Capitalism vs. democracy

„Do capitalism and democracy conflict? Does each weaken the other?

To the American ear, these questions sound bizarre. Capitalism and democracy are bound together like Siamese twins, are they not? That was our mantra during the Cold War, when it was abundantly clear that communism and democracy were incompatible. After the Cold War ended, though, things grew murkier. Recall that virtually every U.S. chief executive and every U.S. president (two Bushes and one Clinton, in particular) told us that bringing capitalism to China would democratize China.

It hasn’t quite worked out that way.

Over the past year, in fact, capitalism has fairly rolled over democracy. Nowhere is this more apparent than in Europe, where financial institutions and large investors have gone to war under the banner of austerity, and governments of nations with not-very-productive or overextended economies have found that they could not satisfy those demands and still cling to power. The elected governments of Greece and Italy have been deposed; financial technocrats are now at the helm of both nations. With interest rates on Spanish bonds rising sharply in recent weeks, Spain’s socialist government was unseated last weekend by a center-right party that has offered no solutions to that country’s growing crisis. Now the Sarkozy government in France is threatened by rising interest rates on its bonds. It’s as though the markets throughout Europe have had enough with this democratic sovereignty nonsense.”