Market and Democracy: Friends or Foes? Theories Reconsidered

Gedeon, Péter (2018) Market and Democracy: Friends or Foes? Theories Reconsidered. Society and Economy, 40 (2). pp. 185-210. DOI

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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.

Item Type:Article
Uncontrolled Keywords:market, capitalism, democracy, political freedom, political equality, market inequalities, economic winners, economic losers
JEL classification:B25 - History of Economic Thought since 1925: Historical; Institutional; Evolutionary; Austrian
D02 - Institutions: Design, Formation, and Operations
P16 - Capitalist Systems: Political Economy
ID Code:3555
Deposited By: Ádám Hoffmann
Deposited On:19 Jun 2018 13:45
Last Modified:19 Jun 2018 13:45

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