Is a capitalist democracy possible?

Conflict politics on the right and the left. EPA/PETER FOLEY

Classical economics predicts that providing people with more choice will improve well-being; however, behavioural economists have discovered that humans prefer to see choices in terms of few options and clear distinctions. So it is with our politics; market forces induce political candidates to offer a stark choice stark between so-called left and so-called right, with clear blue water in between.

In the US, political polarisation has developed to the extent that supporters of the left and the right profess such divergent worldviews that they might come from different nations. They do, indeed, increasingly come from different neighbourhoods.

As in the US, so in Europe. The left seems so much more left, the right so much more right. However, if our nations are to survive as cohesive and mutually supportive entities, we cannot continually move apart. We must seek common ground or risk social and economic dysfunction.

Placating the placard holders. Pug50/Flickr, CC BY

Common ground

Both the left and the right would go along with Abraham Lincoln’s observation that the legitimate object of government is to do for a community that which they cannot do (or cannot do so well) for themselves. However, they differ on who makes up that community. Broadly speaking, the (so-called) right think government should enact policy for the benefit of those who own the nation, while the (so-called) left consider policy should prioritise the interests of those who live there. In modern parlance, the right is broadly capitalist, the left is broadly socialist.

In the “real world”, of course, no party is exclusively right or left. However, it is instructive to consider where increasing divergence will take us.

The end of the road

Because the points of view of the right and left differ, it follows they will propose different policies. As the legitimacy of the right depends on ownership, a primary policy will be the “rule of law”, in particular the continuance of the rights of ownership. Conversely the left may well consider current ownership is based on past injustice such as dispossession or conquest. Left-leaning parties will therefore favour “social justice” as a complement to “criminal justice” and see the former as progressive while the latter favours the status quo.

Left right out. Tom Thai/Flickr, CC BY

Beyond this, the attitude of the right and the left depends on whether the nation is democratic. By its very nature, a democratic nation tends to be one in which the state is expected to take into account the views of its citizens. It follows that the right, in such a circumstance, favours the so-called “small state”, ideally one that does little more than maintain internal and external security through criminal justice and armed services. Conversely, if democracy is weak or non-existent, the economically powerful may subvert national government to their own ends. In such a case, the right will tend to be comfortable with a strong state.

The left will also advocate different policies depending on the level of democracy in a nation. Where a nation is relatively undemocratic, business and private property may be subverted to the ends of the state (or rather, to those who control government). Where a nation is democratic, left-leaning parties will generally promote progressive taxation and the distribution of the benefits of economic growth. Further, the left will generally be more comfortable with publicly-owned – and therefore democratically accountable – assets; for example infrastructure and healthcare which prioritises public good, rather than private profit.


As more and more of any nation is owned by fewer and fewer people, those policies that benefit capitalists are likely to diverge from those of benefit to citizens. The greater the degree of inequality, the more difficult it will be for left and right to agree. Where a proportion of the national capital is in foreign hands, it might even be the case that a right-leaning government will put the demands of foreign interests, even foreign governments, ahead of the needs of their own citizens.

“Those who have the gold, make the rules”, so it is said, and as wealth inequality increases even the semblance of democracy may erode as capitalists begin to deploy their wealth to ensure the nation is run in their interests. It has been argued that the US, for example, is no longer a democratic nation but an oligarchy. Some have argued democracy in the UK is also in decline.

Ticking the boxes. Phil Roeder/Flickr, CC BY


The rise of populist politicians owes much to the effective disenfranchisement of many, if not most in supposed democracies. By definition, anti-establishment politicians will prosper if the general public feel betrayed by the establishment. Ultimately, we cannot build secure nations on the basis of austerity, poverty, desperation and division.

There is a better way: In 1955 the psychologist Erich Fromm argued that sustainable progress can only occur when changes are made simultaneously in the economic, socio-political and cultural spheres. Fromm argued that progress restricted to one sphere is destructive to progress in all spheres. The global financial crisis of 2008 bears out this analysis. Likewise, the philosopher Michael Novak argued that in the long term, capitalist democracy is not possible; however, democratic capitalism is possible. Because capitalism can be at least as destructive as it is constructive, it must be constrained by moral and democratic principles (not the other way about).

Both left and right agree, the state of the nation is fragile. The solution is not more of the same economics and a counterproductive fixation on GDP growth at all costs but rather to strengthen democracy – and not just democracy, but also our moral and cultural institutions. Ultimately, if we can’t make these nations work for everyone, they won’t work for anyone.