transparency and accountability.
ix. In a capitalist democracy, the government provides an enabling environment for investors to produce goods and services. These include making laws and order, providing infrastructural facilities, providing a well-developed monetary and financial policy system to ensure macro-economic stability, and also invest in poverty alleviation programmes.