A capitalist democracy system denotes a system based on economic incentives and free markets to boost businesses. It also supports a social system based on diversity with regards to views, approaches, and culture. The two features are connected by a democratic government in order to be a true capitalist democracy system.
A capitalist democracy system has the following characteristics:
- Private property- The system respects and protects private property rights. Thus, individuals are free to acquire and own property.
- Profit principle- The system supports initiatives geared towards the generation of profits by different individuals and institutions.
- Pluralism- The system fosters competition in line with the idea of pluralism/ diversity.
- Democratic governance- The system requires the establishment of a government by the majority through free and fair elections.
- Equality- The system supports the provision of equal opportunities for all in order to improve productivity and the quality of life.
A capitalist democracy combines characteristics of capitalism (an economic system) and democracy (a political system). Some of the defining characteristics of this system are:
- private ownership: people are free to own and operate businesses, with little intervention from the government. The government controls only certain products that are vital to the country (with possible collaboration from the private sector), while everything else is in the hands of the private sector.
- Economic forces of supply and demand determine the direction in which the market moves. The government's role is only that of a regulator and it intervenes only when necessary. Thus, the market is free to vary according to market forces.
- Entrepreneurship is encouraged in this system. Private ownership coupled with the least regulatory intervention encourages people to start individual ventures and strive for success.
- Freedom for all: the democratic principles are followed which provide freedom of speech, the right to vote, freedom to work anywhere, freedom from oppression, etc. All this is very conducive to personal and economic growth.
- Freedom of production: People are free to decide what to produce and how much to produce, without the government's intervention. Such decisions are made purely based on an economic basis and market forces.