Democratic capitalism: Difference between revisions
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'''Democratic capitalism''' is |
'''Democratic capitalism''' (market democracy) is a political and [[economic system]] that combines [[capitalism]] and a strong [[welfare state]] curbing the excesses of [[Individualism#Liberalism|individual freedom]]. It integrates [[resource allocation]] by [[Marginal product|marginal productivity]] (synonymous with free-market capitalism), with policies of resource allocation by social entitlement.<ref name=":0">{{Cite web|title=Wolfgang Streeck, The Crises of Democratic Capitalism, NLR 71, September–October 2011|url=https://newleftreview.org/issues/II71/articles/wolfgang-streeck-the-crises-of-democratic-capitalism|website=New Left Review|language=en|access-date=2020-05-20}}</ref> The policies which characterise the system are enacted by [[Democracy|democratic]] governments.<ref name=":0" /> |
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The coexistence of capitalism and democracy, particularly in Europe, was supported by the creation of the modern [[welfare state]] in the [[post-war period]] which enabled a relatively stable political atmosphere and widespread support for [[social democracy]] as opposed to Soviet [[communism]].<ref name="Capitalism and Inequality, 2013">Muller, Jerry Z. (March 2013). "[https://www.researchgate.net/profile/Jerry_Muller2/publication/296918516_Capitalism_and_Inequality_What_the_Right_and_the_Left_Get_Wrong/links/5d31141b92851cf4409013b7/Capitalism-and-Inequality-What-the-Right-and-the-Left-Get-Wrong.pdf Capitalism and Inequality]". ''Foreign Affairs''.</ref> |
Democratic capitalism was implemented widely in the 20th century, particularly in [[Europe]] and the [[Western world]] after the [[World War II|Second World War]]. The coexistence of capitalism and democracy, particularly in Europe, was supported by the creation of the modern [[welfare state]] in the [[post-war period]] which enabled a relatively stable political atmosphere and widespread support for [[social democracy]] as opposed to Soviet [[communism]].<ref name="Capitalism and Inequality, 2013">Muller, Jerry Z. (March 2013). "[https://www.researchgate.net/profile/Jerry_Muller2/publication/296918516_Capitalism_and_Inequality_What_the_Right_and_the_Left_Get_Wrong/links/5d31141b92851cf4409013b7/Capitalism-and-Inequality-What-the-Right-and-the-Left-Get-Wrong.pdf Capitalism and Inequality]". ''Foreign Affairs''.</ref> |
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The implementation of democratic capitalism typically involves the enactment of policies expanding the welfare state and strengthening [[collective bargaining]] rights of employees and/or [[Competition law|competition laws]]. These policies are enacted in a capitalist economy characterised by the right to [[Private property|private ownership]] of productive property. |
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== Definition == |
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Democratic capitalism is a type of political and economic system,<ref>{{Cite journal|last=Wilde|first=Keith|last2=Schulte|first2=R. G.|date=2001|title=Democratic capitalism vs. binary economics|url=https://ideas.repec.org/a/eee/soceco/v30y2001i2p99-118.html|journal=Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics)|language=en|volume=30|issue=2|pages=99–118}}</ref> characterised by resource allocation according to both marginal productivity and social need, as determined by decisions reached through democratic politics.<ref name=":0" /> It is marked by democratic [[Election|elections]], [[Political freedom|freedom]], and [[rule of law]], characteristics typically associated with democracy.<ref name=":1">{{Cite journal|last=Parakkal|first=Raju|last2=Bartz-Marvez|first2=Sherry|date=2013-12-01|title=Capitalism, Democratic Capitalism, and the Pursuit of Antitrust Laws|url=https://doi.org/10.1177/0003603X1305800409|journal=The Antitrust Bulletin|language=en|volume=58|issue=4|pages=693–729|doi=10.1177/0003603X1305800409|issn=0003-603X}}</ref> It retains a free-market economic system with an emphasis on [[Privately held company|private enterprise]].<ref name=":1" /> |
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Professor of Entrepreneurship [[Elias G. Carayannis]] and Arisitidis Kaloudis, Economics Professor at the Norwegian University of Science and Technology (NTNU), describe democratic capitalism as an economic system which combines robust [[Competition (companies)|competitiveness]] with [[Sustainable business|sustainable entrepreneurship]], with the aim of [[innovation]] and providing opportunities for economic prosperity to all citizens.<ref name=":2">{{Cite journal|last=Carayannis|first=Elias G.|last2=Kaloudis|first2=Aris|date=2010-03-01|title=A Time for Action and a Time to Lead: Democratic Capitalism and a New “New Deal” for the US and the World in the Twenty-first Century|url=https://doi.org/10.1007/s13132-009-0002-y|journal=Journal of the Knowledge Economy|language=en|volume=1|issue=1|pages=4–17|doi=10.1007/s13132-009-0002-y|issn=1868-7873}}</ref> |
