By Manuel Cereijo

There is little argument today about whether or not there is a relationship between capitalism and democracy. Two great economists of the last generation, Max Weber and Joseph Schumpeter, detailed the linkage. Weber contended that democracy in its clearest form can occur only under capitalist industrialization, and that it had its greatest opportunity in a society which emphasizes individual responsibility. He stated flatly that history clearly confirms that modern democracy rose along with capitalism and in a casual connection with it.

Schumpeter was even more emphatic. He stated that modern democracy is a product of the capitalist process, and the two were mutually supportive parts of a rising modern civilization. Schumpeter was careful to point out, however, the tension between capitalism and democracy. He cautioned that the means at the disposal of private interests were often used to interfere with the mechanism of competitive leadership. The Friedmans say that despite the advantages which flow from capitalism, the relationship between political and economic freedom is complex and by no means unilateral.

The essential nature of capitalism is social harmony through the pursuit of self-interest. Under capitalism, the individual's pursuit of his own economic self-interest benefits the economic self-interests of all others. The system means the complete separation of economy and state, just like the separation of church and state.

Capitalism is the social system based upon private ownership of the means of production. However, the primary premise of capitalism, the one that I consider most important, is that is based on individual rights. It is the only politico-economic system based on the doctrine of individual rights.

This means that capitalism recognizes that each person is the owner of his own life, and has the right to live his life in any manner he chooses as long as he does not violate the rights of others.

Contrary to widely held beliefs, capitalism is not a system which exploits a large portion of society for the sake of a small minority of wealthy capitalists. Ironically, it is actually socialism that causes the systematic exploitation of labor. Exploitation is inherent to the nature of socialism because individuals cannot live for their own sake, rather they exist merely as means to whatever ends the socialist rulers may have in mind.

This is where the Castros along history have failed. Castro was wrong in 1959, Castro is wrong in 2002.


Manuel Cereijo

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