The Relationship between capitalism and Liberal democracy

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How do we define "democracy"? the word itself is derived from the Greek demokratia- rule of the people- demos meaning people and kratos meaning power. There does not exist today a concrete definition for what exactly we mean when was say democracy. We can only base our definitions of the many interpretations that have come into to being over the years. There are, however, key principles that are common to the definitions of democracy; equality and freedom. In its modern form, the idea of democracy has incorporated the ideals of liberalism and in many cases, free market capitalism. When we talk about democracy we are referring to the idea of liberal democracy. Fareed Zakaria defines liberal democracy as, "...a political system marked not only by free and fair elections but also by the rule of law, separation of powers, and the protection of basic liberties of speech, assembly, religion, and property..." (Zakaria p.17) Some argue that capitalism is a necessary condition for liberal democracy to work and flourish. Others argue that capitalism brews inequality and that if equality is a key principle of liberal democracy, then capitalism- a source of inequality- can not be a necessary condition for liberal democracy. If capitalism is not a necessary condition, then what is liberal democracy's relationship to capitalism? Giovanni Sartori and Walter Lippmann argue that markets can only exist in the context of liberal institutions and it is these institutions that determine how the markets work. Contrary to Sartori and Lippmann, Fareed Zakaria argues that capitalism is the creator and facilitator of liberal democracy. By first defining what it is to be a liberal democracy and an analysis of the arguments given by Sartori, Lippmann and Zakaria, we can then qualify the relationship of liberal democracy to free market capitalism.

The idea of democracy has been prevalent in the minds of humans and its definition has been a subject of debate since the time of Aristotle, Socrates and Plato. For Aristotle, democracy was a mathematical expression of the majority. There was a quality of equity essential to democracy.

In most cases, liberal democracies embrace the tenants of free market capitalism. In a free market, the government does not intervene or regulate the ...