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Dr Edward Younkins, professor at [[Wheeling University|Wheeling Jesuit University]], described democratic capitalism as a “dynamic complex of economic, political, moral-cultural, ideological, and institutional forces”, which serves to maximize [[Welfare|social welfare]] given a free market economy.<ref name=":3">{{Cite web|title=The Conceptual Foundations of Democratic Capitalism|url=http://www.quebecoislibre.org/younkins16.htm|website=www.quebecoislibre.org|access-date=2020-05-20}}</ref> Youkins states that the system of individual liberty inherent within democratic capitalism supports the creation of [[Voluntary association|voluntary associations]], such as [[Trade union|labour unions]].<ref name=":3" /> |
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Philosopher and writer Michael Novak characterised democratic capitalism as a blend of a free-market economy, a limited democratic government, and moral-cultural system with an emphasis on personal freedom.<ref name=":4">{{Cite web|title=Democratic Capitalism|url=https://www.nationalreview.com/2013/09/democratic-capitalism-michael-novak/|date=2013-09-24|website=National Review|language=en-US|access-date=2020-05-20}}</ref> Novak comments that capitalism is a necessary, but not a sufficient condition of democracy.<ref name=":4" /> |
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== History == |
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=== Early to mid-20th century === |
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Democratic capitalism was first implemented after the Second World War in the Western world, particularly in [[North America]] and [[Western Europe]].<ref name=":0" /> The development of democratic capitalism was influenced by several historical factors, including the rapid [[economic growth]] following [[World War I|World War One]], the [[Great Depression]], and the political and economic ramifications of World War Two.<ref name=":5">{{Cite journal|last=Merkel|first=Wolfgang|date=2014|title=Is capitalism compatible with democracy?|url=https://www.semanticscholar.org/paper/Is-capitalism-compatible-with-democracy-Merkel/d11c373cb93ecaf65f3753cefd9cd3b37a2869ed|journal=Comparative Governance and Politics|volume=8(2)|pages=109–128|via=Semantic Scholar}}</ref> The growing critique of free-market capitalism and the rise of the notion of [[social justice]] in political debate contributed to the adoption of democratic capitalist policies.<ref name=":5" /> |
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Following the severe economic impacts of the war, [[Working class|working classes]] in the Western world were more inclined to accept capitalist markets in conjunction with political democracy, which enabled a level of social security and improved [[Standard of living|living standards]].<ref name=":0" /> In the postwar decades, democratic capitalist policies saw reduced levels of [[Economic inequality|socioeconomic inequality]].<ref name=":5" /> This was synonymous with the expansion of welfare states, more highly regulated [[Financial market|financial]] and [[Labour economics|labour markets]], and increased political power of labour unions.<ref name=":5" /> According to Political scientist Wolfgang Merkel, democracy and capitalism coexisted with more complementarity at this time than at any other point in history.<ref name=":5" /> |
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=== Late 20th century === |
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From the late 20th century, the tenets of democratic capitalism expanded beyond North America and Western Europe.<ref>{{Cite journal|last=Parakkal|first=Raju|date=2016-06-01|title=Ordoliberalism in European Competition Policy: The Logic of Democratic Capitalism in Talbot’s Essay|url=https://doi.org/10.1177/0003603X16644119|journal=The Antitrust Bulletin|language=en|volume=61|issue=2|pages=290–292|doi=10.1177/0003603X16644119|issn=0003-603X}}</ref> |
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==== South Africa ==== |
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The South African Competition Act of 1998 prioritised the eradication of [[Anti-competitive practices|anticompetitive]] business practices and the free participation in the economy of all citizens, while maintaining a pro-free-market economy.<ref name=":1" /> |
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=== Early 21st century === |
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==== India ==== |
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India enacted the [[The Competition Act, 2002|Competition Act, 2002]] to promote and sustain competition and protect the [[welfare]] of market participants, goals synonymous with democratic capitalism.<ref name=":1" /> |
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== Implementation == |
