Capitalism has become an issue of a heated debate for many people in the 2000s. Interestingly, the world was torn into two parts in the twentieth century. There was the world of capitalism and the world of social or communist ideologies.
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Thus, after the World War II, many European countries joined the US plan of rebuilding economies and the capitalist world was created (Dullien, Herr & Kellermann 12). At the same time, China, Soviet Union and a number of other countries decided to stick to the communist ideology as the societies were built on those ideals. Clearly, the eastern world was against capitalism which was seen as something unjust and vicious. However, in the end of the twentieth century the world turned into a single capitalist society.
This could be the end of the ‘victimization’ of capitalism, but lots of people are against this type of economy as they argue that capitalism detracts from liberal democracy and undermines the most important values, e.g. justice. Nonetheless, it is obvious that capitalism cannot undermine democratic governance as these two notions are interrelated since democracy as well as capitalism presupposes diversity.
In the first place, it is necessary to look back and think about the roots of capitalism. This type of economy developed from feudalism which had become ineffective (Mintz, Croci & Close 133). New agents (owners of industrial enterprises, workers, well-off farmers) appeared and this diversity led to the development of capitalism.
People started making agreements and the interchange became really effective. Of course, opponents of the effectiveness of capitalism may claim that the development of capitalism led to a lot of turmoil and revolutions. Nonetheless, this was the necessary premises for the development of democracy as the political orders (monarchies) failed. Diversity in economy led to the diversity in political structures of countries, i.e. different political parties appeared.
It is impossible to ignore the fact that capitalism sometimes took quite dangerous forms. One of the most notorious periods is the period of the Great Depression when thousands of people as well as economies of many countries were affected by the global financial crisis (Dullien, Herr & Kellermann 11).
That was the period of chaos and it had positive effects in the long run as it was a vital lesson to learn. People understood that regulations are of paramount importance for the system and this finding helped them build a new effective system.
Notably, the system worked successfully up to the 1970s when new structures and regulations had to be introduced (Dullien, Herr & Kellermann 12). Importantly, capitalist structure did not fail. It was the regulatory system that had certain faults as it was tied to a single currency, i.e. US dollar (Dullien, Herr & Kellermann 12). Nonetheless, states managed to work out new strategies to address the burning issues that had appeared at that time.
It is also necessary to note that when the Soviet Union ceased to exist new states adopted capitalist ideology as political and any other monopoly had proved to be ineffective. Economic situation in the former Soviet republics is a certain proof that communist ideology was illusive and the growth of economies at the end of the twentieth century suggested that capitalism was a good way out.
It is possible to trace the development of democracies which are being built in new-born capitalist states (or vice versa, development of capitalism in new democratic countries). These states have a lot of problems but capitalist economic structure helps them accumulate the necessary financial basis for the further development of their societies.
The financial crisis of 2008 is often regarded as a fact that reveals negative influence of capitalism on liberal democracy. However, this financial crisis is similar to the one that happened in the 1930s. Those crises were caused by unrestricted and unregulated violations of certain groups in power.
The world became rather monopolized in the 2000s and it could not have a different ending. Admittedly, authoritarianism inevitably leads to crisis as privileged groups that take control over major spheres of economy tend to think of making even more money at the expense of less privileged groups (Giroux n.p.). This situation also proves that liberal democracy and capitalism are interconnected.
At present, lots of people believe that the US society is not as democratic as it used to be. The famous movement Occupy Wall Street is a reflection of such views (Giroux n.p.). The business world is now overwhelmed with loads of multinationals which are monopolies in some areas. There have been so many scandals concerning these multinationals which continue receiving considerable support on behalf of the government.
Thus, the idea of authoritarianism does not seem so unbelievable. However, this does not prove that capitalism undermines democracy. This situation makes people question the development of the political structure. The western world (as well as the majority of countries in other regions of the globe) is still democratic as there are many political forces that stand for interests of particular parts of the society. Therefore, there is hope that capitalism will also survive and acquire the necessary form.
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Many economists and scholars argue that capitalism cannot co-exist with strict regulations as business needs more freedom. However, a lot of people agree that economies should be regulated and certain structures can fulfill this aim (Roe 2). Effective experience of the middle of the twentieth century supports this idea.
Of course, the society also has to be democratic for capitalism to develop. Importantly, recent research shows that people tend to prefer living in a democratic society (Mintz, Croci & Close 136). This shows people’s satisfaction with the major features of the democratic societies. One of these major features is capitalism and, thus, people do not mind living in a capitalist society.
It is possible to consider another factor that reveals close ties between democracy and capitalism. Western societies are highly individualistic (Mintz, Croci & Close 133). Therefore, people tend to focus on their needs and are not ready to sacrifice liberties for the good of all. This individualistic nature of the society is the basis of democracy where many interests are taken into account to reach the golden mean. Western people are reluctant to follow prescribed rules which might be effective in the long run.
Capitalism also presupposes a great deal of liberty (Worrell, & Krier n.p.). Individuals are free to choose their ways to run their business as long as they comply with several major rules. In authoritarian economies, the control is very strict and individuals have almost no freedom and do not make decisions. Therefore, authoritarianism meets such confrontation in the western world. People do not want to lose their liberty when it comes to political as well as economic areas.
Historically, people longed for liberty and feudalism ceased to exist as an economic structure. Some people acquired certain liberty as they managed to accumulate resources. The development of industry helped many people get rich very quickly. More and more people saw numerous opportunities and feudalism was doomed in such conditions.
Liberty in economy led to desire to obtain liberty in political and social spheres of life. Therefore, it is possible to note that democracy is built on capitalism or it is a product of this economic ideology. On the contrary, failure of communist ideologies (e.g. collapse of the Soviet Union) proves that authoritarian political structures cannot develop an effective economic system.
On balance, it is necessary to note that capitalism supports democracy as they are based on similar values. Western individualism is the core feature of both capitalism and democracy.
Of course, this economic structure has led to a variety of constraints and people have had doubts concerning the effectiveness of the system. However, there has been certain confusion as at the times of financial crises capitalism had a bit specific forms. At the times of financial constraints, there was certain violation of established regulations as well as democratic values.
However, capitalism has always been a good support of democracy when regulating structures have been effective. Therefore, it is possible to conclude that capitalism cannot undermine liberal democracy. There is no example of a state that was based on the capitalist economy where democracy was undermined or failed. All democracies are still strong and capable of handling all financial constraints which appear every year (or even every month).
Dullien, Sebastian, Hansjörg Herr and Christian Kellermann. Decent Capitalism: A Blueprint for Reforming Our Economies. London: Pluto Press, 2011. Print.
Giroux, Henry A. “Occupy Wall Street’s Battle against American-Style Authoritarianism.” Fast Capitalism. 9.1 (2012): n.p. Web.
Mintz, Eric, Osvaldo Croci and David Close. Politics, Power and the Common Good: An Introduction to Political Science. Toronto: Pearson Education Canada, 2011. Print.
Roe, Mark J. “Capital Markets and Financial Politics: Preferences and Institutions.” Capitalism and Society. 7.1. (2012): 1-38. Print.
Worrell, M.P. and Daniel Krier. “The Imperial Eye.” Fast Capitalism. 9.1 (2012): n.p. Web.