Home Articles Economics Democratization of Capitalism and Capitalization of Democracy

Democratization of Capitalism and Capitalization of Democracy

Doug Moody once said, “Capitalism is the bastard child of democracy“.

Democracy and Capitalism – The Pros and Cons

Democracy claims to give a voice to every person and equal rights to all. Capitalism claims to build on this foundation of freedom for all and claims to recognize talent and promote innovation. And both these claims hold good in their initial days.

But as time progresses, elections after elections come and go and democracy slowly tends to become a mob rule where theoretically 51% of the people suppress the freedom of 49% of the people, and practically it is actually around 30-35% of the voters who make their candidates win and suppress the remaining 70-75% population who either do not vote or vote for other candidates. Then the promises of democracy becomes an illusion to majority of the population. They will have to remain satisfied only with their freedom to protest against the policies of the state whom they DID NOT elect in the first place.

Protests against elected governments are a common scenario all over the democratic world. And this need not include only those who DID NOT vote in favor of the current administration. It can even include those who voted IN FAVOR OF the current administration but later became disillusioned with its policies.

Same with Capitalism. Initially there will be a spur of growth, industrialization, employment, wealth creation, etc in a capitalist society. But later as private limited companies go public, as giant corporations start getting created, as business magnets evolve in place – capitalism becomes monopoly of giants or becomes host to manipulative tactics of giant corporations. Smaller newer companies and startups will face unethical competition, or will be swallowed by acquisitions. Democratic institutions and policy makers will start living under the perks of large corporations and will create policies favoring a particular group of corporates.

In other words, Corruption sets in.

Democracy + Capitalism = Corruption

Corruption is the illegal nexus between Capitalism and Democracy where in,

– Capitalists share their wealth with those in power outside the boundaries of democratic setup –  like by paying bribe

in return for

– Administrators (politicians and bureaucrats) misusing their democratic power to create policies that favor the capitalists or to issue orders that favor business houses

So Corruption is where capitalism misuses democracy in return for democracy misusing capitalism, which creates a win-win situation for both capitalists and policy makers at the cost of the general public. Now let us start from the beginning again. Wasn’t democracy and capitalism actually created to benefit the same general public, the common man? And here we are in a situation where both democracy and capitalism have ganged up together to loot the same general public.

The fact is that the policy makers come to power with the votes cast in the elections by the general public. The capitalists run their businesses because the general public buy their goods and products. And yet, the illegal network between Capitalists and Administrators makes life more miserable for the same general public by means of corruption. And the reason?

The Missing Link

Lack of adequate checks and balances. Any system, no matter how fool proof or well intentioned its ideological basis is, if it lacks proper checks and balances, then it is due for a massive failure in the long run. It is this same lack of proper checks and balances that caused the current global economic crisis.

There is no accountability in a democracy. If a corrupt politician loots the country for five consecutive years, does not perform upto the mark, and causes an entire population of a billion people’s development to be delayed by five years, the maximum punishment he will get is not getting elected again. Most of the corruption cases end up in prolonged inquiries and lengthy court cases and rarely does a corrupt politician get punished for his misdeeds.

In Capitalism, the stronger your business corporation is, the easier for you to grow even bigger. Solution monopolies do not allow alternate ideas to easily flow in. Take the case of petroleum business which tries its very best to make sure alternate energy sources do not enter mainstream energy solutions. Larger business companies with deep pockets make sure that smaller companies cannot easily get in for a good share of limited resources. Take the case of the current 2G Scam where it is alleged that stronger telecom companies got away with the 2G spectrum at throw away prices by bribing the democratic policy makers.

Now take the reverse case.

In democracy no matter how strong a political party or political leader is, a collective people’s mandate can root them out in a single election. Be it BJP led NDA putting an end to Congress rule in the Center, or be it Nitish making a clean sweep over Lalu in Bihar – when electorate says enough is enough, parties and leaders have to pack their bags. This is the strength of democracy. The need for change – which brought Obama to power.

In capitalism no matter how little money you have, no matter how inexperienced you are in terms of running a business, if you have a great idea then you have ample options to find all means to assist you to give life to your idea. This is the strength of Capitalism. Capitalism recognizes merit and innovation, and this is what has made Google possible today.