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The post-war implementation of democratic capitalism saw the expansion of welfare states and free collective bargaining rights of employees, alongside market policies designed to ensure [[full employment]].<ref name=":0" /> |
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The right to private ownership of productive property is a central tenet of democratic capitalism, and is recognized as a basic liberty of all democratic citizens, as in a regular free-market capitalist economy.<ref name=":6">{{Cite journal|last=Tomasi|first=John|date=2014-10-02|title=Democratic Capitalism: A Reply to Critics|url=https://doi.org/10.1080/08913811.2014.988417|journal=Critical Review|volume=26|issue=3-4|pages=439–471|doi=10.1080/08913811.2014.988417|issn=0891-3811}}</ref> According to political philosopher John Tomasi, democratic capitalism addresses social entitlement and justice concerns through the preservation of citizens’ private [[Property rights (economics)|property rights]], allowing citizens to be “free, equal, and self-governing”.<ref name=":6" /> |
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The robust competitiveness and sustainable entrepreneurship which define democratic capitalism are characterised by [[Top-down and bottom-up design|top-down policies and bottom-up initiatives]] implemented by democratic governments.<ref name=":2" /> These policies are designed to incentivise public and private sector innovation.<ref name=":2" /> Such policies include strong [[research and development]] funding, and policies which protect [[intellectual property]] rights.<ref name=":2" /> |
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=== Competition law === |
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{{further|Competition law}}A characteristic of democratic capitalist political economies is the democratic enactment of laws and [[Regulation|regulations]] to support competition. Such laws include [[United States antitrust law|United States antitrust laws]].<ref name=":1" /> These laws regulate [[private sector]] activities, including the actions of [[capital asset]] owners and managers, to prevent outcomes which are socially undesirable according to the democratic majority.<ref name=":1" /> |
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The implementation of competition law is intended to prevent anti-competitive behaviour that is harmful to the welfare of consumers, while maintaining a free market economy.<ref name=":1" /> The implementation of antitrust laws was found to be a characteristic of democratic capitalism specifically, and not regular free-market capitalism.<ref name=":1" /> |
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== Conflicts between notions of resource allocation == |
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According to economic sociologist Wolfgang Streeck, the capitalist markets and democratic policies that characterise democratic capitalism are inherently conflicting.<ref name=":0" /> Streeck suggests that under democratic capitalism, governments tend to neglect policies of resource allocation by marginal productivity in favour of those of resource allocation by social entitlement, or vice versa.<ref name=":0" /> In particular, he comments that the accelerating [[inflation]] of the 1970s in the Western world can be attributed to the rising trade-union wage pressure in labour markets and the political priority of full employment, both of which are synonymous with democratic capitalism.<ref name=":0" /> |
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== See also == |
== See also == |
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Revision as of 13:14, 20 May 2020
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Democratic capitalism (market democracy) is a political and economic system that combines capitalism and a strong welfare state curbing the excesses of individual freedom. It integrates resource allocation by marginal productivity (synonymous with free-market capitalism), with policies of resource allocation by social entitlement.[1] The policies which characterise the system are enacted by democratic governments.[1]
Democratic capitalism was implemented widely in the 20th century, particularly in Europe and the Western world after the Second World War. The coexistence of capitalism and democracy, particularly in Europe, was supported by the creation of the modern welfare state in the post-war period which enabled a relatively stable political atmosphere and widespread support for social democracy as opposed to Soviet communism.[2]
The implementation of democratic capitalism typically involves the enactment of policies expanding the welfare state and strengthening collective bargaining rights of employees and/or competition laws. These policies are enacted in a capitalist economy characterised by the right to private ownership of productive property.
