Market and Democracy: Friends or Foes? Theories Reconsidered

Péter Gedeon ()

Society and Economy, 2018, vol. 40, issue 2, 185-210

Abstract: The paper examines theories on the relationship of market and democracy. Four theorems may be distinguished: (1) The necessity theorem: market (M) is the necessary condition of democracy (D) ([M→D]+). (2) The inequality theorem: market undermines democracy ([M→D]–). (3) The optimality theorem: democracy is the optimal condition of market ([D→M]+). (4) The disability theorem: democracy undermines the market ([D→M]–). My question is whether these theorems include or exclude each other. After the reconstruction of the four theorems I examine the six possible combinations of them. My conclusion is that the theory stating that market and democracy mutually reinforce each other is compatible with the theory discussing the conflicts between market and democracy: the two theories do not constitute a logical contradiction. This analysis assists in understanding why the relationship of capitalism and democracy may be relatively stable: the selectivity of democracy and the political restrictions of market do not undermine, do not eliminate economic and political freedom, but sustain it in a modified form.

Keywords: market; capitalism; democracy; political freedom; political equality; market inequalities; economic winners; economic losers (search for similar items in EconPapers)
JEL-codes: B25 D02 P16 (search for similar items in EconPapers)
Date: 2018
Note: Csaba (1997) and Coyne (2007) published papers earlier with similar titles. However, the content of these publications is different from that of my paper. Csaba deals with the relationship of market and democracy within the context of the postsocialist reform process; in his blog, Coyne argues that economic and political freedoms belong together. I do not address the first issue and write about the second in more detail in this paper.
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