Bringing in Accountability into Democracy will build a better representative system. While democracy is not THE BEST form of governance, it definitely IS the best among all the available alternatives to it. It guarantees maximum representation and justice to all if properly implemented, and on the other hand will simply create a mob rule when there are no checks in the system. Plugging in Accountability into democracy gives it a perfect shape. In this regard, the world’s largest democracy India has miles to go compared to the world’s strongest democracy United States. Accountability is to democracy what anti-virus software is to an operating system. Anti-virus software keeps viruses out in a computer, and accountability keeps corruption out in a democracy.

Once accountability is in place, this automatically reduces the cons of Capitalism making it a legitimate child of democracy. When you do not have corruption in the government, obviously policies will be in place to keep a check on the business houses. The only business of a government is to regulate business, and good governance is all about making sure that the benefits of capitalism are equally shared by all the citizens. Failing to do so will remind us of yet another Winston Churchill’s quote

“The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.”

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Gurudev is the developer of Gurunudi AI Platform. This is his official website where he pens his thoughts on a wide range of topics, answers queries, shares resources and tools developed by him.


  1. Bringing accountability in system means exactly what n how can we check politicians ?
    As long as i know all the process of corruption starts from elections itself, i.e. When you have to join a party and want to get ticket for elections they ask for money a candidate who pays max. Is selected as a liable candidate , also if u decide to stand independently (apaksha candidate ) then also you require lot of money to invest for prachar i.e. Publicity . wen u go for asking vote a low income group ppl vote those only who gives money or desi daru at that time they don’t think about the consequences and the educated ppl run behind those with power and money , in such situation how can a simple common man a good thinking non violent ,mannered man stand. There are lots of expenses more for elections , hw can one risk his hardly earned money in such things so men who really want to do good for ppl are not at all involved in elections that is why in current situation every politician is corrupted. I think expenses in elections must b lessened by any means ,ppl must b educated first, as u said transparency in every department must b brought but ppl in power don’t let it happen so i think one day of worst situation will come where bloodshed revolution will b the only option like Russian and French revolutions n our ppl wil create a better country to live.

    • Bringing accountability in the system means make sure that the system punishes those found of misusing their offices. In India you can be corrupt and get caught and even then live a great life. In US you can be corrupt but if you get caught even God cant save you. That is the accountability I am talking of. But no country or society can develop an accountable system if its people dont care about its state of affairs. So as long as we have people voting for Mulayams and Mayawatis and Lalloos in the country, as long as we have people voting in return for cash, reservations, bribe and liquor nothing much can be done about it. Politicians spend money in elections only because they know they can win by doing so, if people do not vote in return for such bribes why will politicians spend money like that. So the problem squarely lies with we the citizens, both who vote for bribe or caste/religion favors, and those who dont vote. Even the revolution can happen only when people become aware of who should rule them, and it is highly unlikely in India where people have the attitude of ‘Chalta Hai’

    • Yes Nayan, definitely we all should support any and every such efforts to clean up the system – wish Bharat Swabhiman actively participates in the coming elections and wish them a grand success. Unfortunately Rajiv Dixit is no more with us, and for all the TRP minded channels this is no news, our media might be a free media in terms of media freedom, but is definitely not free in terms of intellectual freedom.

  2. Guru,

    Couple of years ago, I had formed a small organization with my friends and named it ‘Pragathi’ I had on the agenda, one of the ways of making the government departments answerable and responsible for their work, to the GENERAL PUBLIC. My plan was to have every department clearly spell out their processes, people responsible for each work, costs, time frame, documents required etc. A booklet that could be printed at the cost of local businesses that had all the rules and regulations for both public and government, for each department, for each activity. Huge task, but we thought we would do this over a time taking up one department in one area as a prototype. I could not even start this process because of various reasons with my work and my friends who were not entirely geared upto taking up such huge task.

    My idea was to involve public, well known individuals in the locality, people with high integrity, to be watchdogs of what the departments do. I believe that unless citizens are in control of what they derive from the government, when there’s no one to question the government till the next election, and when we do not raise alerts when the corporators or ministers do not delivered what they promised in a particular time, then we need to have citizen forums which must have the power to raise questions through their elected representatives in the assembly or even in parliament.