Definition
Democratic capitalism is a type of political and economic system,[3] characterised by resource allocation according to both marginal productivity and social need, as determined by decisions reached through democratic politics.[1] It is marked by democratic elections, freedom, and rule of law, characteristics typically associated with democracy.[4] It retains a free-market economic system with an emphasis on private enterprise.[4]
Professor of Entrepreneurship Elias G. Carayannis and Arisitidis Kaloudis, Economics Professor at the Norwegian University of Science and Technology (NTNU), describe democratic capitalism as an economic system which combines robust competitiveness with sustainable entrepreneurship, with the aim of innovation and providing opportunities for economic prosperity to all citizens.[5]
Dr Edward Younkins, professor at Wheeling Jesuit University, described democratic capitalism as a “dynamic complex of economic, political, moral-cultural, ideological, and institutional forces”, which serves to maximize social welfare given a free market economy.[6] Youkins states that the system of individual liberty inherent within democratic capitalism supports the creation of voluntary associations, such as labour unions.[6]
Philosopher and writer Michael Novak characterised democratic capitalism as a blend of a free-market economy, a limited democratic government, and moral-cultural system with an emphasis on personal freedom.[7] Novak comments that capitalism is a necessary, but not a sufficient condition of democracy.[7]
History
Early to mid-20th century
Democratic capitalism was first implemented after the Second World War in the Western world, particularly in North America and Western Europe.[1] The development of democratic capitalism was influenced by several historical factors, including the rapid economic growth following World War One, the Great Depression, and the political and economic ramifications of World War Two.[8] The growing critique of free-market capitalism and the rise of the notion of social justice in political debate contributed to the adoption of democratic capitalist policies.[8]
Following the severe economic impacts of the war, working classes in the Western world were more inclined to accept capitalist markets in conjunction with political democracy, which enabled a level of social security and improved living standards.[1] In the postwar decades, democratic capitalist policies saw reduced levels of socioeconomic inequality.[8] This was synonymous with the expansion of welfare states, more highly regulated financial and labour markets, and increased political power of labour unions.[8] According to Political scientist Wolfgang Merkel, democracy and capitalism coexisted with more complementarity at this time than at any other point in history.[8]
Late 20th century
From the late 20th century, the tenets of democratic capitalism expanded beyond North America and Western Europe.[9]
South Africa
The South African Competition Act of 1998 prioritised the eradication of anticompetitive business practices and the free participation in the economy of all citizens, while maintaining a pro-free-market economy.[4]
Early 21st century
India
India enacted the Competition Act, 2002 to promote and sustain competition and protect the welfare of market participants, goals synonymous with democratic capitalism.[4]
Implementation
The post-war implementation of democratic capitalism saw the expansion of welfare states and free collective bargaining rights of employees, alongside market policies designed to ensure full employment.[1]
The right to private ownership of productive property is a central tenet of democratic capitalism, and is recognized as a basic liberty of all democratic citizens, as in a regular free-market capitalist economy.[10] According to political philosopher John Tomasi, democratic capitalism addresses social entitlement and justice concerns through the preservation of citizens’ private property rights, allowing citizens to be “free, equal, and self-governing”.[10]
