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Democracy: Definition, Origins, Difficulties, and its Relation to Capitalism

Democracy is a form of government in which a substantial proportion of the citizenry directly or indirectly participates in ruling the state. The term democracy is derived from the Greek words demos (“the people”) and kratia (“rule”).



Definition of Democracy

Democracy is a form of government in which a substantial proportion of the citizenry directly or indirectly participates in ruling the state. It is thus distinct from governments controlled by a particular social class or group or by a single person. In a direct democracy citizens vote on laws in an assembly, as they did in ancient Greek city-states. In an indirect democracy citizens elect officials to represent them in government; representation is typical of most modern democracies. Today the essential features of democracy, as understood in the Western world, are that citizens be sufficiently free in speech and assembly, for example to form competing political parties and that voters be able to choose among the candidates of these parties in regularly held elections.

Origins of Democracy

The term democracy is derived from the Greek words demos (“the people”) and kratia (“rule”). The first democratic forms of government developed in the Greek city-states during the 6th century BC. Although demos is sometimes said to mean just “the poor,” Aristotle’s Constitution of Athens shows that in Athens all citizens, rich and poor, participated fully in government; minors, women, slaves, and foreigners, however perhaps 90 percent of the population were not citizens. The Following are its primary Characteristics:

  • Representation: Government as a representative body that is, a body elected by the entire adult population on the basis of one person, one vote;
  • Popular Sovereignty: John Locke, articulated a theory of government that was to be seminal in democratic development i.e. end of government and right to rebel (See Chapter 4, Section 4.8.2) Locke’s idea of popular sovereignty was taken a step further by Jean Jacques Rousseau who argued that the only legitimate state was one based on the “general will” of the people;
  • The Ideal of Justice: Democracy has attracted support from the time of ancient Greece until today because it represents an ideal of justice as well as a form of government. The ideal is the belief that freedom and equality are good in themselves and that democratic participation in ruling enhances human dignity. Political participation encourages the fair treatment of a minority;
  • Freedom and Faction: The vote itself is not enough to guarantee that oppression will be eliminated. For participation to be an effective method or a feasible ideal, it must be accompanied by political liberty. As James Madison wrote in The Federalist, “Liberty is to faction as air is to fire.” The freedoms that promote faction are important, not only as high moral ideals, but also as a method of realizing democracy.

Difficulties of Democracy

Democracies are not easy to establish or to maintain. Because two sets of rulers are required, one to govern and the other to take over when the first set loses an election, democracy is expensive. Some societies seem too poor to afford the luxury of leaders-in-reserve. In the modern world, moreover, democracy requires almost universal literacy, which is also expensive. The worst defect of democracy is that politicians are under constant pressure from the lobbyists of special- interest groups to support particular public policies. Because their future depends on winning elections, and because elections are won by attracting marginal voters, politicians seek the support of marginal voters who belong to such groups by promising to vote for legislation they favor. This weights the legislative process in favor of interest groups, especially the well organized and well funded. The sum of the benefits granted to these groups may be more than the society can afford. These kinds of expenses have contributed to the downfall of democratic governments as has happened in various regions in the second half of the 20th century.

Democracy & Capitalism

Capitalism is an economic system that usually goes with Democracy (but this is not a necessary relationship – Capitalism, as demonstrated years before WWII, could flourish in Fascist and Nazist regimes) in which the means of production are privately owned. Business organizations produce goods for a market guided by the forces of supply and demand. Capitalism requires a financial system that enables business firms to borrow large sums of money, or capital, to maintain and expand production. Underlying capitalism is the presumption that private enterprise is the most efficient way to organize economic activity. Adam Smith expressed this idea in his Wealth of Nations (1776), extolling the free market in which the businessman is “led by an invisible hand to promote an end which was no part of his intention.” The marketplace is the center of the capitalist system. It determines what will be produced, who will produce it, and how the rewards of the economic process will be distributed. From a political standpoint, the market system has two distinct advantages over other ways of organizing the economy: (a) no person or combination of persons can control the marketplace, which means that power is diffuse and cannot be monopolized by a party or a clique; (b) the market system tends to reward efficiency with profits and to punish inefficiency with losses. Economists often speak of capitalism as a free-market system ruled by competition. But capitalism in this ideal sense cannot be found anywhere in the world. The economic systems operating in Western countries today are mixtures of free competition and governmental control.

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