    • Good intentions Suchin, but the problem is no department will be prepared to cooperate on this, and even if they it will be only to grab media attention initially – RTI act is on similar lines – but see what great difficulty even in implementing it, we have scores of RTI activists killed – when violence is the reply for enquiries guess how many common men will be prepared to go and enquire. The solution is to make public offices dynamic, you dont perform then you are out – no waiting till next 5 years or till retirement. Well yes, its much easier said than done, who will bell the cat, the cat has to create these rules here.

  3. At first, Every system would have its origin in human mind, either individual
    (Karl marx -> Communism)
    or it may evolve from collective conscience of people
    (Democracy -> Greece).

    Now the same system gets adopted by the people with totally different spirit and mind(individual/collective).That is if problem is with the mind which is adopting it then there is no way OUT.

    It applies to all the systems at all places, take it in home,street or parliament.

    Basically system(democracy,Communist) can not be static(rules and norms) because the minds(a challenge with other challenges) which it ought to deal with is not static.

    So both the mind and System have to be very dynamic in context of each other.Here lies more responsibility with system or system holder(Monarch or high court or Some human authority) to be very dynamic,responsive to the minds.

    Consider all the minds are very fine then they may create everything successful whatever the system they follow(capitalism,democracy,communism,Monarchy).

    But then that is the ideal condition which ….!

    Now consider that, at least few minds are good/enlightened then practically they may create everything successfully.

    And this has been the idea proposed by ‘Voltair’
    He called that Good mind or system as

    “Enlightened Monarch”.


    • Yes Akshay, its how we implement it that matters – just like technology – science gives the nuclear secrets – its up to us how we use technology from it to create either a nuclear bomb or destroy lives or a nuclear reactor to light houses. But then there is also a requirement in any system to make sure that every point of power has an equal or even more stricter point of accountability and a check in place – that’s when the system is more likely to succeed – because “power corrupts”. Take the case of Indian CVC, we have a CVC which can enquire into the inappropriateness of the politicians and bureacrats – which is a good control point created by a system – now if we end up having a tainted person appointed as a CVC – can we call it a system’s failure? System is after all implemented by biased minds – the better the intentions of the bias, the good for the society.

  4. Actually, this “universal adult franchise” is the real problem of democracy.

    Votes only have a positive effect when there is an equivalence of knowledge and intellect.

    for ex: lets say in an election I have thought meticulously about the way i am going to vote. I have analyzed the pros and cons of each and every contestant and I have decided to vote a best among them.
    But at the same time, there will always be a sweeper at the end of the street who will take Rs.500 and puts his vote for a monkey.And the sad part is people, like sweeper are more in number than peolple like me(don’t mistake, i am not bragging).
    The End result: Monkey gets elected and my vote goes in vain. All the homework I did goes in vain.And that elected monkey’s incompetence royally screws me and the economy.This is the story of the so called world’s largest democracy.
    Now, come on wat would a sweeper know abt economy, society and its respaonsibilities. But yet that sweeper vetoes me when it comes to whose hands my tax money should go to.
    I am tired of all this socialism, and if this continues to be the story, i’ve decided to never ever vote again in my life.

    If India really wants to come out of this corruption mess, then it ought to take voting rights off from all those people who can’t think beyond their community, from all those people who know nothing abt society, economy.
    Voting rights should be given to only those who have proper knowledge and can take this country forward. Restricting voting rights to only graduates can be a good start to this process.This should happen in atleast urban areas, if not in rural areas.

    • Very correct Anil – votes mean something only when the electorate is well aware and educated about the pros and cons of different policies – your intellectual vote can be vetoed by one 500 rupee not and can be turned around by another similar note. But having said that education or graduation doesn’t necessarily mean better votes – Bihar’s recent elections are a classic example where most of the voters were illiterate and yet voted for a clean Nithish overwhelmingly – and on the other hand we have double graduates who speak great english but have narrow thoughts about whom to vote or better not to vote at all. Democracy can only make a different when everybody comes out to vote – because in that case then if the majority vote wrongly – well then that country has little future – country is after all made up of its people. Democracy takes a set back when majority of the voters can make a real difference, but they dont come out and vote – that is where democracy fails. If you ask me – voting must be made a fundamental duty – a mandatory process if one wants any type of benefits from the government say passport or driving license or whatever – and voting at the same time must be made very easy too – say by sending an sms during election day! If we dont like any candidate then we can always give a negative vote forcing all parties to change their candidates.


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