The robust competitiveness and sustainable entrepreneurship which define democratic capitalism are characterised by top-down policies and bottom-up initiatives implemented by democratic governments.[5] These policies are designed to incentivise public and private sector innovation.[5] Such policies include strong research and development funding, and policies which protect intellectual property rights.[5]
Competition law
A characteristic of democratic capitalist political economies is the democratic enactment of laws and regulations to support competition. Such laws include United States antitrust laws.[4] These laws regulate private sector activities, including the actions of capital asset owners and managers, to prevent outcomes which are socially undesirable according to the democratic majority.[4]
The implementation of competition law is intended to prevent anti-competitive behaviour that is harmful to the welfare of consumers, while maintaining a free market economy.[4] The implementation of antitrust laws was found to be a characteristic of democratic capitalism specifically, and not regular free-market capitalism.[4]
Conflicts between notions of resource allocation
According to economic sociologist Wolfgang Streeck, the capitalist markets and democratic policies that characterise democratic capitalism are inherently conflicting.[1] Streeck suggests that under democratic capitalism, governments tend to neglect policies of resource allocation by marginal productivity in favour of those of resource allocation by social entitlement, or vice versa.[1] In particular, he comments that the accelerating inflation of the 1970s in the Western world can be attributed to the rising trade-union wage pressure in labour markets and the political priority of full employment, both of which are synonymous with democratic capitalism.[1]
See also
- Democratic socialism
- Democratic communism
- Mixed economy
- Regulatory capitalism
- State capitalism
- Welfare capitalism
Notes
- ^ a b c d e f g h i "Wolfgang Streeck, The Crises of Democratic Capitalism, NLR 71, September–October 2011". New Left Review. Retrieved 2020-05-20.
- ^ Muller, Jerry Z. (March 2013). "Capitalism and Inequality". Foreign Affairs.
- ^ Wilde, Keith; Schulte, R. G. (2001). "Democratic capitalism vs. binary economics". Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics). 30 (2): 99–118.
- ^ a b c d e f g h Parakkal, Raju; Bartz-Marvez, Sherry (2013-12-01). "Capitalism, Democratic Capitalism, and the Pursuit of Antitrust Laws". The Antitrust Bulletin. 58 (4): 693–729. doi:10.1177/0003603X1305800409. ISSN 0003-603X.
- ^ a b c d Carayannis, Elias G.; Kaloudis, Aris (2010-03-01). "A Time for Action and a Time to Lead: Democratic Capitalism and a New "New Deal" for the US and the World in the Twenty-first Century". Journal of the Knowledge Economy. 1 (1): 4–17. doi:10.1007/s13132-009-0002-y. ISSN 1868-7873.
- ^ a b "The Conceptual Foundations of Democratic Capitalism". www.quebecoislibre.org. Retrieved 2020-05-20.
- ^ a b "Democratic Capitalism". National Review. 2013-09-24. Retrieved 2020-05-20.
- ^ a b c d e Merkel, Wolfgang (2014). "Is capitalism compatible with democracy?". Comparative Governance and Politics. 8(2): 109–128 – via Semantic Scholar.
- ^ Parakkal, Raju (2016-06-01). "Ordoliberalism in European Competition Policy: The Logic of Democratic Capitalism in Talbot's Essay". The Antitrust Bulletin. 61 (2): 290–292. doi:10.1177/0003603X16644119. ISSN 0003-603X.
- ^ a b Tomasi, John (2014-10-02). "Democratic Capitalism: A Reply to Critics". Critical Review. 26 (3–4): 439–471. doi:10.1080/08913811.2014.988417. ISSN 0891-3811.
References
- Benne, Robert (1981), The Ethic of Democratic Capitalism: A Moral Reassessment, Philadelphia: Fortress Press, ISBN 0-8006-1445-3
- J. Michael Miller, ed. (1996), The Encyclicals of John Paul II, Huntington: Our Sunday Visitor
- Prindle, David (2006), The Paradox of Democratic Capitalism: Politics and Economics in American Thought, Baltimore, MD: The Johns Hopkins University Press, ISBN 0-8018-8411-X
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