• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Are Democratic ideals supported by free markets or undermined by them?

Extracts from this document...


Word Count 2745 Are Democratic ideals supported by free markets or undermined by them? In 1991 the world witnessed the collapse of the Soviet Union and an end to nearly 75 years of communism in Russia. In trying to democratize his nation and restructure its economy whilst at the same time attempting to stick to the ideas and principles of socialism, Gorbachev had presented himself with an enormous challenge, one that he had been unable to meet. It was at this time that Francis Fukyama claimed that history had ended. Fukyama believed that history was essentially the struggle between different ideologies, each trying to gain supremacy over the others. She claimed that the fall of the Soviet Union symbolized the end of all ideological alternatives to capitalism; in short the west had won. As the vast majority of capitalist western countries were also democracies, the connection between the free market economy and democracy seems to be a clear one. The western countries, all with stable democratic governments had economies based on the ideas of the free market economy. Those countries that didn't have this system were seen as oppressive dictatorships, such as Russia and Nazi Germany. However, it cannot simply be said that all democracies are built on capitalism and that all state controlled economies belong to oppressive dictatorships. The idea of democracy and capitalism co-existing side by side is a contentious issue and one that has generated countless books and articles. ...read more.


In the free market system the output of a product is determined by the willingness of the consumer to buy it. The idea of consumer sovereignty is key to the success of a free market economy. Neither the consumer nor the producer is forced to enter into an exchange with anyone else against his or her will. The individual, or household, has a resource that they can trade to their maximum benefit, whether that is an actual product or their labor. By doing this the household can sustain itself by providing services for others rather than being self-sufficient. As the economy advances this method becomes more advantageous for the household and allows specialization in production. Obviously our economy has advanced far beyond simply a collection of households. Industry and private enterprise has provided intermediaries between households as both consumers and producers. Through this system consumer sovereignty is preserved, as all the enterprises are private. Therefore both parties are free to enter into a transaction or not. The consumer does not have to buy something of a producer, as there are other producers available. In the same way the producer does not have to sell to that customer, as there are other consumers available. This market equilibrium between supply and demand allows both household and private enterprises to enter transactions only when it is beneficial to both parties. It is not in the interests of the producer to double their prices as the consumer can go elsewhere. ...read more.


It is the home of big business, private enterprise and multi-national conglomerates. However, there are many cases in recent history where the US has been involved in undermining democratic governments because they were either communist or possessed large quantities of natural resources such as oil. There have also been many cases where the US traded with brutal dictatorships when it was in their interests, turning a blind eye to the atrocities being committed. Therefore although capitalism and democracy can exist in certain places, the freedom and abundance of goods found in one country is often balanced by the suffering and hardships found in another. This is not just found at a government level either; many of the goods imported into rich western nations come from third world countries. Although public awareness has never been higher about the problems these countries are facing and issues such as fair trade are big news, people are still not willing to sacrifice their lifestyles. Fairtrade coffee is one thing, but Fairtrade Nike trainers are along way off yet. Therefore free markets do support democratic ideals, if you happen to live in a thriving western country. In political terms the free market economy is a representative democracy, where each individual can enter into a transaction voluntarily, without coercion. It is hard to see how one could be considered to be politically free without these basic rights. So whereas capitalism supports democracy in those countries with established economies, it can undermine it in those exploited countries that are forced to do the 'dirty work' as it were. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. The Nature of Macroeconomics

    need, size of public sector and health of the economy * Net Exports o Varies monthly o Exports and imports o Influence of exchange rate and terms of trade o World economic activity or trade important for both nations, exporter/importer o International competitiveness, linked to domestic policies * Conclusion o

  2. Economic Systems - free markets and mixed economies.

    Economies that do not want to go either extreme may choose to obtain a mixed economy, they try to combine a system in between which shares the advantages of both the free-market and planned economy. A mixed economy tries to obtain the advantages of both the free-market and planned economies

  1. Case Study: The Home Depot

    What are the differences and similarities between the two chains? Large box storesSmall stores -Shelves to the ceilingLower shelves -Often have to walk throughWalk in, walk out whole store to get what you want -For lots of/ larger communitiesFor small communities Almost all productsSelected products Lots of every productavailableLess of

  2. This report will establish the opportunities and threats presented to Sony by the EU ...

    As the EU has a population of 400 million people it permits companies to aim their products at a larger audience also competing on quality and saves cost. Due to this, it permits them to make use of economies of scales, which helps generate profitability for firms.

  1. Discuss the extent to which the economic theories in the Market's Reader can be ...

    Highways are still necessary, but ready access to the "information highway" is essential. Abundant low priced labor is not enough. Low priced US labor does not compete cost-wise with low priced overseas labor. Education is more important than cost to the technology oriented companies of the new economy.

  2. Discuss the extent to which the economic theories in the Market's Reader can be ...

    Now I will talk about the most clearly feathers of the new economy: 1. knowledge society There are a few factors that differentiate the new economy from the old economy. The major difference in the "newness" of the new economy and the old economy is the mode in which the organizations operate and the resources used.

  1. Why does the multinational company Nike choose Indonesia as the location to be its ...

    The labour itself would be very cheap and accessible. As the job specification for the factory workers requires a basic skill level, a broader availability of labour is opened up for Nike. Added to this, the high demand for jobs in Indonesia enables Nike to employ high numbers of workers

  2. Liberalization: where it has lead us and where it is headed

    And what are the prospects for economic growth in India? Below are thoughts on my personal perspective of that issue. My perspective on India and investing is not all positive, but it is an effort to tell the truth as I see it.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work