By Manuel Cereijo

An absolute democracy, which means unlimited majority rule, is incompatible with capitalism and freedom. This is so because capitalism rests on the principle of individual rights. In an absolute democracy, rights would really have no legitimate meaning because they could always be voted away in the next election. When most people think of democracy, they usually mean a constitutionally limited democracy. The function of a limited democracy is to decide who held political power and how that power is specifically exercised, but what that power is should be strictly defined and limited in the constitution. Individual rights would not be subject to vote.

What is the relationship between capitalism and democracy? It is a question of great moment. The dramatic political upheavals, demands for democratic governments, and free market economy in Eastern Europe and Russia have moved the question to the forefront. Modern democracy is a product of the capitalist process, and the two are mutually supportive parts of a rising modern civilization. Economic and political freedom are necessarily linked because both are expressions of one and the same impulse of individual autonomy against the coercive power of the states. Freedom is one whole, and anything that reduces freedom on one part of our lives is likely to affect freedom in the other parts. Democracy and capitalism have very different beliefs about the proper distribution of power. One believes in a completely equal distribution of political power,"one man, one vote', while the other believes that is the duty of the economically fit to lead the development of society. However, in democratic-capitalistic societies power comes from two sources-wealth and political position. It has been possible to convert economic power into political power or, conversely, political power into economic power. Few hold one without quickly gaining the other. The conversion creates a dynamic equilibrium that holds democracy and capitalism functioning properly.

Economic freedom is an indispensable means toward the achievement of political freedom. The kind of economic organization that provides economic freedom directly, namely competitive capitalism, also promotes political freedom, because it separates economic power from political power and in this way enables the one to offset the other. The relationship between political and economic freedom is complex and by no means unilateral. History suggests only that capitalism is a necessary condition for political freedom. Clearly, it is not a sufficient condition.

Obviously, extended discussion of the economic values and assumptions inherent in the Constitution of the United States, and how they intersect with its political values and assumptions is impossible here. But I will try to simplify some. Implicit in the spare, matter of fact prose of the Constitution are embedded three specific economic values deserving of comment.

The first of these is the right to private property. It is assumed, in the Lockean tradition, to flow from the law of nature itself. It is not a concession by those governing to the governed. Along with the right to life and to liberty, the right to property is natural, unalienable and essential to meaningful existence. Government's responsibility, its very purpose, therefore, is to protect individuals in the enjoyment of their natural rights and to secure their persons and property against infringement or violence.

A second economic value implicit in the Constitution is support for private entrepreneurial activity. The Constitution provides for defining the national economic interest in relations with other nations, regulating interstate trade, creating a reliable money supply, securing copyright and patent rights, granting corporate charts, and protecting the sanctity of private contracts. Increased trade and commerce always improve the life for both workers and proprietors.

A third value of special significance is the rule of law. No power can be exercised except in accordance with the procedures, principles and constraints contained in the law. The vibrant economic growth which the Constitution was intended to promote are to be controlled by law. The inherent limitations of the legal order are understood to be fundamental. The basic values and the fundamental assumptions inherent in the Constitution continue to serve the nation's guideposts.

Manuel Cereijo

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